I OVERVIEW

In terms of matters relating to TMT, the government has always taken an affirmative position with the intention of constantly harmonising different sets of sector-specific laws and regulations with the rapid development of the TMT industry. Meanwhile, various incentive measures and preferential policies have been designed to ensure the protection and conditions for the expansion of fair competition and the development of a healthy market.

TMT regulation in China divides all telecommunications into two categories: basic telecommunications services (BTS) and value-added telecommunications services (VATS). BTS essentially refers to the provision of infrastructure facilities and basic voice and data transmissions, both domestically and internationally, while VATS refers to the provision of specialised services via the basic infrastructure facilities. China adopts a strict licensing system for the telecoms industry, and telecoms operators are required to obtain a licence to engage in either BTS or VATS. To fulfil its commitments to the World Trade Organization, China is gradually opening up its telecoms industry to foreign investment.

Among all the VATS, internet content services and e-commerce have grown at a rapid pace in recent years. Following the prosperity of the internet industry, online IP infringement, unfair competition and anti-counterfeiting and cybersecurity risks are issues that are starting to become of greater concern to telecoms operators.

II REGULATION

i The regulators

TMT is one of the broader sectors in China, touching upon a number of different fields of business. The Ministry of Industry and Information Technology (MIIT) is the primary regulatory body in charge of licensing for and administration of BTS and VATS, including internet content or service provision (ICP, ISP and SP) and internet access tariffs and charges. Due to its complex nature, the TMT sector is also governed by other regulatory authorities, including but not limited to:

  1. the Ministry of Commerce (e-commerce policy, foreign investment in the TMT sector);
  2. the Ministry of Culture (online gaming, internet cultural activities, online music, etc.);
  3. the National Development and Reform Commission (IT industry planning and policy);
  4. the State Administration for Industry and Commerce and its local branches (consumer rights protection, online advertising, fair competition, registration of entities);
  5. the Ministry of Public Security (internet security);
  6. the State Council Internet Information Office (coordinating and supervising online content management and handling administrative approval of businesses related to online news reporting);
  7. National Radio and Television Administration (news, publications, TV, radio, film, import and export of films, books, music, etc.);
  8. State Intellectual Property Office (patent, trademark and geographical indication);
  9. the Office of State Commercial Cryptography Administration;
  10. Cyberspace Administration of China (cybersecurity); and
  11. the National Information Security Standardization Technical Committee (issuing standards related to cybersecurity).

ii Main sources of law

The main sources of legislation and regulations governing the TMT sector in China are as follows:

  1. Decision of the National People's Congress Standing Committee to Strengthen Internet Information Protection;
  2. the following laws:
    • Counterterrorism Law of the People's Republic of China;
    • Electronic Signatures Law;
    • Copyright Law;
    • Contract Law;
    • Advertising Law;
    • Cryptography Law (draft for comments);
    • State Security Law of China;
    • Cyber Security Law of China;
    • Law of the People's Republic of China on the Protection of Consumer Rights and Interests; and
    • the Standardization Law;
  3. the following regulations:
    • Regulations for the Management of Telecommunications;
    • Regulations for the Management of Sales of Commercial Cryptographic Products;
    • Regulations for the Management of Commercial Cryptographic;
    • Regulations for the Management of Online Publishing Services;
    • Regulations for the Management of Radio and Television;
    • Regulations for the Protection of the Right of Communication through Information Networks;
    • Regulations for the Protection and Administration of Computer Information Networks;
    • Regulations for the Protection of Computer Software;
    • Regulations for the Protection of Security of Critical Information Infrastructure (draft for comments); and
    • Provisional Regulations for the Administration of Internet Culture;
  4. the following measures:
    • Measures for the Administration of Pilot Operation of Value-added Telecommunications Business by Foreign Investors in China (Shanghai) Pilot Free Trade Zone;
    • Measures for the Administration of Telecommunications Construction;
    • Measures for the Administration of the Connection of Telecommunications Equipment to Networks;
    • Measures for the Administration of Telecommunications Service Operating Permits;
    • Measures for the Handling of Disputes Regarding Interconnections between Telecommunications Networks;
    • Measures for the Administration of International Communications Gateways;
    • Measures for the Administration of Internet Information Services;
    • Measures for the Administration of the Transmission of Audiovisual Programmes over Information Networks such as the Internet;
    • Measures for the Administration of Electronic Certification Services;
    • Measures for the Administration of Internet Domain Names;
    • Measures for the Administration on Use and Maintenance of Internet Information Security Management System;
    • Measures for the Administration of Commercial Franchise Procedures;
    • Measures for the Registration of Copyright in Computer Software;
    • Measures for the Security Assessment of Export of Personal Information and Important Data (draft for comments);
    • Interim Measures for the Administration of Internet Advertising;
    • Interim Measures for the Administration of Online Car Hailing Services;
    • Interim Measures for the Administration of Internet-based Goods and Service Transactions; and
    • Interim Measures for Network Product and Service Security Inspection;
  5. the following provisions:
    • Provisions for the Administration of Online Publishing Services;
    • Provisions for the Administration of Mobile Internet Applications Information Service;
    • Provisions for the Administration of Internet Information Search Services;
    • Provisions for the Administration of the Construction of International Communications Facilities;
    • Provisions for the Administration of Internet Audio and Video Programming Services;
    • Provisions for the Administration of Internet News Information Services; and
    • Provisions for Technical Measures of Internet Security Protection;
  6. the following catalogues and lists:
    • Catalogue of Telecommunications Services by Category (2015);
    • Catalogue of Network (Cyber) Critical Equipment and Cybersecurity-Specific Products (Batch 1);
    • Catalogue of Guide of Foreign Investment (2017); and
    • Negative List of Access of Foreign Investment (2018);
  7. the following rules:
    • Rules for the Administration of Foreign-Invested Telecommunications Enterprises;
    • Rules for the Administration of the Interconnection of Public Telecommunications Network;
    • Rules for the Administration of the Establishment of Satellite Communications Networks and Installation and Use of Earth Stations;
    • Rules for the Protection of Personal Information of Telecommunication and Internet Users;
    • Rules for the Allocation of Radio Frequency Band;
    • Rules for the Registration of Real Names of Phone Users; and
    • Procedural Rules for the Resolution of Domain Name Disputes by China Internet Network Information Center;
  8. the following national standards:
    • Information Security Technology – Assessment Method for Security Capability of Cloud Computing Service;
    • Information Security Technology – Security Capability Requirements for Big Data Services;
    • Information Security Technology – Baseline for the Multi-Level Protection on Information System Security;
    • Information Security Technology – Guide of Rating of the Multi-Level Protection on Cybersecurity;
    • Information Security Technology – Guide of Information Security Risk Assessment;
    • Information Security Technology – Guide of Assessment for Data Cross-Border Transfer Security (draft for comments);
    • Information Security Technology – Guide of Personal Information Protection in Public and Commercial Services Information System;
    • Information Security Technology – Guide of Personal Information Security Specification; and
    • Information Security Technology – Guide of Assessment for Personal Information Security Impact;
  9. Notice of the Administration of Mobile Game Publishing Services, issued by the National Radio and Television Administration;
  10. Opinions on Further Opening up Value-added Telecommunication Business to Foreign Investments in the China (Shanghai) Pilot Free Trade Zone, jointly issued by MIIT and the Shanghai municipal government; and
  11. Circular for Removing Restriction on Foreign Shareholding in Holder of Online Data Processing and Transaction Processing in China (Shanghai) Pilot Free Trade Zone, issued by MIIT.

Generally, the Catalogue of Telecommunications Services by Category and the Catalogue of Guide of Foreign Investment regulate what types of activities require licences. A foreign enterprise shall first inquire regarding the related laws and regulations to clarify whether a business it wishes to engage in requires a license. If the business requires a licence, such enterprise shall apply to the relevant agencies for that licence.

iii Ownership and market access restrictions

The government has formulated relevant laws and administrative regulations, as well as various policy strategies, to facilitate the growth of the sector for the purposes of the following:

  1. satisfying demands to open up China's TMT industry;
  2. promoting the development of all TMT-related services; and
  3. enhancing business activities aiding the path of technological advancement, and the rapid increase in internet penetration rates and the expansion of mobile broadband networks.

In general, to fulfil China's commitments to the World Trade Organization, the TMT field in China will be opened up to foreign investment participation, with foreign investors being subject to certain restrictions and strict government approval procedures. Foreign-funded telecoms enterprises are allowed to engage in telecoms businesses within the territory of China subject to government approval, as well as through abidance by the provisions of the Telecommunications Regulation and other applicable laws and administrative regulations. Foreign investment by way of a Sino-foreign equity joint venture may be engaged in both BTS and VATS. The ultimate proportion of contribution and registered capital required are follows:

Nationwide, or beyond a single province, autonomous region or municipality directly under the central government

Business classifications Geographical areas Registered capital Proportion of contribution
BTS business Nationwide, or beyond a single province, autonomous region or municipality directly under the central government Not less than
1 billion yuan
Foreign investors: no more than 49% (except radio paging services and the construction and operation of power grid systems)

Within a province, autonomous region or municipality directly under the central government Not less than 
100 million yuan
VATS business
Nationwide, or beyond a single province, autonomous region or municipality directly under the central government
Not less than 
10 million yuan
Foreign investors: no more than 50% (including radio paging business in basic telecoms services), except in the online data processing and transaction processing business (the foreign proportion of contribution can be 100%)

Within a province, autonomous region or municipality directly under the central government Not less than
1 million yuan

The major foreign investor of a foreign-invested telecommunications enterprise providing BTS shall meet the following conditions:

  1. being qualified as an legal person or enterprise;
  2. having obtained a licence for providing BTS from the registration country or region;
  3. having the funds and professionals commensurate with its business operation; and
  4. having a good performance record and experience in providing BTS.

The major foreign investor in a foreign-invested telecommunications enterprise providing VATS must have a good performance record and experience in providing VATS.

To establish a foreign-invested telecommunications enterprise providing BTS or VATS, the major Chinese investor shall submit the required application documents for approval to MIIT. For a foreign-funded telecom enterprise engaging in value-added telecom businesses within a province, autonomous region or municipality directly under the central government, MIIT shall complete its examination within 30 days of the date of receipt of application documents establishing a foreign-invested telecommunications enterprise, and either approve or reject the application. For foreign-funded telecom enterprises engaging in a basic telecom businesses, the examination shall last 180 days; for foreign-funded telecom enterprises engaging in value-added telecom businesses within an area of more than one province, autonomous region or municipality directly under the central government, the examination period would last 90 days.

If approved, the Examination Opinions on Foreign Investment in Telecommunications Services Provision shall be issued; if not, the applicant shall be notified in writing with the reasons therefor stated. Following opinions from MIIT, the major Chinese investor shall submit the contract and articles of association of the enterprise to be established to the Ministry of Commerce, which shall complete its examination within 90 days of the date of receipt, and either approve or reject the application.

To provide trans-border telecommunications services, the foreign-invested telecommunications enterprise must obtain approval from MIIT and provide its services through the international entry and exit gateway agency, the establishment of which has been approved by MIIT.

iv Transfers of control and assignments

An ownership change or transfer of equity of a foreign-invested telecommunications enterprise shall comply with China's laws and regulations on investor qualifications and industrial policy requirements. First, the ownership change or transfer of equity of a foreign-invested telecommunications enterprise shall not violate the Catalogue of Guide of Foreign Investment (2017) and the Negative List of Access of Foreign Investment (2018) issued by the Ministry of Commerce. In addition, in TMT industries, MIIT and its branches and the Administrative, Industrial and Commerce authorities may review such transactions.

The enterprise shall, within 30 days of the date on which the examination and approval authority approves the change or the transfer, go through the formalities regarding that examination and approval authority. If the Chinese investor in a joint venture will obtain the entire equity, it shall, within 30 days of the date of approval by the examination and approval authority, cancel the certificate of the foreign-invested enterprise to the examination and approval authority. The enterprise shall, within 30 days of the date of change or cancellation of the foreign-invested enterprise approval certificate, apply to the registration authority for registration of change.

III TELECOMMUNICATIONS AND INTERNET ACCESS

i Internet and internet protocol regulation

With regard to the government institutions that have been restructured in 2018, generally, internet and IP-based services are regulated by the following authorities:

  1. internet services and cybersecurity issues: MIIT, the Cyberspace Administration of China and the Ministry of Public Security; and
  2. IP-based services: the National Radio and Television Administration (news, publications, TV, radio, film, import and export of films, books, music, etc.), the Copyright Protection Centre of China (copyright registration issues) and the State Intellectual Property Office (patent, trademark and geographical indication).

ii Universal service

Under the current telecoms legal system of China, basic telecommunications operators are required to perform their corresponding obligations to make telecommunications services universally available, in accordance with relevant state regulations. MIIT may determine which telecommunications operators shall assume specific obligations in respect of the universal availability of telecommunications services by designating such operators or by inviting tenders.

The State Administration for Market Regulation and the State Council's department in charge of pricing are responsible for formulating the procedures for the administration of compensation for the costs of making telecommunications services universally available.

In addition, telecommunications operators engaging in domestic telephone business and mobile phone business are required to provide their subscribers with free telecommunications services of a public welfare nature, such as phone numbers for reporting fire-related accidents, bandit-related incidents, medical emergencies and traffic accidents, and the availability of telephone lines shall be guaranteed.

iii Restrictions on the provision of service

Products and equipment subject to a network access permit

Telecoms terminal equipment, wireless communication equipment and equipment used in network interconnection that is connected to public telecommunications networks must adhere to the national standards set by the state, and a network access permit must be obtained.

Telecommunications terminal equipment is equipment that is connected to the end of a public telecommunications network and that provides subscribers with functions to transmit and receive information. This includes fixed telephone terminals, cordless telephone terminals, private branch exchange, faxes, modems (with cards), private automated branch exchange, mobile user terminals, pagers, ISDN terminals, data terminals (with cards), multimedia terminals and other telecommunications terminal equipment (12 product categories in total).

Wireless communications equipment is equipment that is connected to a public telecommunications network via radio as a means for wireless communication. It includes wireless base stations (such as fixed, mobile, paging and repeater stations), microwave communications equipment and satellite earth stations (three categories in total).

Network interconnection equipment is equipment that permits interconnection and mutual communication between networks of different telecommunications carriers or between networks that provide different telecommunications services. It includes optical transmission equipment, digital program-controlled switching systems (fixed and mobile), VII (China No. 7 Common Channel Signaling System), intelligent network equipment, synchronisation equipment, access network equipment, frame relay switches, asynchronous transfer mode switches, ISDN switches, routing devices, IP gateways in the gatekeeper, data communication equipment (including multiplexing equipment, access to the server, cross-connect devices) and call centre equipment (13 categories in total).

In addition, in accordance with the Cybersecurity Law and the Interim Measures for Network Product and Service Security Inspection, products and equipment subject to a network access shall be reviewed under the Cybersecurity Review Regime to minimise cybersecurity risks. The Catalogue of Network (Cyber) Critical Equipment and Cybersecurity-Specific Products (Batch 1) includes what it defines as equipment (e.g., routers, switches, and programmable logic controllers) and products (e.g., firewalls and intrusion detection systems). All items on the list cannot be sold in the China market without first getting certification.

Requirements for manufacturers and operators

Under the network access permit system, the following requirements shall be met by telecommunications equipment manufacturers:

  1. telecommunications equipment is allowed to be sold and used within the territory of China only after the relevant network access permit has been secured;
  2. enterprises, once having obtained a network access permit, shall promptly report such for the record to the telecommunications authorities in the various provinces, autonomous regions and municipalities, and accept the supervision and management of such departments;
  3. if there is any modification relating to technology and appearance, such changes shall be tested, and a new application for a new network access permit shall be submitted;
  4. manufacturers must ensure that the quality of the equipment for which they have obtained a network access permit is stable and reliable, and they may not lower the quality or performance of their products; and
  5. they should affix a sticker presenting the network access permit logo and the network access certificate stating the certificate number, applicant, name of manufacture, device name, device type and the effective date of the certificate.

The following requirements shall be met by telecommunications operators:

  1. they shall obtain network access approval prior to using telecommunications equipment;
  2. they shall consider that users have the right to choose the telecommunications terminal equipment to be used, and no carrier shall prevent subscribers from connecting their own telecommunications terminal equipment for which the network connection permit has been obtained;
  3. they shall assist the authorities to review the certified equipment connected to their networks;
  4. major incidents caused by the telecommunications equipment shall be truthfully reported in a brief written report by the telecommunications operators; and
  5. they shall not monitor and control the content, applications and services accessed by their network users under the regulations on personal information protection.

iv Security

Information security

According to the Regulations for the Management on Telecommunications, each telecommunications service operator is asked mandatorily to establish and implement a sound system to protect the security and confidentiality of the transmitted information. Such internal security protection system shall be reported to the regional public security bureau. If, during the course of providing public information services, a telecommunications operator discovers information transmitted on its telecommunications network that clearly falls within the scope of illegal content specified by laws and regulations, it shall immediately stop the transmission thereof, keep the relevant records and make a report thereon to the relevant authority.

To safeguard a safe environment and services for internet transactions, e-commerce platform service providers are obliged not only to provide adequate technological methods for protection, but also to take necessary management measures for the smooth operation of the internet transaction platform.

Under current practice, the public security bureau may ask certification authorities to disclose private keys for criminal investigation or national security purposes. According to the Electronic Signature Law and Measures for the Administration on Electronic Certification Services, certification authorities are responsible for preserving the information relating to electronic signatures safely.

Personal information protection

To protect personal information better, Information Security Technology – Guide of Assessment for Personal Information Security Impact introduces the concept of “assessment of impact of personal information security”. It regulates that personal information controllers shall conduct personal information security impact assessments on processing activities of personal information (especially under the scenarios of entrusted processing, external sharing, transfer or public disclosure of personal information, etc.) on a regular basis (at least once a year). In the assessment, it shall analyze the impact on personal interests, possibility of security risks and other potential risks. It also lists scenarios in which enterprises can develop new or updated personal information security impact assessment procedures.

Cybersecurity

Cybersecurity is an important and growing factor in the economic and legal environment in China for any business involved in information and communication technology. As the Cybersecurity Law was effective in 2017, there are many cybersecurity standards working as supporting rules. The entire legal system of cybersecurity may comprise several categories:

  1. network products and service security review: focuses on ensuring that providers of such network products or services observe the regulations to safeguard cybersecurity and a safe internet environment;
  2. multilevel protection scheme (MLPS): a higher MLPS ranking, especially a sensitive ranking such as Level 4 or Level 5, means that enterprises would be subject to enhanced monitoring under the systems of the Ministry of Public Security;
  3. critical information infrastructure (CII) cybersecurity protection: CII operators must only use network products and services that have undergone the national security review process, store certain data within mainland China and undergo security procedures such as spot testing and regular assessments;
  4. cross-border data transfer: data produced by CII operators will need to be stored within mainland China, and data deemed personal or important must undergo a security assessment before outbound transfer. Companies must conduct self assessments that may trigger reporting obligations to the Cyberspace Administration of China or sector-specific regulators to determine if the transfer can proceed; and
  5. personal data and important data protection: the Cybersecurity Law and the Personal Information Security Specification give rules for user consent and what enterprises must do when collecting, storing, processing and transferring personal data. Such rules have the purpose of protecting citizens from fraud or misappropriation by companies or criminals.

The government may provide more clarity on a clear set of processes that foreign firms should follow to avoid arbitrary auditing, which would be a positive development.

IV SPECTRUM POLICY

In terms of telecommunications resources, the central government is attempting to carry out uniform planning, centralised administration and reasonable allocation, and to implement a system of use with compensation. Telecommunications resources are resources that have telecommunications functions, and are limited in amount, including, inter alia, RFs, satellite orbit locations and telecommunications network codes.

A telecommunications operator that occupies or uses telecommunications resources shall pay telecommunications resource fees. MIIT is the major government body responsible for formulating specific measures for fee collection for use of telecommunications resources. When MIIT allocates telecommunications resources, it needs to consider factors including telecommunications resource planning, usage and expected service capability. The allocation of telecommunications resources may be made either by designation or by auction. To date, no auctions have been conducted.

Without the approval of MIIT, an operator may not unilaterally use, transfer or lease out telecommunications resources or change the use of telecommunications resources. After a user of telecommunications resources obtains a telecommunications network code, the major telecommunications operators or other relevant parties shall be obligated to take the necessary technical measures to cooperate with such user of telecommunications resources to allow it to achieve the functionality of its telecommunications network code resources.

V MEDIA

i Restrictions on the provision of service

China has systematic restrictions on TV and radio content provision and transmission.

Radio or television stations shall be established by the administrative departments for radio and television under the people's governments, and educational television stations may be established by the administrative departments for education under the people's governments at or above the level of a city divided into districts or counties. No other entity or individual may establish radio or television stations.

An entity that intends to establish a cable television station shall obtain the preliminary consent of the competent department of radio and television of the province and apply for the approval of the National Radio and Television Administration. Upon approval, a permit to establish a cable television station shall be issued by the National Radio and Television Administration to the applying entity. An entity that intends to establish a small cable television station shall obtain the preliminary consent of the competent department of radio and television of the county, and apply for the approval of the competent department of radio and television of the province. Upon approval, a permit to establish a small cable television station shall be issued by the competent department of radio and television of the province to the applying entity.

An entity or individual that intends to set up master antenna television shall report to the department of radio and television of the district or county for its records.

An entity that intends to utilise its existing ground satellite receiving facilities or install special ground satellite receiving facilities to receive television programmes transmitted via foreign satellites shall apply in writing to the competent department at or above the provincial level. If consent is granted thereto upon examination, the applying entity shall proceed to submit the application for examination and approval to the department (or bureau) of radio and television of the province, autonomous region or municipality directly under the central government where the applying entity is located. Upon this approval, a permit to receive television programmes transmitted via foreign satellites shall be issued to the applying entity, and the case shall be reported by the examining and approving authorities to MIIT, the National Radio and Television Administration, the Ministry of Public Security and the Ministry of State Security for their records.

ii Internet-delivered video content

An entity that intends to provide internet audio and video programme-related services shall obtain a permit for audio and video programmes transmitted through an information network issued by the competent radio and television authority, or go through the formalities for registration in accordance with the provisions of these regulations.

No entity or individual that has not obtained a permit issued by the competent radio and television authority, or that has not gone through the formalities and legal steps for registration in accordance with the relevant laws and regulations, may provide internet audio and video programme-related services.

As internet access is very common in China and because of technology development, ICPs pay great attention to the protection of their contents' copyright. ICPs may include large platforms providing audio and video content to consumers, or personal media. ICPs take technical measures to prevent copyright infringement. More and more lawsuits related to the right of communication through the information network (a subclass of copyright under the Copyright Law of China) are being filed to fight against the unauthorised use, reproduction or transmission of internet contents. The amount of compensation being awarded in these types of cases is getting higher, especially in judgments of the intellectual property courts in Beijing, Shanghai and Guangzhou that focus on the protection of copyright ownership of internet content.

VI THE YEAR IN REVIEW

i Further promotion of the application and development of big data and cloud computing

China's cloud computing, big data, IoT, mobile internet, and other new generations of information and communication technology and new commercial formats, have achieved rapid development in recent years, and are driving the consumption of information and China's economic growth. Especially under its Internet + policy, China has vigorously fostered an information economy.

China has issued many policies focusing on the application and development of information technology, including:

  1. Made in China 2025;
  2. the Opinion of the State Council on the Promotion of Cloud Computing Innovation and Development of New Formats of the Information Industry;
  3. the Guide of the State Council on Actively Promoting the 'Internet +' Policy; and
  4. the Opinion of the General Office of the State Council on Use of Big Data to Strengthen the Services and Supervision of Market Entities.

These policies will have far-reaching influences on the big data industry and the continued healthy development of the internet industry in the country.

On 7 January 2016, the Development and Reform Commission issued the Notice on Organising and Implementing Major Projects for Promoting the Development of Big Data to promote the development of big data through reliance on the major national construction project libraries. This policy clearly expresses four major development directions for big data projects to support:

  1. big data demonstration applications;
  2. big data sharing development;
  3. the overall development of infrastructure; and
  4. the flow of data elements.

In 2017, MIIT issued the Project Plan of Development of Cloud Computing (2017–2019). This policy will promote the rapid and healthy development of cloud computing from the aspects of improving technology levels, enhancing industrial capabilities, promoting industry applications, ensuring network security and creating an industrial environment.

Finally, in July 2018, MIIT issued the Guide on Promotion of the Cloud Computing of Enterprises. This policy also encourages enterprises to develop cloud computing abilities and big data usage.

ii Cyberspace administration issues the new Cyber Security Law

On 7 November 2016, the Standing Committee of the National People's Congress voted to pass the Cybersecurity Law, which constitutes the basic law of cyberspace security management in China. It became effective on 1 June 2017. The Cybersecurity Law adopts the principle of limited extraterritorial jurisdiction. In response to growing global cybersecurity threats, the legal responsibility of overseas subjects engaged in intrusions, attacks or other activities that are harmful to critical information infrastructure within the territory of China that cause serious consequences shall be investigated according to the law, and China's law enforcement agencies have rights to implement punitive measures, including assets freezes.

The legal system concerning cybersecurity management in China is constituted by the Cybersecurity Law and some other laws and regulations, including, inter alia, the following:

  1. the National Security Law;
  2. the Counterterrorism Law;
  3. the Criminal Law;
  4. the Cryptography Law;
  5. the Public Security Administration Punishments Law;
  6. the Decision of the Standing Committee of the National People's Congress on Strengthening Information Protection of Networks;
  7. the Decision of the Standing Committee of the National People's Congress on Preserving Computer Network Security;
  8. the Regulations of the People's Republic of China on Protecting the Safety of Computer Information Systems; and
  9. the Administrative Measures for Internet Information Services.

Considering that the Cybersecurity Law is a framework law, some supporting laws and regulations (including national standards) are published, and some will be formulated and implemented in the future. In the next few years, cybersecurity will remain a key point both in terms of legislation and law enforcement.

iii Further opening up of the market to foreign capital

The Negative List of Access of Foreign Investment (2018) issued by the Ministry of Commerce was drafted based on the Foreign Investment Industrial Guidance Catalogue (2017), and is the first negative list regarding foreign investment in China. This policy greatly relaxes market access for foreign investment, as it expands and enhances the scope and extent of China's multi-industry openness to foreign investment. These new opening measures will further deepen China's investment cooperation with other countries and regions, and enable the carrying out of broader investment, technology, management and talent exchanges, thus achieving a wider scope of mutual benefits and a win-win situation.

VII CONCLUSIONS AND OUTLOOK

To fulfil China's commitments to the World Trade Organization, we believe that the VATS market will be gradually opened up to foreign investors. Although internet content services (including blogs, instant messenger, TV, radio, online games, online music and internet news) have some restrictions on foreign investment, it can be seen that the government has plans to allow foreign investment in these areas, such as cancelling the restriction on foreign investment in internet cafes.

From the recent policies and regulations issued by the central government on free trade zones, we can see that the government is more willing to open more sectors and shareholdings of telecoms services to foreign investors; which is good news for foreign IT and telecoms enterprises aiming to enter the Chinese market.

China's regulation of the TMT sector remains quite complex and is rapidly changing; therefore, when an entity enters into this market, it is advisable to seek legal advice from professional TMT lawyers.


Footnotes

1 Jihong Chen is a partner at Zhong Lun Law Firm.