September 21, 2021

Volume XI, Number 264

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September 20, 2021

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China Passes New Data Privacy and Security Laws

The People’s Republic of China (China), has been active lately in passing several new laws and regulations relating to data privacy and security. Here are 2 of the recent laws which tend to focus more on those handling data national security and/or public interest (ala Critical Information Infrastructure or Important Data).

Data Security Law:

On June 10, 2021, The National People’s Congress Standing Committee of the People’s Republic of China passed the Data Security Law (“DSL”). The key focus of the DSL is the protection and security of critical data relating to national security and the public interest. The most significant element of the law is the so-called data classification system whereby the government will classify different types of data based on its level of importance and then publish a protection/security standard for each class of data. DSL also sets out certain general security obligations for data processors at large. Given the law is broad in nature, the immediate impact for companies may be limited. We expect to see implementing guidelines and standards to follow.

It is our expectation at present that DSL will have more impact on companies that possess data relating to national security and the public interest, including those with a large volume of personal data, critical infrastructure and critical industries, such as financial, medical and key technologies. We recommend that each company evaluate the type of data it processes and work with legal counsel to determine the level of requirements applicable. The DSL will take effect from September 1, 2021.

Security Protection Regulations on Critical Information Infrastructure:

On August 17, 2021, the State Council of the People’s Republic of China released the Security Protection Regulations on Critical Information Infrastructure (the “CII Regulation”). The CII Regulation is an implementing rule of the Cybersecurity Law (“CSL”). It applies only to Critical Information Infrastructure (“CII”), which refers to the network and IT system that are critical to national security and public interest, but may also have implications for companies that supply or service such networks and systems. Operators of CII are subject to much stricter rules in terms of data security and cross-border data transfer. Compared with CSL, the CII Regulation does not introduce any material new development in this regard. There are no rules or public guidelines as to what network or IT systems are viewed as CII. The relevant government authority is supposed to evaluate and make decisions on a case-by-case basis, and a company, if determined to be a CII operator, will be informed of such decision. Nevertheless, we recommend companies conduct a self-evaluation from the following two aspects: (1) the nature of its businesses, and the type of data it processes, to evaluate the potential risk of being deemed to be a CII operator, and (2) if any of its customers may be deemed to be a CII operator, as the procurement of CII operators may be subject to a security assessment. The CII Regulations will take effect from September 1, 2021.

We further note China’s new Personal Information Protection Law, a draft of which we previously summarized, has just been passed. We will provide an update on its final version shortly.

© Copyright 2021 Squire Patton Boggs (US) LLPNational Law Review, Volume XI, Number 235
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About this Author

Ju (Lindsay) Zhu Partner   Shanghai
Partner

For more than a decade, Ju (Lindsay) Zhu has focused her practice on cross-border mergers and acquisitions, joint ventures and commercial transactions, including strategic partnerships, private equity and venture investments.

In addition to her experience in counseling offshore companies on their investments and restructurings in China, Lindsay is increasingly involved in counseling Chinese private- and state-owned enterprises on outbound investments. She served as the principal transaction counsel on one of China’s largest investments in Spain in 2016.

86-21-6103-6303
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