An Overview of People’s Republic of China’s Cybersecurity Law

The Cybersecurity Law of the People’s Republic of China was adopted at the 24th Session of the Standing Committee. China’s Cybersecurity Law applies to network operators and businesses in critical sectors. It is to be noted that businesses affected by the Cybersecurity Law are not limited to those in the information technology (IT) industry.

According to the China Briefing, cybersecurity Law defines network operators as network owners, managers, and network service providers. In fact, nowadays, the vast majority of enterprises employing networks are in line with the definition of network operators, and therefore are subject to corresponding responsibilities and obligations.

 

The Cybersecurity Law of the People’s Republic of China was adopted at the 24th Session of the Standing Committee of the 12th National People’s Congress on 7 November, with 154 affirmative votes and one abstention. The Cybersecurity Law will come into effect on 1 June 2017.

 

Scope of China’s Cybersecurity Law

It is safe to assume that any company (regardless of size and domestic or multinational extent) operating its network – including websites and internal and external networks – to conduct business, provide a service or collect data in China could very likely be in scope.

The Cybersecurity Law applies to network operators and businesses in critical sectors. The law requires network operators to cooperate with Chinese crime or security investigators and allow full access to data and unspecified “technical support” to the authorities upon request. The law also imposes mandatory testing and certification of computer equipment for critical sector network operators.

Penalties for Violating Cybersecurity law of China
Under the criminal law Peoples Republic of China, cybercrimes are mainly provided in the “Crimes of Disturbing Public Order” section. Articles 285, 286, and 287 are the three major articles that directly relate to cybercrime. The punishment for violating articles 285, 286, and 287 include imprisonment, detention, and fines. An offender if convicted guilty may have to serve imprisonment up to seven years for illegally obtaining data from a computer.

 

According to Article 5: The State measures to monitor, prevent, and handle cybersecurity risks and threats arising both within and without the mainland territory of the People’s Republic of China. The State protects critical information infrastructure against attacks, intrusions, interference, and destruction; the State punishes unlawful and criminal cyber activities by the law, preserving the security and order of cyberspace.

How does the Cybersecurity Law apply to businesses?

The “cybersecurity” in the Cybersecurity Law should be understood in the broad sense. The Chinese cybersecurity law includes a whole range of other domains including:

  • Information Security
  • Control System Security
  • Computer Security
  • Communication Security
  • Automation

 

It is to be noted precisely that the businesses affected by the Cybersecurity Law are not limited to those in the information technology (IT) industry.

 

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Pandemic Can’t Stop the Growth of IP Filings in China

China saw an increase in patent filings, more efficient intellectual property services, and stronger IP protection last year despite the novel coronavirus outbreak. The continued growth of foreign IP applications shows the confidence of foreign investors in the Chinese market as well as China’s progress in IP protection and the business environment.

 

Japan, the United States and Germany topped the list of the most patent filings in China last year, according to China’s National Intellectual Property Administration (NIPA).

The country granted 530,000 patents for inventions in 2020. It brought the total number of valid invention patents on the Chinese mainland to 2.21 million, said Hu Wenhui, spokesman for the National Intellectual Property Administration.

According to China Daily, since 2019, China has promulgated a series of laws, regulations and IP protection guidelines, including the Foreign Investment Law, to create a fairer, more transparent and predictable business environment for foreign investors.

“This continued growth of foreign IP applications shows the confidence of foreign investors in the Chinese market as well as China’s progress in IP protection and business environment,” said Dong Tao, a law professor at Beijing International Studies University.

For the third consecutive year, China-based telecoms giant Huawei Technologies, with 4,411 published PCT applications, was the top corporate filer in 2019. It was followed by:

 

  • Mitsubishi Electric Corp. of Japan (2,661)
  • Samsung Electronics of the Republic of Korea (2,334)
  • Qualcomm Inc. of the U.S. (2,127)
  • Guang Dong Oppo Mobile Telecommunications of China (1,927)

 

Filings are supported by generous subsidies provided by local governments.  For example, Shanghai city provides 50,000 RMB in subsidies (~$7,100 USD) for each foreign patent granted (up to five) through a PCT application.  Further, the Pudong District of Shanghai and the Zhangjiang Hi-Tech Park each provided 100,000 RMB in rewards for foreign patent grants (the policies have since been removed from their respective websites).

 

WIPO’s head, Francis Gurry, told a news conference China’s success was “down to a very deliberate strategy on the part of Chinese leadership to advance innovation and to make the country a country whose economy operates at a higher level of value.

The “extraordinary volume” of IP applications reflects the importance of intellectual property in the contemporary economy, he said. IP applications are mainly driven by innovation and globalization, by the policy focus on innovation around the world, and the fact that innovation is increasingly the battleground for economic advantage, he explained.

Technology and Innovation in China’s Path to 2035

 

Figures from the China Semiconductor Industry Association show that China’s IC industry recorded double-digit growth in the first nine months of 2020. The industry’s sales topped 590.5 billion yuan ($91 billion) during the period, up 16.9 percent year-on-year. More than 40 percent of sales came from the IC design sector.

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