China TMT: Bi-Monthly Update – March & April 2023 Issue.

This newsletter summarizes the latest developments in technology, media, and telecom in China with a focus on the regulatory, enforcement, and industry developments in this area.

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Follow the links below to view the official policy document on the People’s Republic of China Government websites.

Legislative Developments

1. SAMR issued Measures on Administration of Internet AdvertisingOn March 24, the State Administration for Market Regulation (SAMR) revised and issued the Measures on the Administration of Internet Advertising (the “Internet Advertising Measures“), to take effect from May 1, 2023. In response to the changing landscape of China’s internet advertising industry, the Internet Advertising Measures incorporate amendments to the original interim measures and innovative regulatory rules. The Internet Advertising Measures further clarify the responsibilities of internet advertising-related business entities, specify the do’s and don’ts for online advertising, and strengthen the regulatory measures. These changes are of great significance in maintaining the market order of online advertising and promoting the standardized, healthy, and sustainable development of the digital economy.
   
2. SAMR published Law Enforcement Guidelines on Absolute Terms in AdvertisementRecently, the SAMR published the Law Enforcement Guidelines on Absolute Terms in Advertisement (the “Absolute Terms Guidelines“), which will serve as a reference for market regulators in their supervision and enforcement of absolute and superlative terms used in advertisement. The Absolute Terms Guidelines have been designed to consider the practices of advertising supervision and enforcement and address the related complex and topical issues. Specifically, the Absolute Terms Guidelines clarify the boundary of legal application, establish the general principles for enforcement and supervision, and regulate the discretionary power.
   
3. Beijing issued Compliance Guidelines for Celebrity Commercial EndorsementsRecently, the Beijing Municipal Administration for Market Regulation issued the Compliance Guidelines for Celebrity Commercial Endorsements (the “Beijing Guidelines“). Divided into six parts, the Beijing Guidelines underscore the need for celebrity endorsement of commercial advertisements to conform to applicable advertising laws and to adhere to the industry’s self-regulatory framework for relevant codes of practice. According to the Beijing Guidelines, when celebrities recommend or validate goods or services in commercial advertisements through images, language, words, or actions, it shall be considered as an advertising endorsement.
   
4. CAC released Management Measures for Generative AI Services (Draft for Comments)On April 11, the Cyberspace Administration of China (CAC) released the Management Measures for Generative AI Services (Draft for Comments) (the “Management Measures“) for public comments. According to the Management Measures, generative AI service providers must comply with applicable laws and regulations and respect social morality, public order, and good customs. The Management Measures also contain provisions on the obligations of generative AI providers, covering a range of areas including content generated, security assessment declaration and algorithm filing, legality of training data, manual labelling rules and personnel management, user identity verification, user information security protection, complaint handling mechanism, content filtering and processing, and relevant responsibilities.
   
5. MOST issued Measures for Science and Technology Ethics Reviews (For Trial Implementation) (Draft for Comments)On April 4, the Department of Supervision and Scientific Integrity of the Ministry of Science and Technology (MOST) issued the Measures for Science and Technology Ethics Reviews (For Trial Implementation) (Draft for Comments) (the “Review Measures“). Divided into five chapters, the Review Measures contain a comprehensive set of general rules that outline the procedures, standards, and conditions for regulating science and technology ethics reviews in a range of areas. The Review Measures underscore the importance of promoting responsible innovation, adopting a problem-oriented approach, and strengthening the alignment of different laws and regulations.
   
6. Standardized Guidelines for AI Ethics Governance was releasedRecently, the Standardized Guidelines for AI Ethics Governance (the “AI Ethics Guidelines“) were officially released, led by the China Electronic Standardization Institute and jointly completed by the National Artificial Intelligence Standardization General Group and the Artificial Intelligence Sub-Technical Committee of the National Information Security Standardization Technical Committee. The goal of the AI Ethics Guidelines is to establish a standard framework for AI ethics governance and develop detailed standards, which will lay a solid foundation for standardising AI ethics governance in China.
   
7. Shanghai issued Standards for Graded and Categorised Use of Facial Recognition in Public Places (Draft for Comments)On March 29, the Shanghai Municipal Administration for Market Supervision (Shanghai AMS) issued the Standards for the Graded and Categorised Use of Facial Recognition in Public Places (Draft for Comments) (the “Facial Recognition Standards“). The Facial Recognition Standards are the first set of local rules in China to codify the management of facial recognition technology in public places. In compliance with the Personal Information Protection Law and the Data Security Law, as well as the fundamental principles for the collection and handling of facial recognition data in public places, the Facial Recognition Standards categorise the use of the technology under different scenarios and grade the risks according to the purpose of the use of facial recognition and the size of the database.
   
8. Hangzhou released Management Measures for Testing and Application of Intelligent Connected VehiclesOn April 12, Hangzhou Municipal People’s Government released the Management Measures for the Testing and Application of Intelligent Connected Vehicles in Hangzhou (the “Hangzhou Measures“). The Hangzhou Measures aim to (1) support intelligent connected vehicle enterprises in forming industrial alliances, conducting generic technology research and development, and promoting industry self-regulation; (2) prioritise the testing and application of intelligent connected vehicles in logistics and distribution, short-haul and feeder transport, intelligent public transportation, sanitation services, and road maintenance; and (3) incorporate intelligent construction of road infrastructure into urban road planning and promote the coordinated development of intelligent city infrastructure and intelligent connected vehicles.
   
9. MIIT issued Regulation on Handling of Reports of Illegal Activities in Telecommunications SectorOn March 13, the Ministry of Industry and Information Technology (MIIT) issued the Regulation on Handling of Reports of Illegal Activities in the Telecommunications Sector (the “Report Regulation“), which will take effect on June 1, 2023. The purpose of the Report Regulation is to regulate the handling of reports of illegal activities in the sector, maintain order in the telecommunications market, and to protect the legitimate rights and interests of relevant users. The Report Regulation outlines the requirements for the acceptance and handling of reports and the measures to improve the processing procedures.
   
10. MIIT and seven other departments jointly issued Implementation Opinions on Promoting Evolution of IPv6 Technology and Innovative Development of its ApplicationRecently, the Implementation Opinions on Promoting the Evolution of IPv6 Technology and the Innovative Development of its Application (the “Implementation Opinions“) were jointly issued by eight departments, including the MIIT, the Office of the Central Cyberspace Affairs Commission (OCCAC), the National Development and Reform Commission (NDRC), the Ministry of Education (MOE), the Ministry of Transport (MOT), the People’s Bank of China (PBC), the State-owned Assets Supervision and Administration Commission of the State Council (SASAC), and the National Energy Administration (NEA). The Implementation Opinions put forward 15 key tasks covering five aspects, including building an IPv6 evolution technology system, strengthening the industrial foundation for IPv6 evolution and innovation, accelerating the evolution and development of IPv6 infrastructure, deepening the integrated application of “IPv6+” in key industries, and enhancing security and protection measures. Enforcement Developments
11. OCCAC enhanced crackdown on self-media disorderRecently, the OCCAC announced it would launch a two-month special action as part of the “2023 Operation Qinglang” campaign to crack down on self-media disorder. The special action, with a focus on platforms for social networking, short videos, and live streaming, is intended to address issues such as speculative rumour-mongering, counterfeiting, and illegal profit-seeking activities and create a healthier internet ecosystem in China.
    
12. CBIRC launched self-inspection and rectification of internet marketing and promotion activities in insurance industryRecently, the China Banking and Insurance Regulatory Commission (CBIRC) issued the Notice on Self-inspection and Rectification of Internet Marketing and Promotion Compliance by Sales Personnel of Insurance Institutions (the “Self-inspection Notice“). The Self-inspection Notice covers a broad scope of matters, ranging from insurance institutions to sales personnel, and covers all aspects of internet marketing. The CBIRC noted that insurance institutions should view this action as an opportunity to establish an audit mechanism and implement relevant requirements to protect the rights and interests of financial consumers. Additionally, the institutions should be committed to improving their management system of sales personnel, enhancing the compliance training on internet marketing and promotion, and establishing a sound mechanism for day-to-day supervision.
    
13. Beijing court ruled first case of large-scale crawling of short video platform datasets as unfair competitionIn a recent ruling, the Beijing Intellectual Property Court addressed a case involving large-scale crawling of the datasets from a short video platform, marking the first unfair competition dispute over data aggregates of such platforms in Beijing. The court’s ruling clarifies the legal nature and independent economic value of non-original datasets, distinguishing between the rights protected by copyright and the scope of legal interests of anti-unfair competition laws, focussing on the legal application of such laws in relevant cases. The ruling provides legal protection for the legitimate rights and interest of short video platform operators in their collection, storage, processing, and transmission of data.
    
14. Shanghai released first batch of representative cases of false and illegal advertising for 2023On April 13, the Shanghai AMS released the first batch of representative cases of false and illegal advertising for 2023. These cases included advertisements related to the vital areas of livelihood such as food, medicine and healthcare, medical services, beauty and makeup, investment and finance, education and training, and real estate. The Shanghai market regulator stated that it would continue to strengthen the management of both the online and offline advertising markets and severely punish illegal activities in accordance with the law. These efforts aim to maintain a fair and competitive market order, protect the rights and interests of consumers, and create a better market environment for the high-quality development of Shanghai’s advertising industry.
    
15. Beijing issued Guiding Opinions on the Pilot Application of High-Precision Maps for Intelligent Connected Vehicles in BeijingOn March 31, the Beijing Municipal Commission of Planning and Natural Resources and the Beijing Municipal Bureau of Economy and Information Technology jointly issued the Guiding Opinions on the Pilot Application of High-Precision Maps for Intelligent Connected Vehicles in Beijing (the “Guiding Opinions”), which take effect immediately and remain valid for three years. The Guiding Opinions outline the application scope of the high-precision maps and measures for improving government services and safety supervision, with an aim to promote the application of high-precision maps for intelligent connected vehicles and the development of the intelligent connected vehicle industry in the city. Industry Developments
16. CAICT released Report on Value-added Telecommunications Businesses Licensing Activities in China (March 2023)Recently, the China Academy of Information and Communications Technology (CAICT) released the Report on Value-added Telecommunications Businesses Licensing Activities in China (March 2023) (the “CAICT Report“). According to the CAICT Report, as of the end of March 2023, there were 145,656 license holders for value-added telecommunications businesses in China, an increase of 1.14% over the previous month. This included 31,266 cross-regional enterprises licensed by the MIIT and 120,180 local enterprises licensed by their respective local authorities, which reflected a 1.55% and 1.06% month-on-month growth, respectively.
    
17. Roland Berger released White Paper on Intelligent Vehicle SoftwareRecently, Roland Berger, an international management consultancy, released the White Paper on Intelligent Vehicle Software (the “White Paper”). The White Paper primarily explores the future trends in the value of single-vehicle software and its primary areas of value, the projected shifts in value by domain and layer up until 2030, research and development cooperation models between automakers and suppliers, and software development strategies for automakers. According to the White Paper, the value of single-vehicle software is likely to surpass CNY30,000 by 2030, with autonomous driving and cockpit domains becoming the core sources of value. While the value structure of the different software layers is not expected to change fundamentally soon, the trend towards software-defined vehicles is set to bring about a profound transformation in the automotive industry.
    
18. Shanghai officially launched formulation of Inspection Standards for Network Performance and Construction of 5G-enbaled IoV for High-level Autonomous DrivingOn March 31, the Shanghai Communications Administration (SHCA) organized and held a kick-off meeting for the Inspection Standards for the Network Performance and Construction of 5G-enbaled Internet of Vehicles (IoV) for High-level Autonomous Driving (the “Inspection Standards”). During the meeting, the SHCA introduced the background of the Inspection Standards, which are intended to fill the gaps in the industry standards and local standards for 5G-enabled IoV in China, regulate the building of the support facilities for driverless vehicles in the city, and further promote the development of intelligent connected vehicle application and industrial clusters within the city.
    
19. PCAC released Initiative on Cautious Use of ChatGPT and Equivalent Tools by Payment Industry PractitionersOn April 10, the Payment & Clearing Association of China (PCAC) released on its website the Initiative on the Cautious Use of ChatGPT and Equivalent Tools by Payment Industry Practitioners (the “ChatGPT Initiative“). The ChatGPT Initiative noted that ChatGPT and other similar services have recently gained widespread attention and used by some enterprise employees in the industry in their work. However, such intelligent tools are vulnerable to cross-border data leakage and other risks. In response to this, the PCAC has issued the initiative to effectively manage risks, protect customer privacy, maintain data security, and improve data security management in the payment & clearing industry. Specifically, the ChatGPT Initiative calls for (1) raising awareness and lawfully using intelligent tools; (2) avoiding the uploading of critical sensitive information; and (3) strengthening internal management and guidance within member organisations.
    
20. CAPA released Terminology for Online Performances and Short Videos

Recently, the China Association of Performing Arts (CAPA) released the Terminology for Online Performances (Live Streaming and Short Videos) (the “Terminology“). The Terminology defines for the first time the concepts related to live streaming and short video platforms, talent agencies, as well as live streamers. The aim is to avoid ambiguity or misunderstandings in the exchange of information by establishing a set of standardised terminology and definitions. In the next phase, the Technical Committee of the CAPA will, under the guidance of competent authorities, conduct further research on group standards in related fields to promote greater collaboration and partnership within the performance industry.