China’s New Comprehensive Data Protection Law: Context, Stated Objectives, Key Provisions
The National People’s Congress (NPC) of China adopted on August 20, 2021 the first Chinese comprehensive data protection law, the Personal Information Protection Law (PIPL), less than a year after the first draft of the law was published. The NPC thus concluded its legislative process that saw two additional markups of the law since October of last year. The PIPL will go into effect on November 1, 2021, but many companies within China are already coordinating with relevant enforcement agencies to comply. The adoption of the PIPL occurs in the wake of enhanced scrutiny over the tech sector by the Chinese government, and within a year from the entering into force of the new Civil Code which includes specific provisions for the protection of personal information.
The PIPL represents one pillar of China’s emerging data protection architecture that includes a myriad of other laws, industry-specific regulations, and standards. For instance, the recently enacted Data Security Law (DSL) sets forth a comprehensive list of requirements regarding the security and transferability of other types of data. It also establishes a “marketplace for data” to enable data exchange and digitalization. Additionally, the PIPL explicitly references China’s Constitution to provide a more firm legal basis for the implementation of its data protection goals (Art. 1). As such, the PIPL should not be viewed in isolation but rather examined in relation to these other regulatory tools that serve complimentary, albeit different purposes.
The PIPL will mainly serve as China’s comprehensive data protection law, following in this respect the European approach which clearly distinguishes the protection of privacy from the protection of individuals with regard to the processing of their personal information (“data protection”). Its officially declared aims are thus:
- to protect the rights and interests of individuals (为了保护个人信息权益),
- to regulate personal information processing activities (规范个人信息处理活动),
- to safeguard the lawful and “orderly flow” of data (保障个人信息依法有序自由流动),
- to facilitate reasonable use of personal information (促进个人信息合理利用) (Art. 1).
Throughout the legislative process, experts and privacy professionals have contributed to the work of the legislator, based among other things on their experience resulting from the implementation of EU’s General Data Protection Regulation (GDPR), which served as a reference in this exercise as in the drafting of previous renditions of data protection regulation such as the Personal Information Specification. It should be noted that it is not unusual for Chinese lawmakers to draw inspiration from texts and codes from European continental law traditions, China itself being a civil law jurisdiction.
The PIPL however serves several other objectives, which distinguishes it from the majority of data protection laws adopted to date around the world. Like its previous preparatory versions, the law has a distinct ‘national security’ flavor, particularly around its provisions on localization and cross-border transfers.
The law also incorporates provisions that affirm China’s intention to defend its digital sovereignty: overseas entities which infringe on the rights of Chinese citizens or jeopardize the national security or public interests of China will be placed on a blacklist and any transfers of personal information of Chinese citizens to these entities will be restricted or even barred. China will also reciprocate against countries or regions that take “discriminatory, prohibitive or restrictive measures against China in respect of the protection of personal information” (Art. 43).
Last but not least, the PIPL clearly states China’s ambition to take a full part in international data protection discussions and thus assert its influence commensurate with the size of its economy and its growing technological capabilities. In particular, PIPL states China’s aims to actively contribute to the setting of global data protection standards ‘with other countries, regions, and international organizations’ (Art. 12). Related provisions of the PIPL echoe the stated ambitions of influencing international negotiations which relate directly or indirectly to international data transfers. The relevant provisions should therefore be read in the broader perspective of the Belt & Road Initiative (BRI) and the provisions relating to data transfers included in the Regional Comprehensive Economic Partnership (RCEP), conceived as a “regional backup” of negotiations on WTO e-trade rules, or so-called JSI negotiations.
Overview of the PIPL
At a broader level, like most data protection laws modelled after the GDPR and other modern data protection laws, the PIPL sets forth a range of obligations, administrative guidelines, and enforcement mechanisms with respect to the processing of personal information. For instance it applies to very broadly defined “personal information” (PI) – which includes the “identifiable” element from the GDPR, includes lawful grounds for processing after the GDPR model, but with “legitimate interests” notably missing, and applies to “handling” of PI which includes “collection” of PI, meaning that a lawful ground is needed even before touching the data.
Additionally, the PIPL has rules for “handlers”, “joint handling” and “entrusted parties” with handling on behalf of the handlers (controllers, joint controllership, processors), including agreements to be put in place similarly to Art. 26 and Art. 28 agreements in the GDPR. It likewise applies in the public sector, as well as in the private sector, and has data localization requirements with regard to PI processed by state organs, critical infrastructure operators, and other handlers reaching a specific volume of PI processed.
The law regulates personal information transfers outside of China by imposing obligations on handlers before transferring data abroad such as complying with a security assessment by relevant authorities. It also mandates risk assessments (similar to a Data Protection Impact Assessment) for specific processing including automated decision-making and handling that could have “a major influence on individuals.” Data handlers must also appoint Data Protection Officers (DPOs) in specific situations, depending on the volume of PI processed, and conduct regular compliance training.
Individuals are granted an extensive number of “rights in personal information handling activities”. The PIPL provides for individual rights very similar to GDPR’s “rights of the data subject”, such as erasure and access, and it specifically includes a right to obtain explanation and a right to data portability, the latter being introduced late in the third version of the draft law.
Finally, the PIPL has a complex system of enforcement, including fines (that can go up to 5% of a company’s turnover) and administrative action (including orders to stop processing, or confiscation of unlawfully obtained profit), individual rights to obtain compensation, and civil public interest litigation cases through a public prosecutor.
The PIPL is divided into eight substantive chapters. Below we summarize the key aspects of the law and provide preliminary analysis.
1. Covered Data: Personal Information, Sensitive Information
The law applies to “handling” of “personal information”, both in the private and public sectors. Unlike the GDPR and its Article 4, the PIPL contains no general provision defining key terms of the law. Rather, notable definitions are scattered throughout the text and sometimes included directly in a more specific provision. Most of the definitions contained in the law are similar to, or using some identical wording to that of the GDPR, with notable variations.
Broad Definition of Personal Information (个人信息)
Personal information (PI) refers to “all kinds of electronic or otherwise recorded information related to an identified or identifiable natural person” (Art. 4). This definition largely mirrors the one set forth under the Cybersecurity Law and Chinese Civil Code, which define personal information as “the various types of electronic or otherwise recorded information that can be used separately or in combination with other information to identify the natural person.” Relatedly, it resembles the broad definition of “personal data” in the GDPR as “any information relating to an identified or identifiable natural person.”
Open List of Sensitive Information (敏感个人信息).
The law further specifies that sensitive information means “personal information that once leaked or illegally used may cause discrimination against individuals or grave harm to personal or property security, including information on race, ethnicity, religious beliefs, individual biometric features, medical health, financial accounts, individual location tracking, etc.” (Art. 28). Information handlers may only process sensitive personal information for specific purposes and when sufficiently necessary (Art. 28). Handlers shall further obtain specific consent if they rely on individual consent for processing (Art. 29).
Notably, the definition of sensitive information diverges from the GDPR’s “special categories” of personal data, which is a closed list of specific types of personal data (see Article 9). The PIPL has an open list of sensitive data, centering its definition around the notion of harm and the data’s potential discriminatory impact on individuals. Unlike the GDPR, the PIPL contains no specific provision regarding the processing of PI related to criminal convictions and offences. In contrast, financial information and location data are included in the scope of sensitive PI, to the effect of subjecting their handling to obtaining the individual’s specific consent. The extension of the scope of sensitive information to cover financial information has been noted in other jurisdictions like India.
Finally, the PIPL treats biometric data as sensitive PI. This qualification resonates with the specific provisions in the law on facial recognition (see below).
De-identification and Anonymization are Defined Separately
“De-identification” and “anonymization” are defined in the very last substantive provision of the PIPL (art. 73), with anonymized PI being specifically excluded from the material scope of the law (Art. 4).
- De-identification (去标识化) is defined similarly to the GDPR’s pseudonymization and it refers to the “process of personal information undergoing handling to ensure it is impossible to identify specific natural persons without support of additional information” (Art. 73). The PIPL does not define de-identification for any other purpose than to list de-identification among the technical security measures which PI handlers may use to comply with security obligations (Art 51).
- Anonymization (匿名化) refers to the “act of personal information handling to make it impossible to identify specific natural persons and impossible to restore”; PI which has been anonymized is specifically excluded from the scope of the law; in addition, third parties are prohibited to try and re-identify anonymized information they receive from handlers.
Personal Information Handling (个人信息的处理) Defined Broadly to Cover the Entire Lifecycle of PI
PI handling includes “the collection, storage, use, processing, transmission, provision, publishing, and other such activities” of personal information (Art. 4). This resembles the definition of processing under the GDPR and it means that the rules proposed in the law apply to the collection of PI as well as to the use of PI. Since the law includes lawful grounds for handling PI (see below), this means that such grounds must be in place before a handler collects the data.
2. Covered Actors, both in the Public and Private sectors
Information Handler or “Controller” (个人信息处理者); “Entrusted parties”/Processors;
Conventionally the law has rules on controllers, joint controllers and processors. Parties or individuals become personal information handlers when they “independently determine the purposes and means for handling of PI.” (Art. 73). PI handlers appear to function in a similar manner under the Chinese draft law as data controllers under the GDPR. Note that the law nor any other legislation in China specifically uses the term “controller” (控制者).
The law also provides rules on joint controllership, “where two or more PI handlers jointly decide on a PI handling purpose and handling method”. Joint handlers have to “agree” on the rights and obligations of each, and the agreement should not affect the possibility for an individual to exercise their rights against any of them; they are also jointly liable for breaches (Art. 21).
Handlers can entrust handling of PI to third parties under very similar conditions to the controller-processor relationship in the GDPR. They have to conclude an agreement, which has to refer to the purpose of the entrusted handling, the handling method, categories of PI, the rights and duties of both sides etc., including ways to “conduct supervision of the PI handling activities of the entrusted party” (Art. 22); this resembles the audit clause in Art. 28 GDPR agreements.
Finally, If the data processing agreement with a third party becomes ineffective or invalid or is otherwise terminated, the third party must not store the personal information and either return it to the data handler or delete it (Art. 21).
Public and Private Sectors Covered
Similarly to GDPR’s household exemption, the PIPL does not apply to processing by natural persons for their personal or family affairs (Art. 72). The PIPL further applies to processing activities in both the private and public sectors.
No private organization is exempt from the scope of the law; on the other hand, certain companies (“those who provide important Internet platform services, a large number of users, and a complex type of personal information processor”) are subject to reinforced obligations (see below).
In the public sector, all “state organs” (i.e. public authorities and agencies, at central, provincial or municipal levels, including the courts and lawmaking bodies) must abide by a specific set of obligations with regard to the handling of PI in the context of the performance of their statutory duties (Art. 34). These rules apply alongside the wide array of information management rules which apply to the Chinese administration.
The same obligations apply to organisations which handle PI on behalf of state agencies based on specific laws or regulations (Art. 37). This includes notifying individuals and obtaining their consent when handling PI (for instance to share PI between administrations), unless notification will impede the performance of their statutory obligations, or specific statutory rules impose secrecy (Art. 18 & 35). State agencies must store the PI they process in China and can only transfer such data overseas “if it is really necessary to provide the PI overseas” and after undergoing a security risk assessment that “may require support and assistance from relevant departments” (Art. 36).
State agencies that fail to comply with the law will be subject to oversight from a superior authority and will have to make corrections in their processing activities (Art. 68). The individuals directly responsible or in charge of the agency’s decisions that lead to non-compliance face personal liability for their actions, including termination, suspension, and fines (see below).
3. Territorial Scope, with Extraterritorial Long Arm
The PIPL principally applies to organizations and individuals’ handling PI of natural persons within the jurisdiction of China. This applies to any organization or person physically within the borders of China.
Article 3 of the law extends the territorial scope of the law to processing activities by handlers established outside of China, similarly to the GDPR, if one of the following circumstances is present:
- Where the purpose is to provide products or services to natural persons inside the border;
- Where conducting analysis or assessment of activities of natural persons inside the borders;
- Other circumstances provided in laws or administrative regulations.
This third paragraph has no direct equivalent in GDPR and leaves a margin of discretion to the public authorities to further extend the long-arm jurisdiction of the law in cross-border scenarios.
The law requires handlers outside of China that process personal information of covered persons to establish a dedicated entity or appoint a representative within China to be responsible for matters related to their information processing (Art. 52). Such entities must provide the name and contact method of the representative to the relevant departments responsible for implementing the law.
4. Lawful Grounds and Personal Information Protection Principles
PI handlers must have a valid legal basis to handle PI from one of the following circumstances (Art. 13):
- Obtaining the individuals’ consent;
- Where necessary to conclude or perform a contract to which the individual is an interested party or where necessary to comply with relevant labor regulations or the execution of a collective contract to implement necessary human resources supervision (e.g., employee data).
- Where necessary to fulfill statutory duties and responsibilities or statutory obligations;
- Where necessary to respond to sudden public health incidents or protect natural person’ lives and health, or the security of their property, under emergency conditions;
- Handling personal information within a reasonable scope to implement news reporting, public opinion supervision, and other such activities for the public interest;
- Handling personal information publicly disclosed by an individual or other legally disclosed information within a reasonable scope, unless the individual expressly refuses or if there is a major influence on individual rights and interests.
- Other circumstances provided in laws and administrative regulations.
Like in GDPR, the seven legal grounds to process PI in Art. 13 are provided on an equal basis, meaning that there is no preferred order in which they should be relied on. This provision is significant because it distinguishes the PIPL from the data protection provisions previously applicable to the collection and processing of PI in China, including in the Cybersecurity Law and Civil Code, which are mainly centered on consent. This evolution will be welcomed by practitioners and legal scholars alike, who in China as elsewhere criticized overly relying on consent as an insufficient and artificial protection of the individual. The consent-centric framework was also criticized as being too rigid, with companies long advocating for additional legal bases, such as performance of a contract or legitimate interests, e.g. for anti-fraud purposes.
However, this list does not include the broad concept of the data handler’s “legitimate interests” as it has existed for more than twenty years in the EU data protection framework, and now in a significant number of data protection laws in Asia Pacific and other regions. It is nonetheless possible that further administrative regulations will add a similar ground for processing. The insertion in the final version of PIPL of specific provisions relating to the processing of employee data, in order to exempt the processing of their PI from the collection of their consent (Art. 13(2)), would be indicative of this development in the mind of the legislator. This provision built on precedents found in local regulations like the recent Shenzhen data regulation, which expand exceptions to consent for employers to process employees’ data for certain purposes.
Focus on Consent
Despite the evolution seen in relation to the addition of several other lawful grounds for handling data, consent is present throughout the law outside the legal bases provision. For example, the law includes a prohibition for handlers to disclose the PI they are processing, unless they obtain specific consent (Art. 25). When processing publicly available PI, handlers should only process them in a way that reasonably conforms with the purpose for which they were published and if they are processed for different purposes, the individual needs to be notified and asked for consent. Consent also plays a role in further uses of facial recognition installed in public venues, which is allowed as a matter of principle only for the purpose of ensuring public security (Art. 26).
The conditions for validity of consent are that it must be informed (given under a “precondition of knowledge” about the processing), and it must be given “in a voluntary and explicit statement of wishes” (Art. 14). Laws or administrative regulations may require “specific consent” or “written consent” for specific processing of PI (Art. 14).
Similar to the GDPR, individuals have the right to withdraw consent (Art. 15). Inspired by the “freely given” validity condition under the GDPR, the PIPL also provides that handlers may not refuse to provide products or services on the basis that an individual does not consent to the processing of PI or withdraws their consent, except in those situations where the PI is “necessary” for the provision of products or services (Art. 16). Handlers must provide a convenient way for individuals to withdraw consent and the withdrawal will not affect any processing activity that took place before consent was revoked (Art. 15)
Stringent Rules for Children PI
Handlers that process PI of children younger than 14 must obtain consent from parents (Art. 31). This marks a departure from earlier drafts that mandated obtaining consent only when the processor knew or should have known that the data subject was 14 or under. This provision was notably introduced in the 2018 PI Security Specification. The inclusion of a more strict standard also reflects the fact that such information now constitutes sensitive information under the PIPL and thus handlers must comply with additional requirements (see above). Lawmakers in China have recently concentrated on the online protection of minors: they have passed a revised Law on Minors with more stringent restrictions for companies that offer online services to minors and even taken recent enforcement actions in this space.
Personal Information Protection Principles
The PIPL recognises key data protection principles very similar to the Fair Information Protection Principles (FIPPs) and other data protection principles included in the GDPR:
- There is a principle of “sincerity” or “good faith”– which most likely is akin to the principle of fairness. The law further recognizes principles of lawfulness and necessity (Art. 5).
- There are rules on purpose limitation (Art. 6), including a requirement to process PI with a clear, reasonable and directly related purpose. There is also a minimization provision (Art. 6).
- The law references openness and transparency as overarching goals of personal information processing (Art. 7).
- The law also stipulates accuracy and accountability as guiding indicators (Art. 8-9).
- There is a provision that references storage limitation (Art. 19). Retention periods shall be the shortest period necessary to realize the purpose of the personal information handling.
5. Automated Decision-Making (自动化决策) and Facial Recognition
The PIPL contains specific provisions governing the use of Automated Decision-Making (ADM). Under the law, ADM refers to “activities that use personal information to automatically analyze, assess, and decide via computer programs, individual behaviors and habits, interests and hobbies, or situations relating to finance, health, or credit status.” (Art 73(2)).
The law mandates specific processing obligations:
- When conducting ADM with PI, handlers must guarantee transparency, fairness and reasonability of the result (Art. 24). If an individual believes ADM creates a major influence on their rights and interests, they may demand an explanation and refuse the sole use of such automated decision-making.
- Entities that use ADM to make targeted marketing offerings should simultaneously provide an option for individuals to receive information not based on personal characteristics or offer a convenient method of refusal (Art. 24).
- No unreasonable differences in transaction price or treatment may be imposed on individuals through ADM (Art. 24).
- Handlers must conduct a DPIA before offering such services through automated means (Art. 55).
Facial Recognition Rules for Public Areas
In public areas, the installation of image collection or personal identity recognition equipment must be used to safeguard public security and observe relevant State regulations (Art. 27). Safeguarding public security is the only legally recognized purpose for such activities and individuals must be notified of the information collection process. Information gathered in this way cannot be published or disclosed, except where individuals’ specific consent is obtained, or laws and regulations provide otherwise.
The provisions mirror a growing public awareness in China of the need to regulate the private use of facial recognition technology in public areas more strictly. For instance, in a famous case that received widespread attention both within and outside of China, a lawyer successfully sued a zoo for using the technology in order to monitor and admit guests. Although the plaintiff won on a theory of breach of contract, he was unable to change the zoo’s policy but plans to appeal the case to the highest court.
In addition, several cities have passed regulations limiting or banning the use of these technologies including Tianjin, Nanjing, and Xuzhou.
6. Rights for Individuals Over Their PI (Access, Erasure; Specific Right to Explanation, Portability)
Under the law, individuals should receive explicit notice “before handling” occurs and be provided with relevant information including the identity and contact method of the personal information handler, any subsequent third party handlers, the purpose and methods of PI handling, the categories of handled PI, the retention period, and procedures for individuals to exercise their individual rights under the law (Art. 17). Notably, Art. 18 specifies that handlers do not need to notify individuals if a state secrecy law is in place or under “emergency” circumstances, which could include threats to public security, health or safety.
The law stipulates that personal information handlers establish mechanisms to accept and process applications from individuals to exercise their rights (Art. 50). If the information handlers reject the request, they must explain the reason for doing so. The law recognizes the following rights:
- Right to know, decide, refuse, and limit the handling of their personal information by others, unless laws or regulations stipulate otherwise (Art. 44).
- Right to access and copy their personal information in a timely manner, except when the laws and regulations require confidentiality (Art. 45).
- Right to correct or complete inaccurate personal information in a timely manner (Art. 46).
- Right to deletion of (i) the agreed retention period has expired, or the handling purpose has been achieved; (ii) personal information handlers cease the provision of services; (iii) the individual rescinds consent; (iv) the information is handled in violation of laws, regulations or agreements (Art. 47).
- Right to request handlers explain their handling rules (Art. 48).
- Right to data portability to a designated handler (Art. 45, para. 3). Specific conditions for porting data will be determined by state cybersecurity and information departments.
These rights extend beyond an individual’s death and can be exercised by close relatives of the decedent, unless otherwise arranged by the decedent during their lifetime (Art. 49).
7. Obligations of Data Handlers related to Accountability: “DPIAs”, “DPOs”, Data Breach Notification, Training Obligations; Large Scale Distinctions
Chapter V provides for a number of obligations of PI handlers. Art. 52 stipulates that handlers that handle information reaching quantities outlined by the competent authorities must appoint persons responsible for PI protection and publish the name and contact details of such persons. When the handler discovers a personal information leak, they must immediately adopt remedial measures and notify competent authorities (Art. 57). Where adopted measures can effectively avoid data breach harms, information handlers do not have to notify individuals.
Handlers must conduct a personal information protection influence assessment to determine whether the handling purposes and methods are lawful, the influence such processing has on individuals, and whether the adopted security measures are adequate to ensure compliance (Art. 55). The assessment should take into account the handling of sensitive personal information, automated decision making, subsequent processing done by third parties, cross-border transfers, and other processing activities that have a significant impact on personal rights and interests.
Data handlers must also adopt corresponding technical security measures such as encryption, de-identification, etc.; determine operational limits for information handling, regularly conducting security education and training for employees, and regularly conducting compliance audits with specialized entities (Art. 54). Additionally, they must formulate and organize the implementation of incident response plans.
One of the new provisions of the law, introduced just before its adoption, targets large online platforms with specific obligations. Dedicated rules for large or very large online platforms are also the object of draft legislative measures in the EU (in particular the Digital Services Act). These new provisions in the PIPL require data handlers that provide platform services to a “large” number (用户数量巨大) of users and have complex business types (类型复杂) to (i) establish an independent organization to supervise processing activities; (ii) follow the principles of openness, fairness and justice; (iii) immediately cease their service offerings when in serious violation of the law; and (iv) regularly publish reports on social responsibility of PI handling (Art. 58). While the threshold amount under this article remains undefined, the most recent version of the law makes a clear distinction between large-scale Internet platforms and small-scale handlers.
8. Cross-Border Transfers and Data Localization
Transfers of PI outside the borders of China are regulated in Chapter III, with the stated objective of ensuring that the transfer of data outside of China must be protected to the same extent as under Chinese law. This chapter is emblematic of the diversity of the objectives pursued by the text as described earlier. In these provisions, the legislator seeks both to promote responsible data transfers that respect the rights and interests of Chinese citizens, on the model of other provisions relating to transfers in “traditional” data protection laws, and to defend China’s strategic interests.
All transfers must pass a necessity test (they must be “necessary for business or other needs”, undefined). In addition, handlers must provide specific further notice to individuals, regardless of what mechanism for transfers is used (see below), and following this notice handlers have to obtain the individual’s specific consent (Art. 39).
Transfers must further meet at least one of the following conditions (Art. 38):
- Undergoing a security assessment organized by the state cybersecurity and informatization departments in accordance with Art. 40, which states that operators of Critical Information Infrastructure (CII) and entities that transfer a large volume of PI must locally store personal information collected in China and undergo a further security assessment to transfer if necessary. This provision resembles article 37 of the Cybersecurity Law which similarly imposes restrictions of CII operators.
- Obtaining certification conducted by a specialized body according to provisions by the cybersecurity and information departments. This provision in Art. 38(2) mirrors the equivalent provision on “approved certification mechanisms” in EU GDPR (Art. 46(2)(f)). Other similar mechanisms exist in both the Cybersecurity Review Measures and the Multi-Layer Protection System (MLPS) certification scheme under the Cybersecurity Law.
- Concluding a contract with a foreign receiving party, specifying both parties’ rights and obligations, and supervising their activities to ensure they comply with standards provided in the law. The relevant state cybersecurity and information departments will provide standard contractual clauses (SCCs) to handlers for reference when entering into cross-border transfer agreements (Art. 38).
- Complying with other conditions provided in laws or administrative regulations or by the State cybersecurity and informatization department (catch-all provision).
Each of these provisions deliberately opens up space for international negotiations on the interoperability of China’s PI overseas transfer framework, in the spirit of international cooperation that Art. 12 is intended to irrigate in the text: “the State Promotes mutual recognition of PI protection rules [or norms], standards etc. with other countries, regions and international organizations.”
This emphasis on mutual recognition appears to leave room for China to pursue its own bilateral and multilateral data transfer facilitation mechanism with other trading partners, such as those along the Belt and Road Initiative (BRI). Mutual recognition may take the form of recognition of SCCs, certification mechanisms from other jurisdictions, or other international agreements with relevant digital trade or protection provisions.
Interestingly, there is no adequacy regime mentioned in the cross-border data transfers chapter. This choice was no doubt carefully considered by the drafters of the text and can be traced to the work of influential Chinese academics who have presented the regulatory models of data transfers of the EU on the one hand, and the US on the other hand, as “exclusionary blocks” of transborder data flows that would be based on geography (“adequate” jurisdictions for one, and APEC economies participating in the CBPR system for the other).
The counterpart of these provisions that can anchor cooperation with other international actors is a series of provisions aimed at defending the strategic interests of China.
Notably, if it is necessary to transfer PI outside of China for international judicial assistance or administrative law enforcement, information handlers must file an application with the relevant competent authority for approval (Art. 41). The law stipulates that international treaties or agreements that China has become a party to may govern cross-border transfers and supersede the provisions of the law. It is not clear if this provision only concerns international judicial assistance, or also includes general cross-border data transfers.
The PIPL provides that where a country or region adopts discriminatory prohibitions, limitations or other similar measures against China in the area of data protection, China “may adopt retaliatory measures against said country or region” (Art. 43). This provision mirrors other retaliatory measures in the Data Security and Export Control Law.
Regardless, parties should take extra measures to comply with the law as foreign organizations or individuals that process PI that infringe Chinese citizens’ rights and interests or endanger China’s national security or public interest may be placed on a publicly available entity list that restricts other handlers from transferring personal information to them (Art. 42).
9. Implementation and Enforcement
The law does not create an independent authority dedicated to data protection enforcement. The Cyberspace Administration of China (CAC) is the primary body responsible for data protection enforcement, but there are several other regulators that may also administer the law.
In addition, similar to the PI Specification, the Chinese government may delegate further responsibility to a Technical Committee (e.g., TC260) to develop standards to clarify the meaning of the law and provide more guidance on enforcement.
The PIPL stipulates penalties for violations and non-compliance, including the suspension or termination of application programs unlawfully handling data. Non-compliance not only involves unlawfully processing personal information but also includes failing to adopt proper necessary security protection measures in accordance with further regulations.
The law makes a distinction between two types of violations. In the first instance, the departments fulfilling data protection duties will order a correction, confiscate unlawful income, and issue a warning.
- If the data handler refuses to correct the violation, it will receive a fine of not more than 1 million RMB ($150,000).
- Persons who are directly responsible and in charge may also receive a fine between 10,000 and 100,000 RMB ($1500–$15,000) (Art. 66).
- In serious violations, the fine may be increased up to 50 million RMB ($7,500,000) or 5% of annual revenue for the prior fiscal year (Art. 66). The law does not specify whether annual revenue will be calculated on the basis of global turnover.
Acts deemed illegal under PIPL will be recorded and made public in the social credit system (Art. 67).
In addition, the PIPL stipulates that engaging in personal information handling activities that harm national security or the public interest also constitute violations (Art. 10) but no specific penalty is provided for such harms. Violations of the law will be publicly recorded and could lead to removal from serving as a director, supervisor, or senior manager of the relevant enterprise for a period of time.
Importantly, the PIPL provides a mechanism for individuals to receive compensation from data handlers through judicial redress for the loss (damage) they suffered or the benefit the handler obtains “if the processing of personal information infringes upon the rights and interests of the individuals” (Art. 69). If it is difficult to determine actual damages or the benefits unlawfully obtained, a People’s Court may take into account the relevant circumstances and render an appropriate award. The second version of the draft PIPL has reversed the burden of proof for the parties in a tort legal action against PI infringement, so that data handlers that cannot prove they are not at fault for the harm suffered will be liable. Additionally, when data handlers refuse an individual’s request to exercise data rights, that individual may file a lawsuit in a public court (Art. 50).
Finally, when a violation of the law infringes on the rights and interests of many individuals, the People’s Procuratorates, and the relevant enforcing agencies and departments may file a lawsuit with a People’s Court. One such example concerns the Civil Public Interest Litigation mechanism, which effectively operates as civil prosecution of large-scale violators of the law.