China TMT: Bi-monthly Update - July & August 2024 Issue

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Key Highlights

In July and August 2024, China intensified its efforts in artificial intelligence (“AI”), basic telecommunications, and intelligent connected vehicles by introducing multiple policies aimed at promoting rapid development and technological innovation:

• AI: The State Council, the Cyberspace Administration of China (“CAC”), and local governments have issued several opinions aimed at optimising market access in emerging fields like AI to foster development and ensure healthy market growth. MIIT is actively gathering examples of AI applications to promote best practices and set industry benchmarks. Additionally, the Beijing Procuratorate has issued compliance risk alerts for the generative AI industry, focusing on personal information and data security, to ensure that AI development proceeds within legal and ethical frameworks.
• Basic Telecommunications: The Ministry of Industry and Information Technology (“MIIT”), along with local governments such as Beijing, Shanghai, and Shenzhen, has released several guidelines to promote high-quality development in the telecommunications sector. Key initiatives include increasing the share of IPv6 traffic, advancing low-altitude communication sensing networks, and expanding “Broadband Border” initiatives. Additionally, the State Council approved the opening of domestic IP-VPN services in five cities, including Shenyang and Chengdu, while MIIT authorised the establishment of international telecom gateways in cities like Nanning and Qingdao to attract foreign investment and boost competitiveness.
• Intelligent Connected Vehicles: MIIT has issued several notices to strengthen the management of intelligent connected vehicle access, recalls, and software upgrades, requiring companies to enhance product technology and safety. A strict registration system was also established. Furthermore, 20 cities, including Beijing and Shanghai, were designated as pilot cities for vehicle-road-cloud integration. The Ministry of Transport launched a comprehensive promotion of digital road transport licenses, requiring local departments to implement electronic licenses and improve data security to ensure effective adoption.

Follow the links below to view the official policy documents or public announcements.

Legislative Developments

1. MIIT and SAC issued guidelines to strengthen IoT standards system construction, guiding high-quality IoT development (26 August)

The MIIT and the Standardisation Administration of China (“SAC”) jointly released the Guidelines for the Construction of the Internet of Things (IoT) Standards System (2024 Edition). These guidelines aim to lead the high-quality development of the IoT industry by systematically planning the IoT standards system, which includes foundational, technical, operational, and application standards. The guidelines emphasise innovation, application-driven development, and international collaboration, with a goal to establish over 30 national and industry standards by 2025.

2. State Council issued opinions on improving the market access system to optimize the environment for new industries like AI and information security (21 August)

The State Council issued the Opinions on Improving the Market Access System, introducing ten measures to deepen market access reforms and promote healthy market development. This document includes refining the negative list management model, setting market access rules scientifically, easing restrictions in the services sector, coordinating domestic and foreign investment access policies, and optimising market access for emerging sectors like AI and information security. The goal is to create an open, transparent, and well-regulated market access system to foster sustainable growth in the socialist market economy.

3. SAMR issued guidelines to regulate internet advertising identifiability for enforcement (23 August)

The State Administration for Market Regulation (“SAMR”) issued the Guidelines for Enforcement on the Identifiability of Internet Advertising to standardise internet ads and help consumers distinguish between ads and non-advertising content, protecting their rights. The guidelines define internet ads, clarify the responsibilities of advertisers, establish standards for ad identifiability, and provide enforcement and penalty criteria. It emphasises that ads should be clearly marked with text or audio, and SAMR will address unidentifiable ads, including AI-generated ones.

4. NFRA proposed measures to strengthen the regulation of microfinance companies (23 August)

The National Financial Regulatory Administration (“NFRA”) proposed the Interim Measures for the Supervision and Regulation of Microfinance Companies (Draft), aimed at standardising the operations of microfinance companies, strengthening supervision and regulation, and promoting stable and healthy development. The interim measures set forth requirements for microfinance companies regarding the establishment, business scope, financing channels, leverage ratios, and a negative list of prohibited practices. Additionally, the measures clarify that microfinance companies shall establish corporate governance, internal control, and risk management systems commensurate with their operations’ nature, scale, and complexity. Requirements for setting up loan-specific accounts, managing related-party transactions, overseeing cooperative institutions, advancing information technology systems, and reporting Internet platform activities are also outlined. Rigorous supervision and exit mechanisms are also established to ensure market order and financial security.

5. NFRA strengthened regulation of online property insurance business (9 August)

The NFRA issued the Notice on Strengthening the Regulation of Online Property Insurance Business, aimed at standardising online property insurance operations, preventing industry risks, and protecting financial consumers' legitimate rights and interests. The notice seeks to promote the digital and intelligent transformation of the property insurance industry and ensure the high-quality development of online property insurance. It sets forth conditions and regulatory requirements for property insurance companies engaged in online property insurance, including establishing comprehensive service systems covering contract modifications, cancellations, claims, and complaint handling and implementing robust risk management systems. The notice also emphasises the need for strategies for developing online property insurance, implementing daily monitoring and supervision, and adhering to compliant and prudent operations, strongly emphasising data security protection.

6. MIIT issued opinions to innovate ICT industry management and improve the business environment (6 August)

The MIIT issued the Opinions on Innovating ICT Industry Management and Optimising the Business Environment, aiming to promote high-quality development in the information and communication technology (ICT) sector. The opinion emphasises improving market access, supporting innovation, expanding business openness, and enhancing competition rules. It also highlights optimizing regulatory transparency and predictability, improving telecom services, and empowering the digital economy. Local telecom bureaus are encouraged to actively integrate with local economic development, offering more business-friendly measures.

7. MIIT proposed strengthening management of intelligent connected vehicle access, recalls, and software updates (1 August)

The MIIT has issued a draft notice seeking public opinion on strengthening the management of intelligent connected vehicles. The notice focuses on improving product safety and quality, particularly for vehicles equipped with advanced driver assistance systems. It also outlines strict reporting mechanisms for accidents or safety incidents. For software updates, it mandates a robust filing management system, requiring companies to ensure compliance with laws and technical standards and to report updates to prevent misuse in covering defects or avoiding liability.

8. MNR officially released new measures to strengthen management of classified surveying results provided abroad (31 July)

The Ministry of Natural Resources (“MNR”) issued the Measures for the Management of Classified Surveying Results Provided Abroad to enhance control over the sharing of classified surveying data, safeguard national security, and promote international cooperation. The measures detail approval procedures, application requirements, and confidentiality management. They clarify the responsibilities of natural resource authorities and obligations of applicants, emphasising that no classified surveying results may be provided without proper approval, ensuring the security of sensitive information.

9. MIIT proposed new regulations to strengthen radar radio management and maintain airwave order (31 July)

The MIIT has released a draft of the Radar Radio Management Regulations (Trial) for public consultation. These regulations aim to improve the management of radar radio frequencies to ensure safe production, environmental monitoring, disaster prevention, and detection technology. The draft specifies the definition of radar, frequency usage plans, licensing, equipment management, and interference coordination. It also outlines the technical and security requirements for radar equipment to ensure effective frequency management and maintain airwave order.

10. MIIT revised industrial robot industry standards and management measures to strengthen regulatory oversight (30 July)

The MIIT released the Industrial Robot Industry Standard Conditions (2024 Edition) and the Implementation Measures for the Management of Industrial Robot Industry Standards (2024 Edition). These documents aim to standardise industry management and promote high-quality development. The standards cover key components, manufacturing, and integration for industrial robot enterprises, detailing requirements for technical capabilities, quality management, and sales. The implementation measures outline application procedures, supervision, and corrective actions, ensuring compliance for sustainable industry growth.

11. Shanghai issued guidelines to promote the deployment of a low-altitude communication sensing network and accelerate the construction of a smart low-altitude network (16 August)

The Shanghai Communications Administration released the Guiding Opinions on Accelerating the Construction of a Smart Low-Altitude Internet to Support the Development of the Low-Altitude Economy. The guidelines aim to accelerate the deployment of a 5G-A low-altitude communication network, establish construction standards, improve information services, and expand innovation applications. By 2026, Shanghai plans to achieve full coverage of low-altitude flight routes and promote the development of the low-altitude economy, positioning the city as a global leader in this sector.

12. State Council approved opening domestic VPN services to foreign investment in five cities (11 July)

The State Council approved the opening of IP-VPN services to entities in Shenyang, Nanjing, Hangzhou, Guangzhou, and Chengdu, with a foreign equity limit of 50%. This move is aimed at attracting overseas telecom operators to invest by establishing joint ventures, boosting local economic development, and enhancing international competitiveness. The initiative is part of a broader strategy to expand the service sector and ensure long-term stability for foreign enterprises through regulatory adjustments.

13. Shenzhen asked for public opinion on new technical standards for guiding 5G government networks (15 July)

The Shenzhen Municipal Government Services and Data Management Bureau released the 5G Government Network Construction Technical Standards (Draft for Comments), aiming to standardise 5G network infrastructure for government use. These guidelines cover technical requirements, network planning, deployment models, terminal devices, bandwidth resource allocation, security protection, and operations. The standards focus on ensuring the efficient, reliable, and secure operation of 5G government networks, emphasising communication network security and terminal access protection to safeguard external government networks.

Enforcement Developments

14. SPC, SPP, and Ministry of Public Security jointly clarified legal standards for handling cross-border telecom fraud cases (26 July)

The Supreme People’s Court (“SPC”), Supreme People’s Procuratorate (“SPP”), and Ministry of Public Security issued opinions on legal standards for handling cross-border telecom fraud cases. These guidelines focus on combating criminal organisations, including their leaders and key members. The opinions emphasise strict action against crimes like murder, kidnapping, and illegal detention, clarify the methods for determining criminal amounts, and provide instructions for handling illegal border crossing. They also stress recovering assets and confiscating properties of suspects fleeing abroad to protect citizens’ rights.

15. SPP released top 10 cases on punishing cross-border telecom fraud and related crimes (26 July)

The SPP released 10 landmark cases illustrating China’s strict crackdown on cross-border telecom fraud and related crimes. These cases highlight severe punishments for criminal groups running fraud rings abroad and their organisers, core members, and accomplices who provided financial or technical support. The measures include heavy sentencing and intensified asset recovery, reflecting a zero-tolerance stance against cross-border telecom fraud, safeguarding social order, and protecting citizens’ property.

16. NFRA warned against four new types of telecom fraud risks, urging increased awareness (24 July)

The National Financial Regulatory Administration (“NFRA”) issued a risk alert through its Financial Consumer Protection Bureau, highlighting new types of telecom fraud. These include “screen sharing” scams, “AI face and voice mimicking” fraud, fake investment schemes, and fraudulent online gaming transactions. The notice advises the public to remain cautious, avoid sharing screens, protect personal information, verify transactions, and report fraud to the authorities immediately. These efforts aim to raise public awareness and protect individuals’ financial safety.

17. Beijing Prosecutors Issued Criminal Compliance Risk Alert for AI Industry Development, Focusing on Data and Personal Information Protection (18 July)

The Beijing People’s Procuratorate issued a Criminal Compliance Risk Alert for the AI industry at the Global Digital Economy Conference. The alert focuses on areas like intellectual property protection, personal information security, computer system safety, and data protection, particularly in generative AI. Through case analyses, it urges AI companies to strengthen the protection of core technologies and take effective measures to mitigate compliance risks. This initiative aims to promote the healthy and legally compliant development of the AI industry.

18. CAC released seventh batch of deep synthesis service algorithm registration information with nearly 500 approved algorithms (5 August)

The CAC announced the seventh batch of registered deep synthesis service algorithms, covering nearly 500 algorithms in various applications such as text generation, image creation, and voice synthesis. This registration aims to regulate service providers and technical supporters of deep synthesis services, particularly those with public opinion and social mobilisation capabilities.

19. MIIT reported on Q2 2024 telecom services and releases list of non-compliant companies (1 August)

The MIIT issued a report on the quality of telecom services for Q2 2024, highlighting key achievements in emergency communication for flood control, improving information services, regulating apps, and managing unsolicited commercial messages. The report also analysed user complaints about telecom services and internet information services. MIIT outlined corrective actions for companies that did not meet standards and urged continued efforts to ensure communication services during emergencies and to protect consumers’ rights with anti-harassment tools.

Industry Developments

20. CAC and MIIT released plan to boost IPv6 traffic in key cities (21 August)

The CAC and the MIIT issued a plan to enhance IPv6 traffic across key cities, including Beijing, Shanghai, and Shenzhen. The initiative aims to significantly increase the proportion of IPv6 traffic in both fixed and mobile networks within a year. The plan focuses on upgrading internet applications, household devices, government and enterprise systems, data centres, and cloud platforms to IPv6. It also stresses leadership, monitoring, and public involvement to drive IPv6 development nationwide.

21. 2024 World Robot Conference held in Beijing under the theme “Nurturing New Productivity, Sharing an Intelligent Future” (21 August)

The 2024 World Robot Conference opened at the Beijing Yichuang International Convention and Exhibition Centre, attracting global scientists, engineers, entrepreneurs, and over 1,000 participants. The event featured a 3-day main forum, 26 specialized forums, and showcased over 600 innovative products from 169 companies, including 60+ world premieres and 27 humanoid robots. The conference aimed to foster collaboration across industries and governments, while highlighting trends and opportunities in the integration of AI and robotics.

22. Ministry of Transport fully promoted the use of electronic road transport licenses, supporting electronic license verification (14 August)

The Ministry of Transport issued a notice to promote the widespread adoption of electronic road transport licenses, with the goal of fully digitalizing newly issued and renewed licenses by the end of 2025. The notice outlines application scenarios and encourages information sharing between electronic licenses and other digital documents. Provincial transportation authorities are tasked with ensuring data quality and security while guiding road transport operators to adopt and use electronic licenses effectively.

23. Fujian province released plan to accelerate “Broadband Border” construction, enhancing network coverage and application (15 August)

The Fujian Communications Administration, along with 16 other departments, issued a plan to advance the “Broadband Border” initiative, aiming to improve network coverage in coastal areas by 2025. The plan seeks 100% broadband coverage in key areas such as towns, ports, and inhabited islands, with 5G and gigabit fibre networks reaching counties and townships. By 2027, 5G coverage is expected in these areas, including key sea regions within 30 kilometres of the coast. The plan outlines 16 tasks to support the digital transformation of coastal Fujian.

24. MIIT launched call for AI-enabled industrialization case studies (13 August)

The MIIT announced the collection of typical application cases for AI-driven industrialization. The focus is on four key areas: foundational technologies, industry applications, equipment and products, and supporting infrastructure. The goal is to identify and promote exemplary use cases that showcase AI’s role in advancing new industrialisation, setting industry benchmarks, and driving innovation. The selected cases will be publicised through various events to inspire broader adoption and development.

25. CAC to actively promote the development and management of generative AI (12 August)

The CAC outlined its approach to promoting and regulating generative AI, emphasising a balance between high-quality development and robust security. CAC aims to drive AI development through independent innovation, application guidance, and security measures, ensuring healthy and orderly growth. It also highlighted the need for a comprehensive governance system and legal framework to strengthen the internet governance capabilities, fostering a clean and safe cyberspace in alignment with China’s modernisation goals.

26. MIIT seeks 2024 IoT industry development case studies, focusing on four key areas (5 August)

The MIIT has initiated a call for case studies on how the Internet of Things (IoT) empowers industry development for 2024. The initiative aims to highlight successful IoT applications in areas like smart manufacturing, smart agriculture, and intelligent transportation to support new industrialization efforts. The call covers four fields: industry applications, social governance, consumer welfare, and integration with emerging industries, targeting national industrial departments and related units to showcase effective, innovative IoT applications.

27. Beijing Administration for Market Regulation issued guidelines for livestream e-commerce compliance (9 August)

The Beijing Administration for Market Regulation released the Beijing Livestream E-commerce Compliance Guidelines, aiming to regulate the behaviour of all participants in livestream sales, ensuring consumer protection and promoting healthy industry development. The guidelines outline compliance requirements for platforms, streamers, and service providers regarding information registration, product inspection, content publishing, and promotional activities. Emphasising professional ethics and consumer rights, the guidelines include specific measures for handling violations and are effective immediately to guide the livestream e-commerce sector in Beijing.

28. MIIT selected pilot cities for large-scale Beidou applications (15 July)

The MIIT launched a selection process for cities to serve as pilot locations for scaling up Beidou applications. This initiative focused on key areas such as consumer products, industrial manufacturing, and innovation. Cities with strong industrial foundations and policy frameworks were chosen to develop and implement innovative Beidou applications over a two-year period, with the goal of expanding the technology’s usage nationwide.

29. MIIT approved international telecom gateway stations in four cities (10 July)

The MIIT granted licenses to China Telecom, China Mobile, and China Unicom to establish international telecom gateway stations in Nanning, Qingdao, Kunming, and Haikou. This initiative aims to enhance international communication links, support the “Belt and Road” connectivity network, and boost China’s digital economy and international cooperation. Minister Jin Zhuanglong emphasised the importance of these gateways for improving the competitiveness and security of the telecommunications industry.

30. MIIT issued guidelines to further advance IPv6 deployment and initiate “Network De-NAT” efforts (10 July)

The MIIT and the CAC released a notice on advancing IPv6 deployment and reducing NAT44 usage through the “Network De-NAT” initiative. The notice urges telecom operators to upgrade household gateways and devices to support IPv6, while internet companies are encouraged to enhance application services. It also emphasises operational maintenance, risk assessment, and inter-departmental oversight to ensure successful implementation and improve IPv6 traffic share.

31. National IPv6 Traffic Enhancement Initiative Launch Ceremony Held in Beijing (8 July)

The launch ceremony for the National Key Cities IPv6 Traffic Enhancement Initiative took place on 7 July 2024 during the third China IPv6 Innovation Development Conference. The initiative, organised by the CAC and MIIT, focuses on improving IPv6 traffic in eight major cities, including Beijing, Tianjin, and Shanghai. Efforts will include enhancing fixed network traffic, upgrading home terminals, promoting IPv6 in government and enterprises, and improving data centre and cloud platforms. The goal is to significantly boost IPv6 traffic over the next year.

32. Shenzhen proposed measures to establish itself as a pioneering city in AI development (14 August)

Shenzhen released the Measures for Building Shenzhen into a Pioneering City in Artificial Intelligence (Draft for Comments), aiming to lead in AI development. The measures include support for enterprises developing industry-specific AI models, financial incentives such as model vouchers and computing power vouchers, promoting data element market applications, and enhancing AI research. The city will also focus on AI applications in various industries, supporting talent development, technology platforms, and financing. The goal is to position Shenzhen as a globally influential AI hub.

33. Five ministries designate 20 cities for “Vehicle-Road-Cloud Integration” pilot for connected vehicles (3 July)

The MIIT and four other departments jointly announced 20 cities, including Beijing and Shanghai, as pilot locations for “Vehicle-Road-Cloud Integration” applications for smart connected vehicles. The notice urges these cities to submit detailed work plans and to ensure effective implementation. Local authorities are expected to provide policy support and oversight, with an emphasis on gathering replicable experiences for broader adoption across the country.