Category: China

China intensifies data protection of companies

15. July 2021

The state leadership in Beijing is tightening its data protection rules. Chinese driving service provider Didi has now become the subject of far-reaching data protection regulatory measures. Other companies could soon be affected as well.

For months now, Chinese regulators and ministries in China have been issuing a slew of new regulations that not only affect tech companies, but are also directed at how companies handle data in general.

A prime example of China’s “new” data protection policy can be seen in Didi’s public launch on the New York Stock Exchange. The Uber rival only went public for a few days and was urged by the Chinese authorities to remove its app from the app store before the end of the week. The reason for this is reported to have been serious data protection violations by the company, which are now being investigated. The company is said to have processed the collection and use of personal data by the company in a privacy-hostile manner.

Didi was ordered to comply with legal requirements and adhere to national standards. It should also ensure that the security of its users’ personal data is effectively protected.

The announcement had sent shares of the stock market newcomer crashing by more than 5% as of Friday. The news also caused tech stocks to fall on Asian exchanges.

Didi is the nearly undisputed leader among ride-hailing services in China, with 493 million active users and a presence in 14 countries.

Beijing’s new data protection

The actions of Chinese authorities or the Chinese leadership against tech companies speak for a rethinking of the Chinese leadership in terms of data protection.

Initially, there is much to suggest that the state leadership wants to get companies more under control. This is also to prevent third countries from obtaining data from Chinese companies and to prevent Chinese companies from installing themselves abroad.

According to reports, a document from the State Council in Beijing indicates that stricter controls are planned for Chinese companies that are traded on stock exchanges abroad. Capital raised by emerging Chinese companies on foreign stock markets, such as in New York or Hong Kong, will also be subject to more stringent requirements. Especially in the area of “data security, cross-border data flow and management of confidential information”, new standards are to be expected.

However, the aim seems also to better protect the data of Chinese citizens from unauthorized access by criminals or excessive data collection by tech groups and companies.
This is supported by the fact that the Chinese leadership has introduced several rules in recent years and months that are intended to improve data protection. Although the state is not to cede its own rights here, citizens are to be given more rights, at least with respect to companies.

The introduction of the European General Data Protection Regulation also forced Chinese technology companies to meet global data protection standards in order to expand abroad.

China’s data protection policy thus seems to be a contradiction in terms. It is a step towards more protection of the data subjects and at the same time another step towards more control.

China passes new data security law

15. June 2021

China’s “National People’s Congress”, the Chinese legislative body, approved the new “Data Security Law 2021” on June 10th, 2021 (unofficial English translation here). The new law gives President Xi Jinping the power to shut down or fine tech companies. The law will go into effect on September 1st, 2021.

The law applies to data processing activities and security surveillance within China’s territory. Data processing activities outside China’s territory that threaten China’s national security and public interests are also covered by the law. For international companies, the law means they must localize data in China. For example, data generated in factories in China must be kept in China and be subject to cyber data oversight.

Companies that leak sensitive data abroad or are found “mishandling core state data” can be forced to cease operations, have their licenses revoked, or fined up to 1.6 million US$, and companies who provide electronic information to foreign law enforcement authorities can be fined up to approx. 150.000 US$ or forced to suspend their business.

While the Chinese government is increasing its financial involvement in tech companies it is also producing new legislations to tighten its grip on such companies. The new data law is expected to provide a wide outline for future rules for Internet services and to ease the tracking of valuable data in the interest of national security. This may include directives that certain types of data must be stored and handled locally, as well as requirements for companies to track and report the information they hold.

A personal information protection law is still under review in China.

China issued new Draft for Personal Information Protection Law

23. November 2020

At the end of October 2020, China issued a draft for a new „Personal Information Protection Law” (PIPL). This new draft is the introduction of a comprehensive system in terms of data protection, which seems to have taken inspiration from the European General Data Protection Regulation (GDPR).

With the new draft, China’s regulations regarding data protection will be consisting of China’s Cybersecurity Law, Data Security Law (draft) and Draft PIPL. The new draft legislation contains provisions relating to issues presented by new technology and applications, all of this in around 70 articles. The fines written in the draft for non-compliance are quite high, and will bring significant impact to companies with operations in China or targeting China as a market.

The data protection principles drawn out in the draft PIPL include transparency, fairness, purpose limitation, data minimization, limited retention, data accuracy and accountability. The topics that are covered include personal information processing, the cross-border transfer of personal information, the rights of data subjects in relation to data processing, obligations of data processors, the authority in charge of personal information as well as legal liabilities.

Unlike China’s Cybersecurity Law, which provides limited extraterritorial application, the draft PIPL proposes clear and specific extraterritorial application to overseas entities and individuals that process the personal data of data subjects in China.

Further, the definition of “personal data” and “processing” under the draft PIPL are very similar to its equivalent term under the GDPR. Organizations or individuals outside China that fall into the scope of the draft PIPL are also required to set up a dedicated organization or appoint a representative in China, in addition to also report relevant information of their domestic organization or representative to Chinese regulators.

In comparison to the GDPR, the draft PIPL extends the term of “sensitive data” to also include nationality, financial accounts, as well as personal whereabouts. However, sensitive personal information is defined as information that once leaked or abused may cause damage to personal reputation or seriously endanger personal and property safety, which opens the potential for further interpretation.

The draft legislation also regulates cross-border transfers of personal information, which shall be possible if it is certified by recognized institutions, or the data processor executes a cross-border transfer agreement with the recipient located outside of China, to ensure that the processing meets the protection standard provided under the draft PIPL. Where the data processor is categorized as a critical information infrastructure operator or the volume of data processed by the data processor exceeds the level stipulated by the Cyberspace Administration of China (CAC), the cross-border transfer of personal information must pass a security assessment conducted by the CAC.

It further to keep in mind that the draft PIPL enlarges the range of penalties beyond those provided in the Cybersecurity Law, which will put a much higher pressure on liabilities for Controllers operating in China.

Currently, the period established to receive open comments on the draft legislation has ended, but the next steps have not yet been reported, and it not yet sure when the draft legislation will come into full effect.

German Robert-Koch-Institute discusses mobile phone tracking to slow down the spreading of the Coronavirus

9. March 2020

According to a news report by the German newspaper “Der Tagesspiegel”, a small group of scientists at the Robert-Koch-Institute (RKI) and other institutions are currently discussing the evaluation and matching of movement data from mobile phones to detect people infected with the Coronavirus (COVID-19).

The scientists, who are trying to slow down the spreading of the disease, complain about the problem of the time-consuming and vague questionings of infected people on who they came in contact with. The evaluation and matching of mobile phone data may be more accurate and could speed up the process of identifying infected people, which could be essential for saving lives.

In a comment, the German Federal Commissioner for Data Protection Ulrich Kelber expressed that this procedure may cause large data protection issues, especially with regards to having a legal basis for processing and the proportionality of processing according to the GDPR.

German Officials warn Travellers to China of Espionage

17. January 2020

The German Federal Office for the Protection of the Constitution (BfV) sees a significant risk for the security of personal data when accessing local WiFi networks and the mobile network in China. A request from the German newspaper “Handelsblatt” to the BfV revealed that the Officials warn travellers to China of an increasing risk of espionage.

For the stay in China, the BfV discourages travellers from using laptops and smartphones that contain personal data, especially contact information. Instead, the BfV recommends to acquire a travel laptop and a prepaid mobile phone that could be resetted or even be disposed of after leaving China.

According to Handelsblatt, the warning stems from cases in which the Chinese border police conducted mobile phone controls at the Chinese border of Xinjiang and installed a surveillance App on tourists’ smartphones.

In 2016, the BfV already cautioned of potential espionage by Chinese secret services targetting students and researchers.

NIST examines the effect of demographic differences on face recognition

31. December 2019

As part of its Face Recognition Vendor Test (FRVT) program, the U.S. National Institute of Standards and Technology (NIST) conducted a study that evaluated face recognition algorithms submitted by industry and academic developers for their ability to perform various tasks. The study evaluated 189 software algorithms submitted by 99 developers. It focuses on how well each algorithm performs one of two different tasks that are among the most common applications of face recognition.

The two tasks are “one-to-one” matching, i.e. confirming that a photo matches another photo of the same person in a database. This is used, for example, when unlocking a smartphone or checking a passport. The second task involved “one-to-many” matching, i.e. determining whether the person in the photo matches any database. This is used to identify a person of interest.

A special focus of this study was that it also looked at the performance of the individual algorithms taking demographic factors into account. For one-to-one matching, only a few previous studies examined demographic effects; for one-to-many matching, there were none.

To evaluate the algorithms, the NIST team used four photo collections containing 18.27 million images of 8.49 million people. All were taken from operational databases of the State Department, Department of Homeland Security and the FBI. The team did not use images taken directly from Internet sources such as social media or from video surveillance. The photos in the databases contained metadata information that indicated the age, gender, and either race or country of birth of the person.

The study found that the result depends ultimately on the algorithm at the heart of the system, the application that uses it, and the data it is fed with. But the majority of face recognition algorithms exhibit demographic differences. In one-to-one matching, the algorithm rated photos of two different people more often as one person if they were Asian or African-American than if they were white. In algorithms developed by Americans, the same error occurred when the person was a Native American. In contrast, algorithms developed in Asia did not show such a significant difference in one-to-one matching results between Asian and Caucasian faces. However, these results show that algorithms can be trained to achieve correct face recognition results by using a wide range of data.

China publishes provisions on the protection of personal data of children

10. October 2019

On 23 August 2019, the Cyberspace Administration of China published regulations on the cyber protection of personal data of children, which came into force on 1 October 2019. China thus enacted the first rules focusing exclusively on the protection of children’s personal data.

In the regulations, “children” refers to minors under the age of 14. This corresponds to the definition in the national “Information Security Technology – Personal Information Security Specification”.

The provisions regulate activities related to the collection, storage, use, transfer and disclosure of personal data of children through networks located on the territory of China. However, the provisions do not apply to activities conducted outside of China or to similar activities conducted offline.

The provisions provide a higher standard of consent than the Cybersecurity Law of China. To obtain the consent of a guardian, a network operator has to provide the possibility of refusal and expressly inform the guardian of the following:

  • Purpose, means and scope of collection, storage, use, transfer and disclosure of children’s personal information;
  • Storage location of children’s personal information, retention period and how the relevant information will be handled after expiration of the retention period;
  • Safeguard measures protecting children’s personal information;
  • Consequences of rejection by a guardian;
  • The channels and means of filing or reporting complaints; and
  • How to correct and delete children’s personal information.

The network operator also has to restrict internal access to children’s personal information. In particular, before accessing the information, personnel must obtain consent of the person responsible for the protection of children’s personal data or an authorised administrator.

If children’s personal data are processed by a third party processor, the network operator is obliged to carry out a security assessment of the data processor commissioned to process the children’s personal data. He also has to conclude an entrustment agreement with the data processor. The data processor is obliged to support the network operator in fulfilling the request of the guardian to delete the data of a child after termination of the service. Subletting or subcontracting by the data processor is prohibited.

If personal data of children is transferred to a third party, the network operator shall carry out a security assessment of the commissioned person or commission a third party to carry out such an assessment.

Children or their legal guardians have the right to demand the deletion of children’s personal data under certain circumstances. In any case, they have the right to demand the correction of personal data of children if they are collected, stored, used or disclosed by a network operator. In addition, the legal guardians have the right to withdraw their consent in its entirety.

In the event of actual or potential data breaches, the network operator is obliged to immediately initiate its emergency plan and take remedial action. If the violation has or may have serious consequences, the network operator must immediately report the violation to the competent authorities and inform the affected children and their legal guardians by e-mail, letter, telephone or push notification. Where it is challenging to send the notification to any data subject, the network operator shall take appropriate and effective measures to make the notification public. However, the rules do not contain a precise definition of the serious consequences.

In the event that the data breach is caused or observed by a data processor, the data processor is obliged to inform the network operator in good time.

Chinese police uses gait recognition for identification

30. July 2019

The police in Beijing and Shanghai have begun to use a new form of surveillance. The gait recognition technology analyzes the body shapes and ways people walk to identify them, even if their faces are hidden from the camera.

The gait recognition software is part of an advance in China towards the development of artificial intelligence and data-driven surveillance.

On their website, the Chinese technology startup Watrix explains that gait functions with a low-resolution video are remotely obtainable and recognizable compared to other biometrics such as face, iris, palm print and fingerprint. With the features of the contactless, far-reaching, transparent recognition range and the difficult to disguise gait recognition, it closes the gap in the market for remote identification in the public security industry. “You don’t need people’s cooperation for us to be able to recognize their identity,” Huang Yongzhen, the CEO of Watrix, said in an interview. “Gait analysis can’t be fooled by simply limping, walking with splayed feet or hunching over, because we’re analyzing all the features of an entire body.”

Watrix’s software extracts a person’s silhouette from the video and analyzes their movements to create a model of the person’s gait. However, it is not yet able to identify people in real time. Users must upload videos to the program. Yet no special cameras are needed. The software can use footage from regular surveillance cameras to analyze the gait.

The technology is not new. Scientists in Japan, the UK and the U.S. Defense Information Systems Agency have been researching gait detection for over a decade. Professors from the University of Osaka have been working with the Japanese National Police Agency since 2013 to pilot the gait recognition software.

Category: China
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