China

VPNs are out, more security reviews are in: What’s in China’s new cyber rules

Beijing works on the practicality of its groundbreaking data laws.

Brick wall

The new rules show governmental acknowledgment of the Great Firewall for the first time.

Image: Waldemar Brandt / Protocol

On Sunday, the Cyberspace Administration of China released the draft "Cyber Data Security Administrative Rules," which covers everything from penalizing VPN tools to enlarging the scope of cybersecurity reviews to further banning monopolistic practices to ensuring privacy data protection. It contains a number of surprises, including governmental acknowledgement of the Great Firewall for the first time.

To govern a world built on data, Beijing has to give definitions to terms that didn't exist a decade ago and explain the nooks and crannies of how previous data laws will be implemented. This draft regulation does just that.

"This draft can, to some extent, be seen as the implementation guidance of Data Security Law and Personal Information Protection Law," Zuo Xiaodong, vice president of the China Research Institute for Information Security, was quoted saying in the Southern Metropolis Daily. "But that's not the entirety of it."

What Zuo means is that there are also places where the new regulation diverges from — or even slightly contradicts — the language of previous laws. The South Metropolis Daily also quoted two other experts who said the new regulation has pushed the boundaries of online platform responsibilities further than what was previously defined by the law. (The regulation can still change, as it is currently seeking comment until Dec. 13, and these discrepancies with previous law can be amended.)

Outlawing VPNs

One of the most noticeable pieces of new language in the draft regulation is its direct acknowledgement of the Great Firewall, a system China uses to filter inbound information and censor a great number of news and social media websites.

Article 41 of the new regulation, which Henry Gao, associate professor of law at Singapore Management University, calls "the biggest bombshell," says the state has established a cross-border data-security gateway to block out any information that originates outside the country and is banned by Chinese laws.

"[As far as I know], this is the very first time the government openly recognizes the existence of the Great Firewall in a law/regulation," Gao wrote in a Twitter thread.

Article 41 further decrees that no individual or organization is allowed to help others circumvent the Great Firewall, even just by hosting a server or processing payment for firewall workarounds. This is clearly directed at the popular use of VPN tools, which many Chinese individuals employ to keep connected to parts of the internet that are otherwise blocked.

This is not the first time VPNs have been banned in China (except for state-sanctioned companies). Back in 2017, the Ministry of Industry and Information Technology released a notice that said it would start clearing any activities of providing illegal VPN tools. But the new regulation would go beyond that by also outlawing peripheral activities: for example, punishing an app store that publishes a VPN app in China.

"This should dissuade any foreign VPN company from registering and running its business in China," Benjamin Ismail, GreatFire's campaign and advocacy director and Apple Censorship project coordinator, told Protocol. "With such new legislation, we might see even more efforts from companies like Apple to collaborate with the authorities and see that no one and no company can offer solutions bypassing the Great Firewall."

Security reviews for companies listing in Hong Kong

The new regulations also address a big question from this summer: whether listing in Hong Kong can save Chinese tech companies from the problem of an unpredictable cybersecurity review. The answer is no.

After DiDi's New York listing went terribly wrong in July, more than 10 Chinese tech companies have withdrawn or suspended their IPO plans in the United States. Ximalaya, the top audio-content platform in China, recycled its U.S. prospectus and submitted it to the Hong Kong Stock Exchange. Many other companies may follow suit.

Why? Because at the time, listing in Hong Kong was not going to subject the company to the same level of government scrutiny as listing in the U.S.

But that's no longer the case. The Sunday regulation singles out the Hong Kong market and says that companies that "list in Hong Kong and may impact China's national security" also have to apply for cybersecurity review.

Only a vague criterion of national security is needed to invoke Hong Kong review, giving regulators more leeway in determining whether one is necessary.

More protection of personal data

The new regulation also introduces many new rules around personal information.

Article 45 of the regulation treats communication between two individuals and among more than two individuals (i.e., group chats) differently, giving the former more protection. This is the first time such a distinction has ever been made, offering more questions than answers as to implementation.

Several articles in the regulation involve how a company should inform users of its data-collecting practices. Article 43 says that whenever an internet platform drafts or revises its policies concerning privacy and consumer rights, it needs to seek feedback from the public for at least 30 days.

When a company does tell users what information is collected, Article 20 says it needs to inform users of the "purpose, method, category, frequency and timing of how personal information is collected." By adding "frequency and timing" — absent from the PIPL — the regulations address recent concerns that a few top Chinese apps were found accessing user information dozens of times a day without users' knowledge.

For Angela Zhang, associate law professor at the University of Hong Kong, the biggest change in these regulations concerns how consent between platforms and individuals works. Article 49 of the new regulations requires platforms to get "opt-in" consent from users before making algorithmic recommendations, instead of "opt-out" consent, which is much easier to get.

"There is a big difference between opt-in or opt-out requirement due to consumers' cognitive bias," Zhang wrote on Twitter. "When personalized recommendation is the default, few consumers notice and bother to opt-out. But when consumers are required to opt-in, it could make a difference."

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