During the State Council’s regular policy briefing held by the State Council Information Office on April 10th, Li Chunlin, Deputy Director of the National Development and Reform Commission, introduced the long-standing issues faced by small and medium-sized enterprises (SMEs) and private enterprises, such as difficulties and high costs in financing.

Li Chunlin stated that many of these enterprises are in their early stages or growth phases, often lacking effective collateral and guarantees, making it difficult to meet the loan requirements of traditional credit models, as they lack tangible assets as loan collateral. Financial institutions providing credit financing services need to assess the credit levels of enterprises based on their credit information. However, this credit information is often dispersed and difficult to obtain, limiting financial institutions’ ability to grant credit loans based on information. Banks, especially when providing loans to SMEs, startups, and even student entrepreneurs, lack comprehensive understanding of their overall credit and asset situations. With individual pieces of information scattered across different departments, this is a significant bottleneck and a major pain point.

To address this pain point, the National Development and Reform Commission has established a national financing credit service platform to help SMEs exchange credit for loans by strengthening the application of credit information sharing. The platform mainly has four major functions:

I. Credit Information Inquiry

The platform has already collected over 78 billion pieces of credit information and provides information inquiry services to financial institutions based on the principle of public welfare, alleviating the problem of information asymmetry between banks and enterprises. As of now, the platform has provided inquiry services to relevant financial institutions over 276 million times, with an average weekly visit volume exceeding one million people. It has collected credit information on 17 major categories and 37 items of operating entities.

II. Financing Demand Matching

Intelligently matching the financing needs of operating entities with the financial products provided by banking institutions to achieve nationwide financing supply-demand matching services. The “Financial Supermarket” section has launched 22 financing service products for operating entities to choose from independently.

III. Direct Access to Enterprise-Friendly Policies

Concentrating on displaying various enterprise-friendly financial support policies, the first batch of 35 local enterprise-friendly policies can be applied for online. Enterprise-friendly financial policies scattered across various government departments can be queried on this platform, allowing operating entities to find suitable or eligible policies for application.

IV. Financing Credit Enhancement Services

Introducing financing guarantee institutions and risk-sharing funds, the first batch of 20 local credit enhancement and risk mitigation services can be processed on the platform in a “one-stop” manner.

Li Chunlin explained that currently, relying on the national integrated financing credit service platform network, a new inclusive financial model based on credit information has been cultivated, and a comprehensive financing service system covering the entire process has been established, providing SMEs, especially private enterprises, with convenient financing channels.

The State Council Information Office held a regular policy briefing on April 10, 2024 (Wednesday) at 3:00 PM, where Li Chunlin, the Deputy Director of the National Development and Reform Commission, Ren Yongmei, Director of the Credit Bureau of the People’s Bank of China, and Feng Yan, the head of the Inclusive Finance Department of the Financial Regulatory Authority, introduced the ‘Implementation Plan for Coordinating the Construction of Financing Credit Service Platforms to Improve the Financing Convenience Level of Small and Micro Enterprises’ and answered questions from reporters. Below is the transcript of the Q&A session with Ren Yongmei, Director of the Credit Bureau of the People’s Bank of China:

Reporter from Poster News: In recent years, market-oriented credit institutions in our country have developed rapidly and have played an important role in enhancing the efficiency of credit financing matching. Could you please share the People’s Bank of China’s considerations on cultivating and managing the credit market? Thank you.

Thank you for the question, let me answer it. First, I appreciate your concern and support for the credit market. The construction of our country’s credit system has always adhered to a dual-drive approach of ‘government + market,’ and market-oriented credit institutions are an important part of China’s credit system. In recent years, the People’s Bank of China has vigorously developed a multi-level credit market, covering a wide range of social credit needs. First, we have actively and prudently developed the personal credit market. According to market demands and in conjunction with personal information protection requirements, the People’s Bank has approved two personal credit institutions. In 2023, these institutions provided various credit services such as credit reports, credit scores, and anti-fraud scores, totaling 42 billion times. Second, we nurture and develop the corporate credit market. We guide institutions with data, technology, and markets to enter the corporate credit market, integrating various types of credit information related to enterprises’ registration, business operations, and contract fulfillment. In 2023, 149 corporate credit institutions provided various credit services 22.3 billion times. Third, we have actively promoted the market-oriented transformation of local credit platforms, achieving significant results. Out of 31 provincial local credit platforms, 26 are operated by specially established market-oriented institutions. These institutions comprehensively collect local enterprises’ public credit information and other commercial credit data, achieving deep integration and application of various types of information to provide specialized credit services to financial institutions.

Next, the People’s Bank will follow the Central Committee’s decisions on building a comprehensive social credit system, fully implement the deployment requirements of the ‘Implementation Plan,’ and continue to nurture and manage the credit market. First, further optimize the layout of the credit market. Seize the development opportunities of new productive forces, deepen credit supply-side reforms, support credit institutions in using new technologies like big data and artificial intelligence for product innovation, and provide diversified and differentiated credit information services for inclusive financial development. Second, further promote the sharing and application of various types of credit information. In conjunction with the Development and Reform Commission, we will promote the legal and compliant opening of data to credit institutions by the credit information platform, fully leveraging the multiplier effect of data. Third, continuously strengthen credit supervision. Firmly implement strict supervision requirements, bring all credit activities under lawful regulation, and comprehensively protect the legal rights and information security of information subjects. Thank you.

China News Agency reporter: The “Implementation Plan” proposes that the Financial Credit Information Basic Database should adhere to the positioning of financial infrastructure and provide high-quality specialized credit services for financial institutions. I would like to inquire about the effectiveness of the National Financial Credit Information Basic Database in supporting financing for small and medium-sized enterprises (SMEs). What are the considerations for the next steps? Thank you.

Thank you for the question. I’ll address it. The People’s Bank of China (PBOC) resolutely implements the decisions and arrangements of the Central Committee of the Communist Party of China and the State Council, continuously improves the policy system of financial services for the real economy, and vigorously promotes the construction of the credit system, which has played a positive role in alleviating the difficulties and high costs of financing for small and medium-sized enterprises (SMEs). The PBOC began building the financial credit system in the 1990s. After nearly thirty years of development, the National Financial Credit Information Basic Database has grown from nothing to the largest credit system in the world in terms of coverage and the most comprehensive in terms of credit information. Querying the database for credit reports has become a necessary step in the credit review process of financial institutions, playing a leading role in financial services for the real economy.

Here are some numbers for reference: As of the end of March 2024, the database has been accessed by 6,124 legal entities engaged in credit business, including commercial banks, consumer finance companies, and microloan companies. It has recorded information related to 1.16 billion individuals, 130 million households, and other organizations. In 2023, the database provided query services 5.3 billion times, a significant number indicating the substantial support for financing obtained by many SMEs with good credit history. In the World Bank’s Doing Business assessment, China’s credit information index, with the database as a reference, has ranked among the top globally for several consecutive years.

Furthermore, the PBOC actively promotes the construction of the unified registration and public announcement system for movable property financing and the accounts receivable financing service platform, which has facilitated the financing development of SMEs. As of the end of March 2024, the unified registration and public announcement system for movable property financing has handled 34.455 million registrations and provided 210 million queries. The accounts receivable financing service platform has facilitated 512,000 financings. It is fair to say that significant progress has been made in supporting movable property financing and supply chain finance.

In the next steps, the PBOC will thoroughly implement the spirit of the Central Economic Work Conference and the Central Financial Work Conference, practice the concept of “credit for the people,” continuously improve the database’s functions and services, and provide information support for the five major tasks. First, it will lawfully and comprehensively collect financial credit information, deepen the development and application of credit information, further improve service quality and efficiency, and support financial institutions in establishing a sound and effective mechanism for lending. Second, it will research and promote the shared application of payment fund flow information for SMEs, form a complementary service pattern with credit information, and further enhance the financing convenience for SMEs without credit records. Third, it will further expand the registration scope of the unified registration and public announcement system for movable property financing, and promote the application of the accounts receivable financing service platform, helping SMEs obtain financing using movable property. Thank you!

Notice from the General Office of the State Council on Issuing the ‘Implementation Plan for Coordinating the Construction of Financing Credit Service Platforms to Improve the Financing Convenience Level of Small and Micro Enterprises’

State Council Office Issue [2024] No. 15

To the People’s Governments of all provinces, autonomous regions, and municipalities directly under the Central Government, and to all ministries and commissions of the State Council, and to all directly subordinate institutions:

The ‘Implementation Plan for Coordinating the Construction of Financing Credit Service Platforms to Improve the Financing Convenience Level of Small and Micro Enterprises’ has been approved by the State Council and is now issued to you for serious implementation.

General Office of the State Council

March 28, 2024

(This document has been abridged)

Coordinated Construction of Financing Credit Service Platforms

Implementation Plan to Enhance Financing Convenience for Small and Micro Enterprises

The financing credit service platform is a comprehensive platform established under the guidance of government departments. It aggregates credit information across sectors and fields to provide credit information services for financial institutions’ enterprise financing activities. It plays a crucial role in solving the problem of information asymmetry between banks and enterprises and in reducing the financing costs for businesses. To implement the decisions and deployments of the Central Committee of the Communist Party and the State Council, better coordinate the construction of financing credit service platforms, improve the inclusive financing service system based on credit information, and effectively enhance the financing convenience level for small and micro enterprises, this implementation plan has been formulated.

I. Overall Requirements

Guided by Xi Jinping’s Thought on Socialism with Chinese Characteristics for a New Era, fully implement the spirit of the Party’s 20th National Congress, thoroughly, accurately, and comprehensively apply the new development concepts, accelerate the construction of a new development pattern, strive to promote high-quality development, improve the data foundation system, increase the coordination efforts in building financing credit service platforms, perfect the mechanism for the aggregation and sharing of credit information, advance the ‘Credit Easy Loan’ initiative, deepen the application of credit big data, ensure information security and the legitimate rights and interests of business entities, prompt financial institutions to change their business philosophies, optimize financial services, and control financial risks, providing high-quality financial services especially for small and micro enterprises.

II. Increase Coordination Efforts for Platform Construction

(i) Clarify the channels for the aggregation and sharing of credit information. Strengthen the ‘main hub’ function of the national credit information sharing platform (hereinafter referred to as the credit information platform) for the aggregation and sharing of credit information, and enhance the data sharing of the national financial credit information base database. The credit information platform unifies the collection of various types of credit information and shares it with departments and localities as needed. Relying on the credit information platform, construct a national financing credit service platform and connect it with local financing credit service platforms to form a nationwide integrated platform network. This serves as the ‘sole outlet’ for providing public credit information services to financial institutions, although the provision of credit information services in specific fields by departments to financial institutions is not restricted by this. Adhere to the financial infrastructure positioning of the national financial credit information base database, providing high-quality professional credit services to financial institutions.

(ii) Strengthen the integration and unified management of local platforms. Integrate local financing credit service platforms that are redundant or inefficient, keeping only one provincial platform per province in principle, and no more than one platform at the city or county level. All local platforms should be unified into the national integrated platform network, managed through a list-based approach to reduce redundant construction and waste of resources. The National Development and Reform Commission is responsible for coordinating the construction of financing credit service platforms and promoting the integration and unified management of local platforms. All regions should complete the platform integration by the end of December 2024, orderly managing asset transfer, data handover, and personnel placement, ensuring that platform services are not affected during the integration period.

(iii) Enhance guidance for the construction of local platforms. Standardize the criteria for local financing credit service platforms to access the national integrated platform network, optimize credit information services, and promote the standard and healthy development of local platforms. Relying on urban credit monitoring and the creation of social credit system demonstration zones, strengthen guidance on improving platform data quality. Fully utilize the existing counterpart support mechanisms to further deepen cooperation in constructing financing credit service platforms between the eastern and the central and western regions, and accelerate the ‘Credit Easy Loan’ initiative in the central and western regions.

III. Optimize the credit information collection and sharing mechanism

(iv) Clarify the scope of credit information collection and sharing. Based on the actual needs of financial institutions for credit information, further expand the scope of credit information collection and sharing to include key personnel information of enterprises, various qualification information, import and export information, etc., into the credit information collection and sharing list (see attachment). The National Development and Reform Commission will lead the timely update of this list. All regions should fully utilize the role of local financing credit service platforms to break down data barriers, legally and regulatively increase the collection and sharing of credit information outside the list, compile provincial credit information collection and sharing lists in line with local realities, and effectively expand the breadth and depth of data collection and sharing.

(v) Improve the quality and efficiency of credit information sharing. Increase ‘total-to-total’ sharing efforts for credit information already managed centrally by national departments. Strengthen collaborative governance of data quality, standardize data collection standards, timely conduct credit information repair, and improve information update and maintenance mechanisms to ensure data is true, accurate, and complete. Address issues such as insufficient data sharing frequency, inadequate interface capacity, and insufficient sharing of certain public utility information to further enhance the efficiency of credit information sharing. According to the needs of data providing units, regularly feedback on data usage and effectiveness. The National Development and Reform Commission should lead the assessment of credit information sharing quality and efficiency among regions and relevant departments.

IV. Deepening the Utilization of Credit Data

(vi) Improve information query services. Financing credit service platforms at all levels should provide services such as information push, information queries, and credit report queries to financial institutions according to the principles of public welfare, in accordance with laws and regulations. They should expand the scope of credit information queries, refine the credit report query system, and enhance the quality of credit reports. Support banking institutions in perfecting credit management systems and increasing the use of credit reports in customer screening, pre-loan investigations, in-loan approvals, and post-loan management, thereby providing high-quality financial services to small and micro enterprises.

(vii) Conduct joint modeling applications. Support financing credit service platforms and financial institutions in establishing joint laboratories for credit information collection and processing. Enhance sensitive data development and application through measures such as ‘keeping data within domain’, and improve the level of financial credit joint modeling. Encourage financial institutions to actively connect with financing credit service platforms and fully utilize credit information to optimize credit product development, credit evaluation, and risk management.

(viii) Develop credit financing products. Fully leverage the credit information aggregation advantages of key enterprises, centralized trading places, and distinctive industrial clusters. Conduct “Credit Easy Loan” special product pilots adaptively. Enhance the application of comprehensive public credit evaluation results, encourage local financing credit service platforms to develop strategic new industries, future industries, green and low-carbon development, key industrial and supply chains, agriculture-related modules, and support financial institutions in utilizing specialized credit information to launch market-oriented financial products and services in niche areas. Accelerate the construction of the rural credit system, support financial institutions in developing exclusive financial products and services for farmers and new types of agricultural operators, and moderately increase the proportion of credit loans.

(ix) Expand and enhance platform service functions. Encourage localities to establish and improve a “policy-to-person” mechanism, fully leverage the advantages of local financing credit service platforms in connecting enterprises and financial institutions, and promote the direct delivery of various financial convenience and enterprise-benefiting policies to small and micro enterprises and other business entities through the platform. Promote financing guarantee institutions to join the financing credit service platforms, establish a multi-party cooperation mechanism involving banks, governments, and financing guarantee institutions based on the platform, and simplify related financing guarantee procedures rationally. Encourage capable localities to establish mechanisms such as “online notarization,” “online arbitration,” and financial internet courts based on financing credit service platforms, for efficient resolution of financial disputes.

(x) Develop the credit service market. Establish operating conditions and standards for the credit information platform. Under the premise of ensuring information security, legally and regulatively open data to various credit service institutions, including credit reporting agencies, steadily foster the credit service market, and enhance the efficiency of matching supply and demand in credit financing.

V. Safeguard Measures

(xi) Strengthen information security and protect the rights and interests of information subjects. Enhance the management of information security on financing credit service platforms, improve management norms and standards for platform integration, institution entry, information collection, information sharing, and data security, and effectively ensure the security of physically collected information. Financing credit service platforms at all levels should strengthen the management of information authorization, enhance the security of data sharing, use, transmission, and storage, improve the monitoring and early warning of security risks, and effectively safeguard data security. Without anonymization or explicit authorization from the information subjects, financing credit service platforms at all levels must not provide information involving trade secrets or personal privacy, nor may they illegally spread, leak, or sell relevant credit information.

(xii) Strengthen policy support and safeguards. Local people’s governments should provide appropriate support for the construction of local financing credit service platforms at their level, guide local platforms and financing guarantee institutions to strengthen cooperation, and enhance the level of financing convenience for small and micro enterprises. Encourage localities to develop incentive policies that support credit financing, and provide appropriate incentives to financial institutions that help small and micro enterprises achieve financing through financing credit service platforms.

The third personal credit license may be issued soon!

Pan Gongsheng, the governor of the People’s Bank of China, recently announced at a press conference held by the State Council Information Office that the People’s Bank is guiding Qiantang Credit in its application for a personal credit license in conjunction with the Zhejiang Provincial Government.

Compared to Baihang Credit and Pudao Credit, which are already operational, Qiantang Credit has faced a much more difficult journey in applying for the personal credit license. As early as November 26, 2021, the People’s Bank had announced that it had accepted Qiantang Credit’s application for personal credit services. More than two years have passed, and the People’s Bank has still not issued a decision.

The challenging path for Qiantang Credit’s license application may be influenced by the ‘direct connection interruption’ and major shareholder restructuring. From the perspective of equity structure, both Zhejiang Tourism Investment Group Co., Ltd. (referred to as ‘Zhejiang Tourism Group’) and Ant Technology Group Co., Ltd. (referred to as ‘Ant Group’) hold 35% stakes, making them the largest shareholders.

As the restructuring of Ant Group is essentially complete and policy signals are clear, the issuance of Qiantang Credit’s personal credit license may accelerate. Several industry experts have stated that the issuance of Qiantang Credit’s personal credit license is of positive significance to the industry and will help align personal credit infrastructure with the development of the digital economy.

Qiantang Credit’s Challenging Path to Licensing

Ant Group’s application for a personal credit license began with the implementation of the ‘Interim Measures for the Supervision and Administration of Financial Holding Companies’ that landed in September 2020. These measures brought Ant Group under regulatory scrutiny, resulting in three regulatory interviews within six months. The regulatory rectification plan required Ant Group to bring all its financial activities under financial supervision, apply legally for the establishment of a financial holding company if eligible, sever improper connections between payment tools and other financial products, and prudently carry out internet lending and insurance business with licensed personal credit services.

On November 26, 2021, the People’s Bank of China publicized that it had accepted the personal credit business application from Qiantang Credit Limited (in preparation), referred to as “Qiantang Credit.” According to disclosures, Qiantang Credit has a registered capital of 1 billion yuan, with both Zhejiang Tourism Group and Ant Group holding 35% stakes each, making them the largest shareholders. Transfar Group holds 7%, Hangzhou Financial Investment Group holds 6.5%, Zhejiang E-port holds 6.5%, and Hangzhou Xishu Enterprise Management Partnership (LP) holds 10%.

The proposed list of directors, supervisors, and senior managers includes Chen Long, Dong Zhanbin, Yu Quan, and Chen Xinchun as shareholder directors; independent directors include Guo Tianyong, Hu Shaoxian, and Zhang Jingzhong; supervisors include Zhou Shengxue, Zhao Lei, and Cheng Zhijuan; senior management includes President Dong Zhanbin and CFO Kong Lingren.

Reporters learned that while Baihang Credit and Pudao Credit took about one to two months from application acceptance to approval, Qiantang Credit has been waiting for more than two years since its application was accepted, and the People’s Bank has yet to issue a decision. The path to licensing appears to be fraught with challenges. Pan Wenyuan, director of the Credit Research Center at the Shanghai Huaxia Economic Development Research Institute, told reporters that the difficulties in Qiantang Credit’s licensing mainly stem from the central bank’s cautious approach. Personal credit licenses involve multiple factors such as personal privacy protection, data compliance, and regulatory needs, requiring time for a comprehensive assessment.

Liu Xinhai, the executive deputy director of the Credit Management Committee of the All-China Mergers and Acquisitions Association and vice president of the Beijing Credit Society, analyzed several reasons for Qiantang Credit’s challenging path: one is the impact of Ant Group’s restructuring in recent years; another is the unique formation of Qiantang Credit, which differs from traditional global credit institutions, adding complexity. With the current strict global regulation of personal data, regulatory approvals are particularly cautious.

Wang Pengbo, a senior analyst at Broad Consulting, told reporters, “It might be due to not meeting the central bank’s acceptance criteria. The central bank might also be concerned about the actual control a single institution has over its personal credit business, questioning whether it can maintain the independence that a third-party credit agency should possess. If the data is biased, it could lead to assessment discrepancies. Of course, the decision might also be based on macroprudential principles.”

Impact of the License on the Industry

However, as Ant Group’s restructuring is essentially complete and the policy signals for the development of the credit market are clear, Qiantang Credit is experiencing new developments. Pan Gongsheng, the governor of the People’s Bank of China, recently announced at a State Council Information Office press conference that the People’s Bank, in conjunction with the Zhejiang Provincial Government, is guiding Qiantang Credit in its application for a personal credit license.

Pan Wenyuan believes that the central bank is further promoting the development of the credit market and sending positive signals, especially since Qiantang Credit has a higher private capital ratio compared to the first two institutions. Introducing market-oriented personal credit institutions under the premise of controllable risks can foster healthy competition in the industry and boost market confidence.

Pan Wenyuan states that Qiantang Credit’s role is primarily based on Ant Group’s actual application scenarios. Unlike Baihang Credit and Pudao Credit, which mainly serve the public market, Qiantang Credit has a multidimensional data advantage. The establishment of Qiantang Credit can enrich the data sources of the existing personal credit industry from a data collection perspective; from the perspective of serving the financial industry’s data needs, personal credit companies will become important participants in the financial industry’s data service providers, leveraging data resources and licensing advantages to increase market share.

Wang Pengbo points out that the personal credit industry requires participation from institutions representing various types to meet market demands. Credit is the foundation and underlying business of finance, supporting lending. Under the requirements of mandatory licensing and the disconnection of direct financial information, the value of personal credit licenses will gradually increase. As the financial industry develops progressively, the application scenarios for credit will become richer and more diverse.

Liu Xinhai states that China has the world’s largest consumer market and plans to further develop its consumer economy in the future. Efficient and diversified personal credit services are important digital economic infrastructures. There needs to be a central bank credit system as public infrastructure, state-backed credit institutions to ensure data security, and personal credit institutions based on large technology platforms to compete and promote each other, making the entire personal credit market more dynamic.

Liu Xinhai points out that the future establishment of Qiantang Credit’s personal credit license will have a positive impact on the industry: on one hand, it will help to align personal credit infrastructure with the development of the digital economy; on the other hand, being based on a large technology platform, market-driven incentives and specialized operations can bring technological and business model innovations to the field of personal credit.

By Liu Xin Source:Global Times Published: 2020/5/12

Many places in China have taken measures to deal with personal information leakage as some individuals’ information has been improperly acquired and experts warned that with the COVID-19 epidemic coming under control in China, personal information that has been collected for prevention work should have encryption to decrease the risk of information leakage. 

Reports of individuals’ personal information being exposed or misused have appeared recently, which raised concerns over the security of personal information. For example, the public security authorities in Qiangdao (should that be Qingdao?), East China’s Shandong Province, released a notice on April 19, saying that more than 6,000 residents’ information, including their name, address, identity number and phone number had been exposed, the Xinhua Daily Telegraph reported. 

In the early stage of fighting against the coronavirus, some places required individuals to register their information with residential communities, online applications or pharmacies, which increased the risk of misuse or leakage of the information, experts said. 

Qin An, head of the Beijing-based Institute of China Cyberspace Strategy, told the Global Times that some places over-collected personal information after the outbreak of the coronavirus. The current issue is how to properly store and manage the information. 

“Two situations should be avoided – information leakage and continuous collecting of residents’ information,” Qin said. 

He noted that since China’s cryptography law has been implemented, all personal information should be stored after encryption to avoid disclosure. 

The public security bureaus in many places in China have dealt with cases involving illegally collecting and disclosing personal information. On March 5, Chinese authorities, including the Ministry of Civil Affairs and the Cyberspace Administration of China, required residential communities to ask for residents’ permission before collecting information for prevention work. 

Authorities in South China’s Guangdong have started supervision of online applications and set requirements for data and privacy protection for organizations that offer applications for prevention, the Xinhua Daily Telegraph reported.

By Cao Siqi and Chen Qingqing Source: Global Times Published: 2020/10/13

As home to the world’s most online users, China on Tuesday unveiled its highly anticipated draft law on personal data protection, a significant step to address the long-held problems of leaks and hacks.

The draft was submitted for first review at the ongoing session of the top legislature meeting on Tuesday. It clarifies the definition of sensitive private data, including race, ethnicity, religion, biometric data, medical and financial data, and personal trajectory.  

It states that those who violate the law could face a fine of up to 50 million yuan ($7.4 million) or 5 percent of its past year’s turnover, which observers said will strike a heavy blow to organizations, enterprises and individuals who have constantly disturbed people’s lives by illegally collecting, using and trading personal information for profit. 

Legal experts said the existing laws do not provide adequate protection for individuals because they do not impose significant punishment on companies engaged in breaches.

Key information infrastructure operators and entities that handle a substantial amount of personal information that need to provide personal information to overseas must undergo security assessment from Chinese authorities. 

If overseas organizations or individuals are found to have damaged Chinese citizens’ rights to private data or involved in personal data activities that harm national security and public interests, they will be put into a blacklist by the Cyberspace Administration of China. 

Wang Sixin, a media law professor at Communication University of China, believes that this specific clause targets overseas internet companies, especially in the US, given some popular social media platforms were found to leak users’ privacy. 

In August 2019, Twitter fixed an issue on its advertising platform that resulted in the company sharing some users’ data with advertising partners without the users’ consent. Earlier the same year, Facebook’s database leaked the phone numbers of 419 million users. 

The draft law has been long awaited and widely welcomed, as the big data industry has been rapidly growing in China, which played a vital role in helping fight the coronavirus epidemic, such as tracking down close contacts to confirmed patients through online tools, and monitoring personal trajectory to quickly identify suspected cases. 

Similarly, based on the EU General Data Protection Regulation, which took effect on May 25, 2018 and replaced the Data Protection Directive, violations could result in a fine of up to €20 million, or 4 percent of the firm’s worldwide annual revenue from the preceding financial year. GDPR regulators have issued hundreds of fines to companies, including Google and Facebook, worth more than €114 million in the first 20 months of GDPR, according to its website. 

Experts suggested Chinese law on personal information protection should also impose specific punishments on overseas organizations or individuals if they are found to leak Chinese citizens’ privacy. They warned that the enforcement of the personal information protection law should be cautious; otherwise, it may harm the development of new technologies, as personal data also has abundant social, economic and governance value.