Under the online privacy law new rules, public and private companies that process personal information will have to reduce data collection and obtain user consent.
Under the new rules, public and private companies that process personal information will have to reduce data collection and obtain user consent.
China passed a sweeping privacy law on Aug. 20 aimed at preventing companies from collecting sensitive personal data as the country grapples with a surge in internet fraud, data leaks and concerns that tech giants are misusing customers’ personal informations.
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Under new rules passed by China’s top legislature, state-owned and private companies that process personal information will have to curtail data collection and obtain user consent.
online privacy law
However, China’s state apparatus will have access to personal data, and Beijing has long been accused of using big technology to accelerate repression in the northwestern province of Xinjiang and elsewhere.
The new rules are expected to further shake up China’s tech sector, which has seen companies such as auto-transportation giant Didi and gaming behemoth Tencent come under regulatory scrutiny in recent months for data abuse.
The law aims to protect those who “strongly believe that personal data is used to profile users and through recommendation algorithms or the use of big data in settings [unfair] prices,” a spokesman for the National People’s Congress told the state news agency Xinhua earlier this week.
This will prevent companies from setting different prices for the same service based on customers’ purchase history, a common practice among Chinese online businesses.
The law is modeled after one of the world’s strictest online privacy laws, the European Union’s General Data Protection Regulation.
Chinese online businesses.
“China’s new privacy regime is one of the toughest in the world,” said Kendra Schaefer, a partner at Beijing-based consulting firm Trivium China. “China is not really looking at the short term with this law.”
Instead, she said, it aims to “lay the foundations for the digital economy for the next 40 or 50 years.”
The law also stipulates that personal data of Chinese citizens cannot be transferred to countries with lower data security standards than China, regulations that could create problems for foreign companies.
“What we’re concerned about is the data transfer,” Ms. Schaefer said. “It creates a very interesting geopolitical conundrum, which is that there is no national privacy law in the US.”
Companies that do not comply with these requirements can be fined up to 50 million yuan ($7.6 million) or 5% of the company’s annual turnovers.
Serious violators risk losing their business licenses and being forced to close.