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China passes sweeping data privacy law, toughens regulation on tech companies

WebdeskAug 20, 2021, 06:50 PM IST

China passes sweeping data privacy law, toughens regulation on tech companies



China has toughened its regulation on the country's tech companies bypassing sweeping new rules about the collection and use of personal data.


The Personal Information Protection Law -- which was approved Friday by the Standing Committee of the National People's Congress, and which will take effect November 1 -- prohibits "illegally collecting, using, processing, transmitting, disclosing and trading people's personal information," according to state-run Xinhua News Agency, reported CNN.


The full text of the law is not yet public, but Xinhua reported that, among other things, it "clarifies" rules governing the "processing" and "provision" of personal information across borders.


News of the law comes as some Chinese tech firms, including ride-hailing company Didi, have been accused of mishandling user data in recent months.


Shortly after Didi went public in the United States, Chinese regulators accused it of "illegally collecting and using personal information," reported CNN.


China has been cracking down on their tech giants. Chinese President XI Jinping recently delivered a big blow to Wall Street investors when he crushed Didi after US investors pumped billions of dollars in it.


The Chinese companies ordered the removal of the Didi App from the app store citing data privacy concerns and its stock dipped 30 per cent of its original value just sometimes after many US investors landed billions into it.


And this situation is getting worse, huge Chinese tech giants like Alibaba and Tencent are paying fines against various allegations. The Chinese government is still de-stalling many companies that have raised money from the US market. It has become an admitted fact that all Chinese profit-making firms are under the direct control of CCP.

Xinhua also reported that the law will create stronger regulation of China's public surveillance system, requiring the disclosure and labelling of hardware used in identifying people in public places. Collected data can only be used for maintaining public safety, the news agency said.


China operates a vast network of cameras, backed by advanced facial recognition and AI-driven technology, to control crime but also to check identities in subways, schools and office buildings.


The law also stipulates that companies cannot use personal data to target individuals for marketing, according to state broadcaster CCTV. And firms must provide easy ways for users to opt-out of targeted marketing, reported CNN.


CCTV also reported that sensitive personal information -- such as biometrics, health care and financial accounts -- should only be processed with the individual's consent.


Should a company illegally handle personal information, their services could be suspended or terminated, according to the law. Those who refuse to make corrections will be handed a fine of up to 1 million yuan (USD 153,000), reported CNN.


The news rocked Chinese tech stocks on Friday, adding to what has already been another disastrous week. (JD), Xiaomi and Alibaba (BABA) fell 2 per cent or more in Hong Kong.


Health information affiliates of JD, Alibaba and Ping An Insurance (PIAIF) were among the worst performers, all plunging 13 per cent or more, reported CNN.


This week, Hong Kong's Hang Seng Tech Index -- which tracks the 30 largest tech firms that trade in the city -- has fallen more than 10 per cent. That's the index's worst weekly performance since February, added CNN.


Experts have admitted that that Chinese companies have no transparency, no accountability and have been playing on CCP's tunes, investing money in Chinese firms is nothing but a predictable loss.






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