Is China's tech 'crackdown' over?
Plus: A state-backed ride-hailing app? And regulating synthetic media.
Welcome to the DigiChina Update. In 2023, we are returning to regular newsletter publication to update you on DigiChina’s recent work and to highlight resources from the growing community of projects and publications analyzing China’s technology policies. This edition is written by Student Editor Tianyu Fang (TF) and Editor-in-Chief Graham Webster (GW).
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For the platform economy, data-intensive businesses, and key consumer-facing sectors such as fintech, the last two years have been turbulent in China. A series of major regulatory moves targeting prominent firms such as Ant Group and DiDi coincided with the implementation of new laws on personal information protection and data security. These diverse events have collectively been labeled a “crackdown” or “rectification” in the digital economy.
Since the beginning of 2023, DiDi seems to be out of the regulatory doghouse and is accepting new sign-ups. A top bank regulator said at least part of the rectification is “basically complete.” And although much remains to be seen as to how the new data laws are enforced, a long period when new draft language would open enormous legal uncertainty has yielded to a basically complete scaffolding for cyberspace regulation.
DigiChina welcomed eight specialists to give their answers to the questions:
Is China’s regulatory fervor in tech over, or is it the new normal? What has it wrought, and what’s yet to come?
Read answers from Rogier Creemers of University of Leiden, Johanna Costigan of Asia Society, Paul Triolo of the Center for Strategic and International Studies, Tom Nunlist of Trivium China, Lauren Dudley of Rhodium Group, the threat intelligence analyst Mei Danowski, Martin Chorzempa of the Peterson Institute for International Economics, and Karman Lucero of Yale Law School.
Their views and insights are diverse, but if one thing emerges as a commonly-held view, it’s that while tech fields may see less upheaval, stronger state attention to the digital economy is here to say. –GW
⚖️ Read the full forum: Is China’s Tech ‘Crackdown’ or ‘Rectification’ Over?
Student Editor Tianyu Fang looked into reports that Xuexi Qiangguo 学习强国, sometimes called the “Little Red App,” may be introducing a ride-hailing service that could compete with DiDi, just after the privately-held market leader got out of app store jail:
“Looking deeper, however, there is little justification for speculation that this amounts to a government-backed alternative to displace DiDi. The Ministry of Transport, whose logo appears on a screenshot of the platform, has denied any involvement; Beijing Daily, the municipal Party Committee–affiliated newspaper that first broke the news, has subsequently removed its coverage. In a Jan. 19 statement, Xuexi Qiangguo said Qiangguo Jiaotong was not a “national-level transport platform,” but a mini-program developed in partnership with the China Traffic Communication Information Center (CTCIC), a body under the Ministry of Transport. The platform wouldn’t have its own services but rather would aggregate third-party providers—and DiDi might even be one of them.” –TF
🚕 Read the full analysis: Is a State-Backed Ride-Hailing Service Set to Displace DiDi in China? Think Again.
China is an early mover in regulating media synthesis services
China’s regulations on synthetic media, the Internet Information Service Deep Synthesis Management Provisions, took effect Jan. 10. The provisions govern a wide variety of services that now or in the future give users the ability to algorithmically generate content, ranging from text-generating models similar to OpenAI’s ChatGPT, to face swap apps, deep fake production, or 3D environment generation for virtual or augmented reality.
As I told The Wall Street Journal, these provisions represent Chinese policymakers’ efforts to channel international discussions about how to govern the use of AI into some of the earliest concrete regulations in any major market. The rules represent a more detailed explication of requirements under the Cybersecurity Law, the Data Security Law, the Personal Information Protection Law, and the Internet Information Service Management Measures. At root, they define the types of monitoring and due diligence, as well as incident response, required for entities providing “deep synthesis” media services to users.
Among the most interesting provisions—not at all out of step with regulatory thinking around the world, but notably now in effect in China—is to require prominent labeling of outputs that might confuse or mislead the public (Art. 17), and to prohibit anyone from removing such markers (Art. 18). It will be interesting to watch how this is accomplished if, for instance, reports are true that Baidu will soon release a text-generating product like ChatGPT. –GW
📄 DigiChina translated last year’s draft of the Provisions
📄 China Law Translate has a version of the final
What we’re following
Signaling support for SMEs: The Ministry of Industry and Information Technology (MIIT) hosted its annual National Work Conference on Jan. 11, outlining 13 critical tasks in 2023. As noted by Trivium, the conference called for support for small- and medium-sized enterprises, potentially signaling a friendlier regulatory regime for technology entrepreneurs.
20 articles on data systems: The State Council issued guidelines (containing 20 articles) on “building a basic system to better give play to the utility of data factors [of production]” in December, followed by a document published in Qiushi magazine by the National Development and Reform Commission (NDRC) emphasizing its importance.
Now you can file an appeal to credit blacklists: New provisional measures on “credit information restoration,” published by the NDRC this month, outline procedures for entities to remove themselves from negative credit information catalogs.
Happy 2023 and Year of the Rabbit! Resolve to share and subscribe.