In the news: China passes the Cybersecurity Law, considers permitting investment bank WFOEs and releases a law for the film industry
November 08, 2016 | BY
Katherine Jo &clp articles &The NPC approved the PRC Cybersecurity Law, U.S.-China trade negotiations involved allowing wholly foreign-owned investment banks on the mainland and the new film law targeted ticket sales fraud
After two rounds of drafts, the Standing Committee of the National People's Congress has passed the PRC Cybersecurity Law, which will take effect in June. Key information infrastructure operators are required to cooperate with investigations involving crime and national security, and mandatory testing and certification of network equipment are aso imposed. Foreign groups have criticized each review stage of the law, arguing that it creates barriers to trade and innovation and expressing concerns surrounding the handover of security keys, intellectual property and source codes to the PRC government. Several companies seem to have begun ring-fencing their Chinese data. For instance, Airbnb reportedly sent an email last week informing its mainland users that their personal data will be transferred to servers within the country in accordance with its laws and regulations. China's fortress approach to safeguarding cybersecurity and restricting cross-border data transfers could have a greater on impact domestic companies going outbound than foreign investors. Several questions still need to be addressed, such as what constitutes “important data” and how broadly network operators of “critical information infrastructure” will be interpreted by the government.
More from CLP:
Data dragnet: Cybersecurity Law broadens scope, restricts outflows (Official release analysis)
Cybersecurity Law: Stricter rules on big data (Second reading analysis)
China defines rules for e-evidence in criminal cases
Cybersecurity Law sparks data concern for MNCs (First reading analysis)
Is China really opening up big data?
China tightens regulatory net for multinationals
China is reportedly considering whether to allow Wall Street banks to establish wholly-owned investment banking businesses on the mainland as part of negotiations of a new U.S.-China trade framework. Foreign investment banks currently can only operate in the PRC market by forming a local joint venture. The China Securities Regulatory Commission (CSRC) lifted the share cap from 33% to 49% in 2012. Data from Dealogic show China's rank as the largest fee paying nation globally after the U.S., hitting a half-year record high of $3.7 billion in investment banking revenue in the first half of 2016. Debt capital markets, M&A and syndicated loan revenue led the jump, with technology as the most target outbound sector. China's opening up of its financial industry appears to be making progress. It relaxed investment limits for QFIIs, opened up its $8 trillion interbank bond market and permitted the establishment of secondary market private fund WFOEs this year. On the other hand, the CSRC has been extremely active in investigations and demanding of information from industry players since the 2015 stock crash. Even if China follows through with allowing investment bank WFOEs, the move is unlikely to prompt an immediate breakaway from existing joint ventures—having a Chinese partner can be useful for both regulatory and commercial reasons.
More from CLP:
China's new film law, the first formal legislation for the industry, will target face box-office sales and ensure movies reflect the country in a positive light. Taking effect in March next year, it lays down harsh punishments for producers who artificially pump up ticket sales—a practice that has helped propel huge market growth in recent years—and sets stricter rules for actors and filmmakers, stating that industry employees should have moral integrity and self-discipline. The law's release comes as a movie market boom has Hollywood studios looking to tap into China's growing middle class and consumer base despite challenges from regulatory scrutiny to annual caps on imported films. Chinese real estate conglomerate Dalian Wanda—which the U.S. entertainment industry sees as the bridge between the Chinese and American movie worlds—recently bought Dick Clark Productions for $1 billion, following its acquisition of Legendary Entertainment earlier this year.
More from CLP:
After two rounds of drafts, the Standing Committee of the National People's Congress has passed the PRC Cybersecurity Law, which will take effect in June. Key information infrastructure operators are required to cooperate with investigations involving crime and national security, and mandatory testing and certification of network equipment are aso imposed. Foreign groups have criticized each review stage of the law, arguing that it creates barriers to trade and innovation and expressing concerns surrounding the handover of security keys, intellectual property and source codes to the PRC government. Several companies seem to have begun ring-fencing their Chinese data. For instance, Airbnb reportedly sent an email last week informing its mainland users that their personal data will be transferred to servers within the country in accordance with its laws and regulations. China's fortress approach to safeguarding cybersecurity and restricting cross-border data transfers could have a greater on impact domestic companies going outbound than foreign investors. Several questions still need to be addressed, such as what constitutes “important data” and how broadly network operators of “critical information infrastructure” will be interpreted by the government.
More from CLP:
Data dragnet: Cybersecurity Law broadens scope, restricts outflows (Official release analysis)
Cybersecurity Law: Stricter rules on big data (Second reading analysis)
China defines rules for e-evidence in criminal cases
Cybersecurity Law sparks data concern for MNCs (First reading analysis)
Is China really opening up big data?
China tightens regulatory net for multinationals
China is reportedly considering whether to allow Wall Street banks to establish wholly-owned investment banking businesses on the mainland as part of negotiations of a new U.S.-China trade framework. Foreign investment banks currently can only operate in the PRC market by forming a local joint venture. The China Securities Regulatory Commission (CSRC) lifted the share cap from 33% to 49% in 2012. Data from Dealogic show China's rank as the largest fee paying nation globally after the U.S., hitting a half-year record high of $3.7 billion in investment banking revenue in the first half of 2016. Debt capital markets, M&A and syndicated loan revenue led the jump, with technology as the most target outbound sector. China's opening up of its financial industry appears to be making progress. It relaxed investment limits for QFIIs, opened up its $8 trillion interbank bond market and permitted the establishment of secondary market private fund WFOEs this year. On the other hand, the CSRC has been extremely active in investigations and demanding of information from industry players since the 2015 stock crash. Even if China follows through with allowing investment bank WFOEs, the move is unlikely to prompt an immediate breakaway from existing joint ventures—having a Chinese partner can be useful for both regulatory and commercial reasons.
More from CLP:
China's new film law, the first formal legislation for the industry, will target face box-office sales and ensure movies reflect the country in a positive light. Taking effect in March next year, it lays down harsh punishments for producers who artificially pump up ticket sales—a practice that has helped propel huge market growth in recent years—and sets stricter rules for actors and filmmakers, stating that industry employees should have moral integrity and self-discipline. The law's release comes as a movie market boom has Hollywood studios looking to tap into China's growing middle class and consumer base despite challenges from regulatory scrutiny to annual caps on imported films. Chinese real estate conglomerate Dalian Wanda—which the U.S. entertainment industry sees as the bridge between the Chinese and American movie worlds—recently bought Dick Clark Productions for $1 billion, following its acquisition of Legendary Entertainment earlier this year.
More from CLP:
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