The People's Republic of China ("PRC") Ministry of Science and Technology ("MOST") issued the Implementing Rules of the Administrative Regulations on Human Genetic Resources (Draft for Comments) (人类遗传资源管理条例实施细则(征求意见稿), "Draft HGR Rules") on 22 March 2022 for public comments. The Draft HGR Rules contain seven chapters and 122 articles, covering the detailed requirements on the collection, preservation, utilisation, international cooperation and cross-border transfer of human genetic resources ("HGR"), as well as provisions regarding the relevant workflow, supervision, inspection and administrative penalties. The Draft HGR Rules intend to provide detailed rules for relevant parties to comply with the Regulation on Human Genetic Resources (人类遗传资源管理条例) which took effect in 2019.
Based on the Draft HGR Rules, HGR includes HGR materials (such as organs, tissues and cells which contain human genomes, genes and other genetic substances) and HGR information generated from the utilisation of HGR materials.
Article 11 of the Draft HGR Rules provide that "foreign parties" are prohibited from collecting, preserving or transferring Chinese HGR to a foreign country or place. If they do need to make use of China's HGR to carry out scientific research activities, they shall cooperate with qualified Chinese partners, which will be subject to review, approval or filing by MOST's HGR Office.
It is noteworthy that the determination of a "foreign party" is not only based on its domicile / place of establishment, but also whether it is established or actually controlled by a foreign organisation or individual. Based on the definition of "actual control" under the Draft HGR Rules, even if a foreign organisation or individual does not hold equity interests in a PRC-domiciled entity, it may still be deemed as a "foreign party" if a foreign organisation or individual can, through contractual arrangements, exert control or decisive influence over its major matters, such as decision-making, operation and management. This means that a PRC-domiciled company adopting the VIE (variable interest entity) structure may be deemed as a foreign entity and cannot avoid the relevant restrictions under the Draft HGR Rules.
We would like to highlight that there are some overlaps between HGR information and "important data" and "personal information" under the PRC Cybersecurity Law, the PRC Data Security Law and the PRC Personal Information Protection Law. Accordingly, any provision of the HGR information to foreign entities shall also be subject to the relevant requirements under such laws and regulations on the cross-border transfer of personal information and important data. However, it is subject to further clarity from the authority whether the cross-border transfer of HGR data needs to fulfil the cross-border data transfer security assessment procedures of both MOST and the Cyberspace Administration of China.
