CHINA

China Passes Regulations on Cross-Border Data Flow

On 22 March 2024, the Cyberspace Administration of China ("CAC") published the long-awaited Regulations on Promoting and Regulating the Cross-border Data Flow (促进和规范数据跨境流动规定) ("Regulations"), which came into immediate effect.

Compared to the draft Regulations earlier issued for comments by CAC on 28 September 2023 ("Draft Regulations"), one of the significant changes is the change of the Regulations' name by moving "promoting" before "regulating". This marks a radical shift in China's cross-border data transfer regulatory approach towards one which seeks to ensure a balance between national security and protection of individual rights on one hand, and commercial practicability on the other hand.

The Regulations and Draft Regulations remain largely aligned with respect to scenarios that may be exempted from the requirements to (i) complete and file a data export security assessment; (ii) conclude a standard personal information export contract; or (iii) obtain a Personal Information Protection Certification (collectively, "Data Export Regulatory Requirements"). However, the Regulations have included more examples of scenarios that can be exempted from the above requirements. In addition, the triggering conditions to comply with the Data Export Regulatory Requirements have been raised from "personal information of 10,000 persons that would be expected to be transferred within one year" to "personal information of 100,000 persons that have been transferred cumulatively starting from 1 January of the current year" when transferring personal information (excluding sensitive personal information) from China to other countries or places.

We have prepared a detailed legal update on the passed Regulations. Please click here to understand more scenarios that can be exempted from the Data Export Regulatory Requirements. 

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China Issues Draft Administrative Measures for Syndicated Loan

On 22 March 2024, the National Financial Regulatory Administration of the PRC officially published Administrative Measures for Syndicated Loan (Draft for Comment) ("Draft Measures") to solicit public opinion. The Draft Measures are intended to revise the Syndicated Loan Guidelines, which were issued by the former China Banking Regulatory Commission in 2007 and revised in 2011 ("Guidelines"). While maintaining the overall structure of the Guidelines, the Draft Measures introduce several key changes. We summarise some of the key changes below.

Principles for Providing Syndicated Loans

The Draft Measures introduce new principles for banks engaging in the business of syndicated loans. It stipulates that banks should (i) enhance quality financial services for major strategies, key areas, and weak links; (ii) support the growth of the real economy; and (iii) strengthen penetration management. Banks should also control client concentration and effectively prevent and resolve risks. These principles suggest a strategic direction for banks to focus on certain specific sectors for the provision of syndicated loans.

Incorporation of Grouped Syndicated Loans Mode

The Draft Measures also make major adjustments to the mode of syndicated loans. It moves away from the Guidelines' requirement for uniform conditions and terms across the syndicated loans. Instead, it incorporates the concept of the grouped syndicated loan, drawing from international practice. This new mode allows syndicate members to offer loans with varying terms or types under one syndicated loan contract, provided that terms, interest rates, purposes, and other conditions shall remain consistent within each group. However, the Draft Measures also set restrictions on grouped syndicated loans, specifying that they should not form more than three groups, and in principle, each group should have at least two participating banks.

Allowing Partial Transfer of Syndicated Loans

Another highlight of the Draft Measures is that it expressly permits banks to partially transfer a syndicated loan by splitting the outstanding principal and interest in its entirety pro rata. This will activate the secondary market of syndicated loans if the Draft Measures are passed in the current form. However, the Draft Measures maintain the priority right of other members in the syndicate. Additionally, the Draft Measures also require that any transfer of a syndicated loan must be pre-registered at the China Credit Assets Registration & Exchange. However, further clarification is needed on how such registration shall be conducted, especially for the transfer of a cross-border syndicated loan.

Overall, the Draft Measures signify a potentially great move towards integrating with global syndicated loan practices while enhancing the oversight of domestic syndicated loan activities.

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China Issues Draft Regulations in Relation to Off-Campus Tutoring

On 8 February 2024, the PRC Ministry of Education released the draft Regulations on Administration of Off-Campus Tutoring (校外培训管理条例(征求意见稿), "Draft Regulations"). The Draft Regulations are the first draft regulations for the off-campus tutoring sector at the national level since July 2021 when China initiated a sweeping crackdown on the private tutoring industry. A summary of the key highlights in the Draft Regulations is listed below. Kindly note that the Draft Regulations have not been passed, and the final Regulations may be different from the current draft.

Definition

Clause 2 of the Draft Regulations provides a clear definition of off-campus tutoring, which refers to organised or systematic educational training activities conducted outside the school education system, targeting primary and secondary school students and pre-school children aged three to six with the main purpose of improving the students' academic performance or cultivating interests and specialties. This is the first time that a clear definition of off-campus tutoring is provided in law.

Classification, Approval and Administration

The Draft Regulations classify and differentiate two types of off-campus tutoring, i.e. curriculum-based tutoring and non-curriculum-based tutoring, which are subject to different approval and administration requirements.

Clause 6 of the Draft Regulations further stipulates that approval for off-campus tutoring shall be obtained for all off-campus tutoring activities. In particular, institutions which provide curriculum-based tutoring targeting students at the compulsory education stage (i.e. primary and junior high school) should be registered as non-profit legal entities.

Qualification and Teaching Materials

Clause 8 of the Draft Regulations stipulates that the teaching and research staff of off-campus tutoring institutions providing curriculum-based tutoring shall obtain teaching qualifications. The teaching and research staff of off-campus tutoring institutions providing non-curriculum-based tutoring shall obtain corresponding professional qualifications. The Draft Regulations further prohibit teachers and research staff in kindergartens and primary and secondary schools from engaging in off-campus tutoring activities.

Clause 9 of the Draft Regulations stipulates that materials used for off-campus tutoring shall be filed with the relevant approving authority. In particular, materials used for non-curriculum-based tutoring shall also be concurrently submitted to the competent industry regulatory authority.

The Draft Regulations also provide rules and/or restrictions in other aspects of off-campus tutoring activities, such as the name of the institution, time and schedule of tutoring hours, testing and competitions, pricing requirements, etc. All in all, the issuance of the Draft Regulations marks a significant step forward in the restructuring and standardisation of China’s off-campus tutoring industry after the introduction of the "Double Reduction" policy in July 2021. Certain provisions of the Draft Regulations still need to be further clarified or interpreted by the authorities.

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Expanded Scope for Reciprocal Recognition and Enforcement of Court Judgements in Civil and Commercial Matters between Chinese Mainland and Hong Kong SAR

On 29 January 2024, the Arrangement on Reciprocal Recognition and Enforcement of Judgments in Civil and Commercial Matters by the Courts of the Chinese Mainland and of the Hong Kong Special Administrative Region ("New Arrangement"), which was signed on 18 January 2019, came into effect.

Before the New Arrangement took effect, the basis for the mutual recognition and enforcement of court judgments between the Chinese Mainland ("Mainland") and the Hong Kong Special Administrative Region ("Hong Kong") was the Arrangement on Reciprocal Recognition and Enforcement of Judgments in Civil and Commercial Matters by the Courts of the Chinese Mainland and of the Hong Kong Special Administrative Region Pursuant to Choice of Court Agreements between Parties Concerned ("2008 Arrangement"), which came into force in August 2008.

Under the 2008 Arrangement, the judgments would be reciprocally enforceable only if there was a written agreement between the parties designating the court in the Mainland or Hong Kong as having exclusive jurisdiction. In addition, the 2008 Arrangement also limited the scope of the mutual recognition and enforcement to monetary judgments only. Other types of judgments such as those involving tort judgments were not covered.

The New Arrangement broadens the scope of judgments that can be recognised and enforced mutually between the two places. It now includes non-monetary judgments and covers almost all judgments of a "civil and commercial" nature under the laws of the Mainland and Hong Kong. This includes certain types of intellectual property dispute judgments, and judgments regarding civil compensation in criminal cases. In addition, it eliminates the requirement for a written exclusive jurisdiction agreement. Instead, the applicant only needs to show that there is an actual connection between the dispute and the requesting place, and that the requested place does not have exclusive jurisdiction over the dispute. The connection can be demonstrated through the defendant's place of residence, the place of performance of the contract involved, or any other actual connection.

However, it should be noted that the New Arrangement does not apply to eight types of judgments in civil and commercial matters, namely:

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Singapore and China Sign Three MOUs to Strengthen Business Ties

In its 1 February 2024 press release, the Singapore Business Federation ("SBF") announced that  Singapore and China had hosted the Singapore-China Economic Partnership Conference, during which time three Memoranda of Understanding ("MOUs") were signed. The MOUs aim to enhance the business relationships, intellectual property protection, and mediation and arbitration support in these two countries. The conference, attended by business leaders and government officials, also explored new opportunities for trade and investment between Singapore and China.

The scope of the three MOUs are as follows:

1. The first MOU prioritises the facilitation of business activities to encourage the advancement of commercial and industrial relations between Singapore and China. It was renewed by SBF and the China Council for the Promotion of International Trade ("CCPIT").


2. The second MOU focuses on providing capacity-building support for enterprises from China and Singapore in intellectual property protection, management, and dispute resolution. This was signed by the Singapore Manufacturing Federation (SMF) and CCPIT Commercial and Legal Service Center.


3. The third MOU, together with the Joint Declaration on the Provision of Legal Services for Regional Economic Development ("Joint Declaration"), seeks to offer businesses from both countries support for mediation and arbitration as an alternative mode of dispute resolution to foster trade and investment cooperation in the region. The MOU was signed by the CCPIT Commercial Legal Service Centre and Singapore International Mediation Centre ("SIMC"), while the Joint Declaration was signed by SIMC, Singapore Chamber of Maritime Arbitration (SCMA), Singapore International Arbitration Centre (SIAC), CCPIT Mediation Center, China Maritime Arbitration Commission (CMAC), and China International Economic and Trade Arbitration Commission (CIETAC).

The signing of the three MOUs demonstrates the deepening economic ties and the commitment of both Singapore and China to foster stronger bilateral relations.

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