CHINA Looking Back: 2021 and Gazing Into: 2022 Looking Back: 2021
Looking back on 2021, the world was facing unprecedented changes and struggling with the challenges brought about by the pandemic of the century, the COVID-19 pandemic. In contrast, China in that same year has further opened its markets to foreign investments and continued to provide strong impetus for the steady recovery of the global economy. For example, on the national level, the National Development and Reform Commission and the Ministry of Commerce jointly issued in December 2021 the updated versions of two "negative lists" for the access to foreign investment in China, both of which have taken effect on 1 January 2022, replacing their respective 2020 versions. On the regional level, further to the Master Plan for Construction of Hainan Free Trade Port which has been rolled out since 1 June 2020, China passed the Hainan Free Trade Port Law on 20 June 2021, marking a significant move to upgrade the construction of the Hainan free trade port covering areas from policy support to legislative guarantee.
Together with the opening up of the market, China also focused on data security and protection by promulgating two very important laws in the year of 2021, namely, the Data Security Law and the Personal Information Protection Law. A number of (draft) implementation rules and industry regulations have also been finalised and/or released, such as the Regulations/Rules on: (i) the Protection of the Security of Critical Information Infrastructure which came into force on 1 September 2021; (ii) the Management of Automobile Data Security (for Trial Implementation) which took effect on 1 October 2021; (iii) the Measures on Security Assessment of Cross-Border Data Transfer (Draft for Comments); and (iv) the Measures on Network Security Assessment (Draft Revision for Comments). These laws and regulations demonstrate the Chinese government's determination and efforts to safeguard data security. It is expected that more detailed rules relating to these will be issued in the year of 2022.
As the tensions between China and the United States over trade and technology have not been eased in 2021, China has promulgated various regulations and/or policies to safeguard its national security and interests as well as to push back against certain foreign discriminatory restrictive measures. Such regulations include the Measures for Security Review of Foreign Investment, the Anti-Foreign Sanctions Law Measures, and the Rules on Counteracting Unjustified Extra-territorial Application of Foreign Laws.
Gazing Into: 2022
2022 is likely to witness the further opening-up of the China market for foreign investment alongside the tightening of regulations in relation to some aspects of business operations. In response to the negative impact of the COVID-19 pandemic on China's economy and to deliver on its commitments to open up its economy, China will continue to press ahead with the reforms to streamline administration, improve regulation, and upgrade services (which is called "放管服" in Chinese) to further optimise the business operation environment for all domestic and foreign investors.
The 2021 Negative Lists have been further shortened, signalling the Chinese government's continuous attempts to attract foreign investments.
After around 40 years' implementation of reform and opening-up policies, China has become the world's second largest economic power. Despite this, it is also facing various challenges and issues brought about by the rapid growth of capital, resulting in an unstable and unbalanced social and economic development. It is against this backdrop that President Xi has called for China to achieve "Common Prosperity (共同富裕)". In the coming year, China will continue its efforts to reform its existing regulatory regime and strengthen supervision to prevent the uncontrolled growth and disorderly expansion of capital and to promote a healthy and stable social and economic environment. These efforts include:
- reshaping China's regulatory regime for overseas listing;
- ongoing amendments to the Company Law (second substantial amendments); and
- continued enhancement of anti-monopoly enforcement.
Last but not least, data protection will continue to be the China regulators' focus in 2022. China regulators have rolled out several data enforcement campaigns in 2021, the most significant of which was the enforcement against Didi, which announced on 3 December 2021 that it would delist from the New York Stock Exchange (NYSE) and pursue a listing in Hong Kong instead. As we are in an era of big data, data security and protection are to be taken to relate not only to individual privacy but also to national security. China will continue to strengthen its data enforcement following the passage of the Data Security Law ("DSL") and the Personal Information Protection Law ("PIPL"). The basic legal framework of data protection has been established in China through the DSL and PIPL coming into operation. However, it remains to be seen how the general requirements and principles stipulated under these laws are implemented.
Full Report
Click on the link below for the full report which provides summaries of the key legal developments related to the above areas.
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Please note that whilst the information in this Update is correct to the best of our knowledge and belief at the time of writing, it is only
intended to provide a general guide to the subject matter and should not be treated as a substitute for specific professional advice.
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