China's Cybersecurity Laws - What Malaysian Businesses should be aware and Steps to Take


Scope of the Law and Key Provisions

China’s Cybersecurity Law focuses on the nature and flow of digital information that has been generated in China. It places a strong emphasis on securing personal information and other important data that has been collected in China, and standardises its collection and usage.


Network operators (currently defined as the owners and administrators of networks and network service providers) are expected, amongst other things, to: 

  1. clarify cybersecurity responsibilities within their organisation;

  2. take technical measures to safeguard network operations and prevent data leaks and theft; and 

  3. report any cybersecurity incidents to both users of the network and the relevant implementing department for that sector.

According to recently released draft guidelines, network operators can transfer data overseas under most circumstances. However they would be required to carry out regular security self-assessments to gauge the risk of data transfers based on factors such as quantity, scope and sensitivity of the data. Where the nature of the data is deemed to be “important” (for example, if it relates to population and health, marine environment or sensitive geographic information, or other information likely to affect national security or the public interest), network operators would be subject to further inspection, and could be prevented from transferring the data overseas. 


Critical information infrastructure operators face additional, more stringent, obligations. There is currently no fixed definition of the term “critical information infrastructure operator”. This means that organisations operating in sectors removed from telecommunications infrastructure could still be impacted by the law’s more stringent requirements. 


Such operators are expected, amongst other things, to:

  1. store personal information and important data collected and generated in China within mainland China. If transmission of such data out of China is necessary due to business needs, clearance procedures shall be followed according to separate rules formulated by the Cyberspace Administration of China; 

  2. procure “safe and controllable” Internet technologies, products and services; and 

  3. conduct regular audits of cyber-technology systems and processes. 

Securing the supply chain – regulating the use of certified network products and services 

Specialised equipment, products and services designed to ensure network security (such as routers, switches and servers) must adhere to compulsory government standards in order to be used in China. Any critical information infrastructure operator using network-related products and services that are important to national security and the public interest must go through network security reviews. 


Related measures on cloud services operations

Cloud service operators are expected, amongst other things, to:

  1. hold a value-added telecommunications license (which are still subject to certain foreign investment restrictions); 

  2. construct cloud service platforms within the territory of China; and 

  3. locate service and data storage facilities in China for services that target Chinese users. 

Cloud service providers may also need to follow the same draft requirements for security self-assessment and potential audits by regulators as are applicable to network operators when transferring personal information and “important data” across borders. 


VPN regulations

New directives have also been released aimed at "clearing up" and regulating the Internet access service market. Under these moves, telecom businesses will need prior approval before providing VPN services. Businesses using unapproved VPNs could be impacted if the particular VPN they are using is affected by the regulations. Foreign businesses who need to access cross-border networks can rent VPNs from authorized carriers. We recommend checking whether the provider of your VPN is licensed in China. 

As the cybersecurity laws in China are constantly evolving, we will keep you informed as changes develop. We recommend that businesses in Malaysia that has businesses and operations in China to,

  1. keep yourself updated on Chinese cybersecurity laws and how they will relate to your business, 

  2. review your policies on information technology, information security management and personally identifiable information;

  3. check whether your VPN provider in China is a “licensed” provider; and 

  4. consider whether you might need to seek specialised legal and/or technical advice. 

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