Lexology GTDT Market Intelligence provides a unique perspective on evolving legal and regulatory landscapes. This interview is taken from the Artificial Intelligence volume featuring discussion on various topics including, government national strategy on AI, ethics and human rights, AI-related data protection and privacy issues, trade implications for AI and more, within key jurisdictions worldwide.

1 What is the current state of the law and regulation governing AI in your jurisdiction? How would you compare the level of regulation with that in other jurisdictions?

At present, there are no laws or regulations directly governing AI in China. However, the Chinese government has encouraged usage of AI in various industries in recent years as a tool that allows for greater efficiency and convenience with respect to policy implementation, safety and law enforcement.

Over the past few years, the Chinese government set out ambitious goals in the development of facial recognition, as evidenced by many policy documents issued by various government agencies. For example, the Ministry of Civil Affairs and the National Development and Reform Commission explicitly promoted the application of AI in civil affairs in the 13th Five-Year Plan for the Development of Civil Affairs. The National Development and Reform Commission also stipulated in the Notice on the Organization and Implementation of the New Generation of Information Infrastructure Construction Project, and the Internet Plus Major Project in 2017, that the infrastructure of face recognition should be strengthened.

The Ministry of Industry and Information Technology’s AI strategy, issued in 2017 (Three-Year Action Plan to Develop a New Generation of the Artificial Intelligence Industry), states that by 2020 the effective detection rate in complex dynamic scenarios should exceed 97 per cent and the correction rate should exceed 90 per cent.

Like other jurisdictions (eg, the European Union and the United States), China remains in its early stages in development in terms of legislation, though China has been more willing to encourage the use of AI technology to facilitate convenience and efficiency in achieving certain purposes and may not be inclined to impose a moratorium on AI due to wariness about how the technology may intrude on individual rights.

Using facial recognition as an example, while China has some generally applicable privacy rules, including a number of national standards that are viewed as best practices recommended by the government, which address the collection and use of biometric data, it is unclear whether these rules are enforceable in cases where government agencies or state-owned enterprises providing utilities and essential services are deploying this technology. Individuals usually have far less power to opt out of such collection and use, and it is hard to obtain any relief if there is misuse or harm. Despite the lack of use parameters and specific guidance, current Chinese rules governing use of facial recognition in the public sector generally encourages greater use and integration of the technology, leaving out important concerns of how to strike a balance between individual interests and public needs.

2 Has the government released a national strategy on AI? Are there any national efforts to create data sharing arrangements?

The State Council released a national strategy on 8 July 2017, entitled the New Generation Artificial Intelligence Development Plan (the AI Development Plan). With respect to data sharing arrangements, the AI Development Plan generally encourages collaborative efforts in the development of AI and AI infrastructure. For example, the AI Development Plan proposes open-source platforms that encourage sharing of algorithms and other tool sets to improve innovation in the field of AI, as well as establishing a national data sharing exchange platform to support big data infrastructure. However, no specific programmes or initiatives were mentioned in the AI Development Plan and the implementation of this plan is not clear. The Standardization Administration has released its Guidance for Building the National Standardization System for New Generation Artificial Intelligence, pursuant to its 2017 development plan to establish China as a leading AI power. The guidance calls on Chinese government to develop more than 20 key AI standards by 2030, covering both hardware and software standards across applications in 16 identified sectors.

3 What is the government policy and strategy for managing the ethical and human rights issues raised by the deployment of AI?

The AI Development Plan notes that the continued development of AI will necessitate policies that include:

  • research on AI ethics;
  • an ethical framework that incorporates collaboration between human beings and computers in the decision-making process; and
  • the establishment of an ethical code of conduct for AI products.

Government-backed trade associations started issuing self-regulatory guidance to covered entities. For example, the Payment and Clearing Association of China released the Self-Regulatory Conventions for Facial Recognition Within the Offline Payment Sector (trial) (the Facial Recognition Conventions) on 20 January 2020, which apply to all entities that facilitate payments via facial recognition. Importantly, the Facial Recognition Conventions incorporate consumer protection provisions, from general cybersecurity protections, such as physical and network security that satisfy security requirements under national and finance-specific regulations, to preservation of user rights, which include channels for complaint and disclosure of usage purposes for collected facial information.

Under the Facial Recognition Conventions, entities facilitating payments via facial recognition are required to notify consumers of the purpose, methods and scope of the data collection and to obtain consent from consumers. In addition, encryption measures are required to be adopted when storing original facial recognition data.

4 What is the government policy and strategy for managing the national security and trade implications of AI? Are there any trade restrictions that may apply to AI-based products?

We are presently unaware of any specific policies or strategies of Chinese regulators regarding national security and trade implications of AI. However, AI has reportedly been a sector that is frequently mentioned in the current trade discussions between the United States and China.

5 How are AI-related data protection and privacy issues being addressed? Have these issues affected data sharing arrangements in any way?

While discussions exist around the issues of AI-related data protection and privacy issues, Chinese regulators have not directly addressed such issues at this time. The existing data protection and privacy issues are generally governed by China’s Cybersecurity Law framework. Specifically, and by way of example, the Personal Information Security Specification released in February 2020 stipulates secure storage requirements for biometric information, which falls under the wider umbrella of AI. However, more specific guidance on the deployment and use of AI remains lacking.

6 How are government authorities enforcing and monitoring compliance with AI legislation, regulations and practice guidance? Which entities are issuing and enforcing regulations, strategies and frameworks with respect to AI?

At present, there are no instances of enforcement with respect to AI legislation, regulations and practice guidance. However, we anticipate future guidance to be issued from the Ministry of Science and Technology.

7 Has your jurisdiction participated in any international frameworks for AI?

China, via its China Electronics Standardization Institute, has been an active member of the ISO/IEC JTC 1/SC 42 subcommittee that develops international standards for the AI industry. In addition, Chinese regulators have established the Artificial Intelligence Industry Alliance, which seeks to develop industry standards on assessment and certification industry systems for AI products and services. Of note, China is not a signatory to the Organisation for Economic Co-operation and Development and its published Principles on Artificial Intelligence.

8 What have been the most noteworthy AI-related developments over the past year in your jurisdiction?

In 2019, China accounted for 12 per cent of the global market, but with a growth rate of 64 per cent, which exceeds those of peer countries and regions, such as the United States and Western Europe. Closer examination of the Chinese market in 2019 reveals that most image analysis companies can already provide AI technologies that intersect with privacy, such as optical character recognition and facial and human recognition. Moreover, AI continues to see large-scale implementation, particularly with respect to government services in the form of intelligent terminals and robots that provide assistance.

9 Which industry sectors have seen the most development in AI-based products and services in your jurisdiction?

In China, the AI-based products with the most rapid development involve processing of facial recognition and biometric data. The Chinese government, in recognition of the efficiency gain that facial recognition can create in both public and private sectors, has attached great importance to research and development, as well as deployment and commercialisation, of this technology. As a result, facial recognition touches upon almost every aspect of an individual’s life in China – for example, facial recognition is widely used in containing covid-19 by verifying identity without person-to-person contact.

10 Are there any pending or proposed legislative or regulatory initiatives in relation to AI?

While there are no pending or proposed AI legislative or regulatory initiatives at this time, the AI Development Plan explicitly states that, as the field of AI evolves, China aims to develop laws, regulations and ethical norms that promote the development of AI, while also maintaining accountability, such as with privacy protections and ensuring that an ethical code of conduct exists for AI products.

11 What best practices would you recommend to assess and manage risks arising in the deployment of AI?

It is important to continuously monitor national strategies and pending legislation in China, particularly as AI is being deployed at a rapid rate in terms of integration into corporate operations. While no legislation specific to AI has been promulgated as yet, companies should nevertheless adhere to related laws and implementing regulations, such as China’s Cybersecurity Law, and establish – among other required tasks – technical and operational controls with respect to personal information.

The Inside Track

What skills and experiences have helped you to navigate AI issues as a lawyer?

At Covington, we take a holistic approach to AI that integrates our deep understanding of technology matters and our global and multi-disciplinary expertise. We have been working with clients on emerging technology matters for decades and we have helped clients navigate evolving legal landscapes, including at the dawn of cellular technology and the internet. We draw upon these past experiences as well as our deep understanding of technology and leverage our international and multi-disciplinary approach. We also translate this expertise into practical guidance that clients can apply in their transactions, public policy matters and business operations.

Which areas of AI development are you most excited about and which do you think will offer the greatest opportunities?

The development of AI technology is affecting virtually every industry and has tremendous potential to promote the public good, including to help achieve the UN Sustainable Development Goals by 2030. For example, in the healthcare sector, AI may continue to have an important role in helping to mitigate the effects of covid-19 and it has the potential to improve outcomes while reducing costs, including by aiding in diagnosis and policing drug theft and abuse. AI also has the potential to enable more efficient use of energy and other resources and to improve education, transportation, and the health and safety of workers. We are excited about the many great opportunities presented by AI.

What do you see as the greatest challenges facing both developers and society as a whole in relation to the deployment of AI?

AI has tremendous promise to advance economic and public good in many ways and it will be important to have policy frameworks that allow society to capitalise on these benefits and safeguard against potential harms. Also, as this publication explains, several jurisdictions are advancing different legal approaches with respect to AI. One of the great challenges is to develop harmonised policy approaches that achieve desired objectives. We have worked with stakeholders in the past to address these challenges with other technologies, such as the internet, and we are optimistic that workable approaches can be crafted for AI.