On May 16, 2017, the Legislative Affairs Commission of the National People’s Congress (NPC) Standing Committee of China released for public comment a draft of the National Intelligence Law (“the Draft Law”). The Draft Law, if enacted as drafted, would be the first Chinese statute to systematically address national intelligence related issues, including institutional structures, the scope of intelligence-gathering powers, and potential effects on private entities.

Background of the Draft Law

The Draft Law is part of the Chinese government’s initiative to strengthen national security during President Xi Jinping’s administration. In 2013, President Xi created the National Security Committee as well as the Committee for Inspection of State Affairs. A series of laws related to national security, including the National Security Law, Counter-Espionage Law, Counter-Terrorism Law, and Cybersecurity Law have been enacted since then. The Draft Law is the latest effort by the Chinese government to strengthen and safeguard national intelligence and to protect national security and interests, by calling for the establishment of a comprehensive national intelligence system.

Summary of the Draft Law

The Draft Law consists of five (5) chapters and twenty-eight (28) articles. Chapter 1 discusses general principles; Chapter 2 addresses the powers of the national intelligence agencies; Chapter 3 covers recruitment, training, and protection of agents; Chapter 4 provides the penalties for violating the law; and Chapter 5 provides that the Law shall take effect upon issuance.

The Draft Law divides the national intelligence system into three branches—the State Security Institution, the Public Security Intelligence Institution and the Military Intelligence Institution. It grants national intelligence agencies and relevant agents broad authority to conduct intelligence-gathering activities. For example, Article 16 grants intelligence agents power to enter certain restricted areas and facilities during emergencies. Article 9 grants national intelligence institutions the power to employ “all necessary methods, tactics, and channels” to carry out intelligence-gathering efforts “domestically and abroad,” so long as such activity is conducted “according to law.” The intelligence-gathering authority is also extended to individuals and private organizations that work under the authorization of intelligence institutions per Article 12. This Article implies that private intelligence organizations may be developed (or officially recognized) in the future and could work as government contractors in response to national intelligence needs.

Despite the potentially broad scope of the Draft Law, each substantive Chapter contains language that prohibits abuses of power by intelligence authorities. For example, Article 7 and 18 require the intelligence agencies to respect “human rights” protection and the legal rights of citizens and organizations, such as property rights, personal privacy, and trade secrets. Article 24 provides that any person may report potential violations of the law by intelligence agencies, and prohibits retaliation against such persons. Article 27 imposes civil and criminal liabilities on those who are convicted of corruption or abuse of power.

Potential Implications           

Companies active in China should assess how the National Intelligence Law might affect their operations, data assets, and relations with local and national authorities. Under the Draft Law, it is possible that trade secrets or other proprietary information may be accessed by the Chinese government if deemed necessary. For instance, Article 15 provides that companies or other organizations can be asked to produce documents and other property as part of investigations, so long as such requests comply with procedural requirements. The practical effect of the Law’s checks on abuse of power will also depend on how it is implemented by authorities and interpreted by courts.

Chao Qu and Xinyi Song contributed research for this article.

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Photo of Yan Luo Yan Luo

Yan Luo advises clients on a broad range of regulatory matters in connection with data privacy and cybersecurity, antitrust and competition, as well as international trade laws in the United States, EU, and China.

Yan has significant experience assisting multinational companies navigating the…

Yan Luo advises clients on a broad range of regulatory matters in connection with data privacy and cybersecurity, antitrust and competition, as well as international trade laws in the United States, EU, and China.

Yan has significant experience assisting multinational companies navigating the rapidly-evolving Chinese cybersecurity and data privacy rules. Her work includes high-stakes compliance advice on strategic issues such as data localization and cross border data transfer, as well as data protection advice in the context of strategic transactions. She also advises leading Chinese technology companies on global data governance issues and on compliance matters in major jurisdictions such as the European Union and the United States.

Yan regularly contributes to the development of data privacy and cybersecurity rules and standards in China. She chairs Covington’s membership in two working groups of China’s National Information Security Standardization Technical Committee (“TC260”), and serves as an expert in China’s standard-setting group for Artificial Intelligence and Ethics.

Photo of Victor Ban Victor Ban

Victor Ban is an associate in Covington’s Washington office who helps clients navigate complex disputes and international trade matters.