A. Specific obligations imposed on Government Projects

The Measures impose specific obligations on Scientific Data Projects funded by the state or regional governments (Government Projects),²  as follows:

(1) Collating and submitting data to scientific data centres – all scientific data generated under a Government Project must be collated and submitted by the entity leading the Government Project to the relevant scientific data centre for further consolidation and processing.

(2) Sharing data for public utilisation – all scientific data generated under a Government Project, except data that is subject to specific confidentiality and security rules (such as data containing state secrets, trade secrets, etc.), must be made public for sharing and use.

(3) Submitting data to the relevant research institute – if certain scientific data generated under a Government Project has to be made available outside China in connection with an academic paper to be published in a foreign academic journal, the data must be submitted to the research institute where the author works, for review by the institute’s management prior to publication of the academic paper.

We note that some articles in the public media have expressed grave concerns, particularly about the specific obligations mentioned above. However, these articles fail to clarify that the Measures do not impose such mandatory obligations on other projects using private funds (such as R&D activities solely funded by non-state-owned enterprises) (Non-Government Projects). That is to say, if no government funding is involved, entities are not required to submit their scientific data to data centres or research institutes, or to share the data with the public. They are only encouraged to do so, although if the data generated under any Non-Government Project concerns state secrets, national security or the public interest, then such data can still be subject to the obligation under paragraph (1) above.

B. General obligations applicable to all projects

We also set forth below the general obligations provided under the Measures that are applicable to all Scientific Data Projects, whether or not they are publicly funded.

(1) Providing data on a non-profit basis – scientific data that is essential for policy making, public safety, national defence construction projects, environmental protection, disaster prevention, scientific research carried out for the public good, etc., shall be provided free of charge, or for a reasonable fee in accordance with a standardised fee policy (yet to be published).

(2) Signing contracts for data use – when using scientific data for business purposes, the parties concerned must enter into a contract specifying their rights and obligations in relation to usage of the data.

(3) Keeping certain data confidential – scientific data relating to state secrets, national security, the public interest, trade secrets and personal privacy must either not be made public or, before being made public, be subject to the authorities’  review of the purposes of its use, the qualification status of the relevant data user and all confidentiality provisions.

(4) Review by the authorities – if, during any collaboration with a foreign party, it is necessary to provide scientific data relating to state secrets to the party, such data provision shall be subject to review and approval by the authorities and to the Chinese and foreign parties entering into a confidentiality agreement.

In essence, the obligations under paragraphs (2), (3) and (4) above are generally in line with current legislation in effect in respect of state secrets and data privacy, such as the PRC Guarding State Secrets Law and the PRC Cybersecurity Law, although paragraph (1) above may add an extra burden and potentially grant fair use of scientific data by the government for the public good.

C. Comments and suggestions

When conducting scientific-data-related activities in China, it is good practice to ensure the following matters are duly addressed:

1. Know your partner – the Measures impose specific obligations on Government Projects but fail to provide clear guidance on what constitutes a Government Project. Therefore, we recommend that, before entering into a scientific collaboration project in China, foreign parties conduct basic due diligence of the intended Chinese business partner (if any) and the source of funding to establish whether the collaboration project might, in fact, be deemed a Government Project. If a project involves the participation of a public university, a research institute or a hospital (which are usually fully funded by the government in China), or involves a governmental authority or its designated entity, then it is highly likely to be considered a Government Project.

2. Check your funding terms and sources – when receiving external funding (including financial subsidies or incentives) for any scientific research in China, it is important to review the terms of the funding and its source, to establish whether any specific requirements or restrictions might apply and whether the funding comes from government.

3. Review your project documents – it is recommended that appropriate legal documentation be entered into between the participants to govern material matters in respect of scientific data generated under the collaboration project, such as matters relating to the ownership of intellectual property, confidentiality, etc.

4. Ensure your compliance – especially when participating in Government Projects, we recommend establishing an internal compliance programme to ensure the fulfilment of any obligations under the Measures, and compliance with applicable laws and regulations governing data privacy and state secrets.

1. The Measures came into effect on 17 March 2018 upon issuance by the State Council of China.
2. This could be interpreted to broadly include all kinds of funding provided by the central government, regional governments, local authorities, state-funded organisations (such as public universities, hospitals and research institutes) or state-owned enterprises.

Client Alert 2018-152