It is worth noting that:

• Terms such as “national security” and what damage is considered “significant” or “severe” are not defined in the draft MLPS. Further guidance on how to assess the impact level of networks is expected to be provided by Information Security Technology – Guidelines for Grading of Cybersecurity Multi-level Protection (Grading Standard), a national standard a draft of which was issued by the National Information Security Standardization Technical Committee on January 19, 2018 for public comments. In particular, the draft Grading Standard now indicates that the “critical information infrastructure,” as defined under the CSL, shall be classified as no lower than Level 3.

• Networks that may cause severe damage to the legitimate rights and interests of individuals, legal persons and other organizations are classified as Level 2 under the existing MLPS, but they would instead be classified as Level 3 under the draft MLPS as shown in the above chart. Once the draft MLPS becomes effective and binding, networks operated by multinational corporations (which usually process a lot more personal and business information and data) could be more easily classified as Level 3 and thus be subject to further legal obligations and greater supervision.

• How can the classification be determined?

Pursuant to the draft MLPS, the network operator will be required to propose a classification based on a self-assessment made during the network design phase. For a classification at Level 2 or above, reviews by experts and (if applicable) competent authorities, and filings with the local counterpart of the MPS, are also required. The local MPS shall issue the filing certificate within 10 business days of the date of the submission if all legal requirements are met. The detailed filing procedures will be further formulated and released by the MPS.

• What are the cybersecurity protection obligations?

Routine obligations at all levels 

Under article 20 of the draft MLPS, all network operators must comply with routine cybersecurity protection obligations, in particular:

• Designating personnel responsible and accountable for the cybersecurity multi-level protection scheme

• Establishing a cybersecurity management system and operational procedures for data centers and computer rooms

• Retaining records of network operations, cybersecurity incidents, and illegal and criminal activities for at least six months

• Classifying data, and protecting important data through measures such as backups and encryption

• Lawfully collecting, using, and processing personal information

• Implementing measures to detect, block, and remove illegal information

• Reporting cybersecurity incidents to the local MPS (and, if state secrets are involved, to the local state secrets agency) within 24 hours of the incident

Although the last requirement imposes a new 24-hour timeline for breach notification, it falls short of detailing the reporting process, including what information should be included in the notification report. Network operators are also required to conduct an annual self-assessment of the implementation status of the MLPS, make timely rectifications, and report the results to the local MPS.

• Establishing the network security management organization, job responsibilities, and escalation-approval procedures for operational matters

• Developing an overall cybersecurity plan and safeguards strategy, and putting into place the necessary security infrastructure, subject to review and approval by technical experts

• Implementing rules on background checks and certificate requirements for cybersecurity personnel

• Providing real-time monitoring and analysis of network operations, traffic, user behavior, and cybersecurity incidents, and reporting the results to the local MPS

• Establishing backup and recovery procedures for critical networks and telecommunication systems

• Establishing assessment procedures for the cybersecurity multi-level protection scheme, regularly assessing the classification of the network, and reporting the results to the local MPS

Operators of networks with a classification of Level 3 or above must also pass a test set and given by an accredited testing agency before their networks go online. The operators must also formulate an emergency cybersecurity plan and conduct periodic emergency response drills. Moreover, technical maintenance of networks at Level 3 or above must be conducted within the PRC and not remotely from another country, or if remote technical maintenance is required for business needs, a network security assessment must be conducted and risk control measures put into place. Additional requirements are imposed on operators of networks at Level 3 or above. These relate to cybersecurity product procurement, network service providers, and the use and testing of encryption measures under the draft MLPS.

• What are the enforcement measures and legal liabilities?

Compared with the existing MLPS, the draft MLPS introduces more enforcement measures, such as blocking information transmission and disconnecting the internet in case of emergency, initiating the investigation of cybersecurity incidents, and summoning the relevant personnel of network operators (legal representatives, the main people in charge, etc.) for consultation.

Furthermore, by incorporating the relevant articles under the CSL, the draft MLPS, as compared with the existing MLPS, provides more clear guidance as to the applicable legal liabilities (from administrative orders requiring corrective measures to monetary penalties imposed on network operators and relevant personnel) in the following situations: 

• Violations of obligation to protect network security (article 59 of the CSL)

• Violations of obligation to protect personal information (article 64 of the CSL)

• Failure to comply with instructions from enforcement authorities or refusal to cooperate with investigations (article 69 of the CSL)

The draft MLPS also highlights that network operators classified at Level 3 or above may be subject to more severe penalties for violations.

Conclusion

Once the draft MLPS is adopted, multinational corporations doing business in China that fall under the category of network operators will first need to check the applicable classification on their networks and, if the network at issue would be classified as Level 3 or above, be sure to ensure compliance.