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Chapter IV Technological Innovation

Article 29 [Original Text]

Article 29 Support private economic entities in lawfully participating in the research and development of common digital and intelligent technologies and the construction of data element markets. Enable them to use data reasonably in accordance with the law and develop and utilize open public data resources lawfully. Enhance the sharing, inclusiveness, and security of data elements to fully leverage the enabling role of data.

[Interpretation of Provisions]

Legislative Background and Purpose: The digital economy represents a significant current development trend, with data emerging as a critical production factor. This provision aims to support private enterprises in playing a role in digital technology R&D, data element market development, and data resource utilization, thereby advancing the digital economy.

Interpretation of Provisions: a. “Research and development of common digital and intelligent technologies”: Refers to foundational digital technologies capable of empowering multiple industries, such as artificial intelligence algorithms, big data analytics, cloud computing platforms, and Internet of Things (IoT) technologies. b. “Development of data factor markets”: Refers to cultivating and developing market systems encompassing data collection, processing, trading, and application to facilitate efficient allocation and value realization of data resources. c. “Lawful and reasonable use of data”: Emphasizes that data utilization must occur within the legal framework, particularly adhering to regulations on data security and personal information protection. d. “Lawful Development and Utilization of Open Public Data Resources”: Public data held by government departments (e.g., meteorological, transportation, geographic information) should be made accessible to society after anonymization and security safeguards, encouraging private enterprises to pursue value-added development and innovative applications. e. “Enhancing Data Element Sharing, Inclusivity, and Security”: ● Sharing: Promoting cross-departmental, cross-level, and cross-regional data flow and sharing. ● Accessibility: Enable more market entities to access and utilize data resources equitably and conveniently. ● Security: Ensure data security throughout collection, storage, transmission, and usage to prevent leaks and misuse. f. “Fully leverage the enabling role of data”: Utilize data to optimize production and operations, innovate business models, and enhance social governance.

【Relevant Regulations】

● Data Security Law of the People's Republic of China: Establishes fundamental systems for data security protection. ● Personal Information Protection Law of the People's Republic of China: Regulates personal information processing activities. ● Cybersecurity Law of the People's Republic of China: Safeguards cyberspace sovereignty, national security, and public interests while protecting the lawful rights and interests of citizens, legal persons, and other organizations. ● National planning documents and policy directives on digital economy development, big data strategy, and market-oriented allocation of data as a factor of production. ● Public data opening management measures issued by local governments.

【Practical Guidelines】

a. Digital Transformation for Private Enterprises:

● Actively apply digital technologies to upgrade traditional operations and develop new digital economy models.

● Participate in building data factor markets by providing services such as data collection, cleaning, annotation, analysis, and visualization. ● Monitor government public data open platforms to identify application scenarios and develop innovative products and services. b. Data Compliance and Security: Enterprises must strictly adhere to data security and personal information protection laws and regulations when processing data. Establish robust internal data management systems to prevent risks of data leakage and misuse. c. Government Promotion of Data Element Market Development: ● Accelerate the open sharing of public data resources by establishing clear open catalogs and standards. ● Support the establishment of regional or industry-specific data trading platforms. ● Explore foundational systems for data property rights, circulation and trading, and revenue distribution. d. Research and Development of Common Technologies: Encourage private enterprises to participate in tackling key common technologies in the digital field and support the development of open-source communities.

Article 30

The State guarantees the lawful participation of private economic entities in standard-setting activities, enhances information disclosure and public oversight in standard development, and provides services and conveniences in areas such as scientific research infrastructure, technical validation, standard specifications, quality certification, inspection and testing, intellectual property, and demonstration applications.

Interpretation of the Provision

Legislative Background and Purpose: Standards serve as the technical foundation for industry development and the strategic high ground for market competition. This provision aims to safeguard private enterprises' right to participate equally in standard-setting and provide public service support for their technological innovation and product promotion.

Interpretation of the Provision: a. Paragraph 1: Participation in Standard-Setting: ● “Participate in standard-setting activities in accordance with the law”: Private enterprises have the right to participate in the formulation and revision of national, industry, local, and even group standards, express opinions, and contribute expertise. ● “Enhancing Information Disclosure and Public Oversight in Standard Development”: Information throughout the entire process—including project initiation, drafting, soliciting opinions, review, approval, and publication—shall be disclosed to the public and subject to oversight by all parties to ensure the scientific rigor, fairness, and applicability of standards. b. Paragraph 2: Public Service Support: ● This enumerates multifaceted services and conveniences provided by the state to private enterprises, which are crucial for transforming technological innovations into market advantages. ● “Scientific Research Infrastructure”: See Article 28. ● “Technology Validation”: Provide platforms or services to help enterprises validate the feasibility and performance of their new technologies and products. ● “Standards and Specifications”: Offer services such as standard information queries and standard compliance assessments. ● “Quality Certification”: Support enterprises in obtaining quality management system certifications (e.g., ISO 9000) and product certifications (e.g., CCC certification). ● “Inspection and Testing”: Deliver authoritative inspection and testing services to ensure product quality meets standards.

● “Intellectual Property”: Offer services including patent applications, trademark registration, copyright registration, and rights protection assistance.

● “Demonstration Applications”: Support the demonstration, promotion, and market application of new technologies and products.

【Relevant Regulations】

● Standardization Law of the People's Republic of China: Regulates standard development, implementation, and oversight. ● Product Quality Law of the People's Republic of China: Establishes provisions for product quality, certification, and inspection. ● Regulations on Certification and Accreditation of the People's Republic of China: Standardizes certification and accreditation activities. ● Rules and policies issued by the State Administration for Market Regulation (Standardization Administration of China) regarding standard development, quality certification, and inspection and testing.

【Practical Guidelines】

a. Private Enterprise Participation in Standard Development: ● Actively monitor industry standard development and revision dynamics, participating in standard drafting and consultation through industry associations and standardization technical committees. ● Integrate proprietary technological strengths and innovation achievements into standards to secure industry influence. b. Leveraging Public Service Resources: ● Proactively explore and utilize government-provided public technical service platforms and resources, such as national/provincial quality inspection centers, intellectual property service centers, and technology transfer centers. ● Enhance management capabilities and product competitiveness through quality certification. c. Government Enhancement of Service Provision: ● The government should increase investment in public technical service platform development to elevate service capacity and quality. ● Streamline service access procedures and reduce service costs, particularly for small and medium-sized private enterprises. ● Ensure transparency in the standard-setting process and facilitate participation channels for private enterprises. d. “Leading Enterprises Set Standards”: Encourage technically capable private enterprises to lead or deeply engage in the development of international and national standards.

Article 31 [Original Text]

Article 31 Support private economic entities in strengthening the application of new technologies, conducting trials of new technologies, products, services, and business models, leveraging the roles of technology markets and intermediary service institutions, and promoting the application and dissemination of scientific and technological achievements through various means. Encourage private economic entities to voluntarily engage in technological cooperation based on commercial rules during investment processes. The terms of technological cooperation shall be determined through negotiation among all parties involved in the investment, adhering to the principle of fairness.

[Interpretation of the Provision]

Legislative Background and Purpose: Scientific and technological achievements can only be transformed into tangible productive forces through application and promotion. This provision aims to encourage private enterprises to actively adopt new technologies, emphasizing that technical cooperation should adhere to the principles of voluntariness and fairness.

Interpretation of Provisions: a. Paragraph 1: Application of New Technologies and Promotion of Achievements: ● “Strengthen the application of new technologies”: Encourages private enterprises to adopt advanced and applicable domestic and international technologies to upgrade and enhance their operations. ● “Conduct application trials for new technologies, new products, new services, and new models”: Supports enterprises in undertaking small-scale, exploratory ‘trials’ to accumulate experience for large-scale promotion. This may involve innovative regulatory approaches such as “regulatory sandboxes.” ● “Leveraging the Role of Technology Markets and Intermediary Service Institutions”: Technology markets (e.g., technology property rights exchanges) and intermediary service institutions (e.g., technology transfer agencies, science and technology consulting firms) play a vital role in facilitating technology supply-demand matching, achievement evaluation, and transaction facilitation. ● “Promoting the Application and Dissemination of Scientific and Technological Achievements Through Diverse Methods”: Such as technology transfer, technology licensing, valuation-based equity participation, and cooperative development. b. Paragraph 2: Principles of Technology Cooperation: ● “Voluntarily engage in technology cooperation based on commercial rules during the investment process”: Emphasizes that technology cooperation should be a market-driven activity, guided by commercial logic, and established on a voluntary basis among all parties, opposing forced technology transfer. ● “The terms of technology cooperation shall be determined through negotiation by the investing parties in accordance with the principle of fairness”: Specific terms of technology cooperation (such as the scope of technology, fees, ownership of intellectual property rights, confidentiality obligations, etc.) should be determined by the cooperating parties through equal negotiation and on the basis of mutual benefit and win-win outcomes.

【Relevant Regulations】

● Law of the People's Republic of China on the Promotion of the Transformation of Scientific and Technological Achievements: Provides detailed provisions for the promotion and application of scientific and technological achievements. ● Provisions on Technology Contracts in the Contract Law of the People's Republic of China (now superseded by the Contract Section of the Civil Code) (currently Part IV “Technology Contracts” of the Civil Code): Regulates contracts for technology development, technology transfer, technology licensing, technical consulting, and technical services. ● Foreign Investment Law of the People's Republic of China: Article 22 prohibits administrative organs and their personnel from compelling technology transfer through administrative means. This provision also emphasizes voluntary participation in domestic investments.

【Practical Guidelines】

a. Technology Upgrading for Private Enterprises:

● Proactively monitor industry technology trends and boldly adopt new technologies, processes, and equipment.

● Utilize technology markets and intermediary service providers to identify suitable technological achievements and partners. b. Prudent Technology Cooperation: ● Conduct thorough due diligence before initiating cooperation, clearly defining objectives and respective rights and responsibilities. ● Execute written technology contracts detailing technical scope, intellectual property ownership, confidentiality clauses, and breach liabilities; seek legal counsel when necessary. ● Remain vigilant against unequal cooperation terms or demands for forced technology transfer. c. Government Fostering a Favorable Environment: ● Governments should support the development of technology markets and technology transfer institutions, providing services such as information dissemination and supply-demand matching. ● Explore a regulatory approach that is both inclusive and prudent for piloting new technologies and business models. ● Protect intellectual property and trade secrets in technology cooperation. d. Professional Services from Intermediaries: Technology transfer institutions, law firms, intellectual property service providers, and similar entities should enhance their professional service capabilities to support enterprises in technology cooperation and the commercialization of achievements.