Legislation will soon help Web users protect online privacy and ensure that they agree to any personal information being passed on.
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The top legislature reviewed a draft on Monday that includes measures to strengthen protection of personal information.
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Li Fei, a senior legislator involved in the draft at the National People's Congress, said the State must bolster protection for digital information that could be used to determine the identity of a user or that concerns a user's privacy.
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"The safety of information is being challenged by rapidly developing technology. A great deal of criminal activity, such as online fraud, involves information being gathered illegally," he said.
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"This jeopardizes the security of the State and society. But the necessary measures to counteract it are being hindered by a lack of legal support."
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One of the highlights in the draft seeks to ban illegal trading of personal information.
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"Organizations and individuals will be banned from illegally obtaining and providing, or selling, personal digital information," Li said.
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"Internet service providers and government-sponsored institutions and companies should strictly ensure the privacy of personal digital information."
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One recent case saw an innocent person's reputation blackened by false accusations spread online.
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An employee of a real estate archive in Guangzhou was sacked on Saturday for illegally obtaining property information and releasing the information online, China National Radio reported.
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The suspect alleged corruption on the part of a retired architect, who the suspect claimed owns many properties.
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The accusation was widely circulated online but an investigation cleared the retired architect.
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In May, Chen Shiqu, director of the anti-human-trafficking office of the Ministry of Public Security, posted a message calling for the public to verify any accusations they made online.
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"Public security officers will look into every single piece of information about alleged trafficking, but false information interferes with investigations," he said.
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The draft also proposed asking Internet users to identify themselves to Internet and telecom services providers.
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But "such identity management could be conducted backstage, allowing users to use different names when publicizing information", Li said.
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Since March, leading micro-blogging services, including Tencent Weibo and Sina Weibo, have asked users to identify themselves.
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Li Yuxiao, director of the Collaborative Innovation Center of Social Networks and Public Opinion Research, has called to set up a national project to protect personal information as well as legislation to support it.
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"The Internet can only achieve sustainable development based on the rule of law," he said.
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Ying Songnian, a professor at the Chinese Academy of Governance, said organizations that hold large amounts of information must be responsible and capable of holding it.
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"Organizations like websites, banks and hospitals have huge amounts of personal information, but their ability to prevent leakage is weak," he said.
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The passwords of about 40 million users at tianya.cn, a major Internet forum, were leaked to outsiders a year ago.Â