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Manufacturers, Exporters, Wholesalers - Global trade starts here.

China Passes Law Legalizing Electronic Deals

China's top legislature on Saturday passed the Law on Electronic Signature to boost electronic business, which for the first time legalizes increasing electronic deals.  

The law was approved after three deliberations by the Standing Committee of the 10th National People's Congress (NPC).


The law grants electronic signatures the same legal effect as handwritten signatures and seals in business transactions, and set up the market access system for online certification providers to ensure the security of e-commerce.


According to the law, the contracts signed via the Internet have the same legal authority with the paper ones, which is expected to clear some institutional barriers among the current e-commerce across the country.


A legal electronic signature should identify the signer and confirm file content. As Internet trade requires a reliable third party to identify the signers, the credibility of online certifying organizations is significant for the transaction security.


"Considering the weakness of China's social credibility system, the law regulates that the online signatures certification providers should be approved and administered by governments," said Cao Kangtai, director of the Legislative Affairs Office of the State Council, in his report to the top legislature.


The law stipulates that the providers of online signature certification should be approved and supervised by governments while both of them should be responsible for their faults. It also details the responsibilities of supervision departments and certification providers.


Besides the punishment to the departments and companies making mistakes, the officials and managers who are found faults also should be punished, according to the law.


The law also grants the legal effect to the electronic contracts with public utility, which were once excluded by the former draft. The only exception is the unilateral electronic notice to the public canceling service like water, electricity, gas.


The State Council started the lawmaking process in April last year, pooling experience from experts and legislation from developed nations.


Statistics show that China has some 4,000 websites dealing with e-commerce and over 70 online certifying centers. China's Internet Data Center (IDC) estimates that domestic revenue from e-commerce amounted to US$60 billion in 2003.


(Xinhua News Agency August 29, 2004)

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