Within the framework of the International Scientific Conference “Russia-China strategic partnership in a changing world”, organized by the State Academic University of Humanities (GAUGN) and the Financial Research Institute (FRI) of the Russian Ministry of Finance , there was a meeting held on May 25^th2022 of the session Digitalization in Russia and China: Legal Challenges”. The work of the session as been moderated by the Head of the Center for Legal Research of Digital Technologies of the State Academic University of Humanities, a Leading Researcher of FRI, Dr. Professor L.V. Sannikova. The conference presenters discussed a range of issues around digitalization, such as the regulation of digitalization, digital platforms and their role in the modern economy, data security, fintech, financial security, international sanctions, crypto assets, artificial intelligence, digital sovereignty, and others. Comparative legal analysis and the exchange of regulatory experience were dominant aspects of discussion, and a significant number of reports contained proposals on how legal regulation may cater for the needs of the new digital environment.

Dr. Law Hong Xue, PhD, Beijing Normal University Law School Professor, Co-Director of UNCITRAL-BNU Joint Certificate Program on International E-Commerce, commenced the session with a presentation on legal regulation of data security and its use in the digital economy in China. The government policies stimulate the digitization of all industrial sectors and trade areas, and emphasize data as one of the key elements of social productivity. The growing body of laws and regulations provide an enabling, secure, and sustainable environment for the digital economy. A portfolio of the comprehensive legal systems, including the Chinese Cybersecurity Law, Data Security Law, Administrative Measures for Internet Information Services, Measures for the Administration of Protecting the Security of International Connections to Computer Information Networks and other regulations, are put in place to protect computer data from being damaged in natural disasters, computer crimes and other types of abuse and misuse. With the emergence of the data industry, the Chinese Personal Information Protection Law, alongside with the relevant regulations, outlines the legal criteria and requirements for processing personal information in data products or services. China is committed to building a secure, open, cooperative, and organized community with a shared future in cyberspace, while protecting its network and data autonomy. China is developing the standards and governance mechanisms for data security and utilization, and is open to cooperation with international partners to develop unified rules and standards.

A presentation given by Dr Chen-Yongdong, a Professor of Law Faculty of Yunnan University, Vice President of the Chinese Society of International Economic Law, Executive Director of the Chinese Society of Private International Law and Man Boven, a PhD. Candidate of International Economic Law, Law School of Yunnan University discussed assessment of the risk factors of Sino-Russian fintech cooperation and financial security based on SWOT analysis. The presenters commented on the positive progress made by China and Russia in cross-border currency exchange, enterprise financing mechanisms and fintech development in recent years.

The method of SWOT matrix analysis was applied to evaluate the risk factors of Sino-Russian fintech cooperation and financial security, the top-level design advantages for the cooperation mechanism, and the opportunity for international payment systems, such as CIPS and SPFS. This model revealed that Western financial sanctions on Russia have not only strengthened the collaboration between China, Russia and non-western countries on their financial security but also accelerated the process of “de-dollarization”. At the same time, problems, such as the imbalance in investment cooperation development, the deficiency of innovative products and information sharing mechanisms, the security problems of capital account opening, foreign exchange reserve assets and international payment and settlement system, are some of the common challenges for China and Russia in the financial cooperation and financial security domains. The presentation pointed out that the future effective cooperation between China and Russia in personal financial information security protection, risk management and resilience to the pressure of financial sectors and institutions, fintech empowering social governance, enhancement of financial regulation, international cooperation of regulation technology, and the promotion in independent innovation ability of core financial technology will be conducive to the improvement of fintech security for both countries.

Dr. Sun Qi, The Secretary General of the Research Center for Regional Economic Integration and Rule of Law of the Shanghai Academy of Social Sciences, , in the presentation “The Digital Cold War in a Changing World” noted the desire of the US and other NATO countries to impose the “Digital Iron Curtain” on China and Russia. Cyberwar, information war and cognitive war supported by information and communication technologies (ICT) are some of the important areas of the current fierce geopolitical conflicts in the world. In that regard, the need to strengthen cooperation between China and Russia in the area of cybersecurity and digital currencies was highlighted. The concept of “Digital Suppression”, which describes behavior aimed at intervening and influencing the technological industries of another country in pursuit of strategic objectives, was introduced. The presenter also suggested several ways to counteract the digital cold war, such as the formulating some general rules for the protection of critical infrastructure, sharing experience in developing the legislative regulation of cyberspace and establishing a framework for payments in digital currency. Moreover, in the context of financial interactions, the presenter stated that the digital economy and trade exchanges should be deeper and more diversified, to provide China and Russia with a wider range of cooperation opportunities in the field of digital currencies.

Dr. L.V. Sannikova, Professor of the Russian Academy of Sciences, in her presentation discussed the regulatory approaches of Russia and China to crypto assets. The development of the crypto market and its growing integration into the global financial system has opened the debate on the risks of cryptoassets to both the global and national financial systems. The main risks associated with crypto-assets, highlighting both internationally and nationally were analyzed in the presentation:

• consumer risks
• money laundering and terrorist financing risks
• environmental risks
• financial stability risks

Although the risks are mostly identical for national and international financial systems due to the extraterritorial nature of crypto assets, the impact of these risks on countries' national financial systems differs significantly. A thorough assessment of existing risks demonstrated that Russia has the technological and organizational capacity to mitigate most risks. The balanced approaches to managing these risks developed in Russia will allow it to use cryptoassets to mitigate the damage from sanctions and to build a common crypto market together with the EAEU and BRICS countries. The presenter highlighted the ineffectiveness of the total cryptocurrency mining and transactions ban based on the Chinese experience, as China's experience in launching a digital yuan is very interesting. Central bank digital currencies (CBDC) were mentioned as an alternative to cryptocurrencies. They are deemed to be safer and less volatile, as their issuance is government-backed. Thus, the Bank of Russia is seeking to take advantage of new technology to create a digital ruble.

Dr. Yu.S. Kharitonova, the Head of the Research and Educational Center “Center for Legal Studies of Artificial Intelligence and Digital Economy”, Professor at Lomonosov Moscow State University in her presentation “The Rule of Law and Recommendatory Systems in Russia and China: Strengthening Regulation in Global Instability” made a suggestion to utilize China’s experience in legal regulation of artificial intelligence sub-technology - recommendatory systems used by digital platforms and adjust it to the local context. The presenter highlighted the problem of recommendatory algorithms in their ability to influence the behavior of individuals, as well as their impact on society. Thus, Dr. Kharitonova pointed out the need for transparency of recommendatory algorithms and the development of rules for their regulation. Moreover, the problem of recommendatory algorithms regulation presents new challenges as the algorithms are applied in the digital space without considering the borders between the countries. The main aim of the presentation was to highlight the necessity of development of a set of rules and regulations for algorithm transparency, as well as the recommendations for users' rights protection in the digital environment. Dr. Kharitonova claimed that the creation of rules might ensure the citizens’ rights for protection of the personal data. The presentation concluded that such rules and regulations around personal data protection should be developed with fairness, applicability and effectiveness in mind, and the law should be accompanied by technical restrictions for enforcement purposes.

As a follow-up for the topic of legal regulation of platform economy Dr A.P. Alekseenko, Associate Professor of the Department of Commercial Law St. Petersburg University, used the case study of Alibaba Group to demonstrate the factors that should be taken into consideration in the investigation of anti-competitive actions of digital platforms. Based on the Alibaba Group case, it was suggested that foreign e-commerce platforms should not be taken into account when defining the digital market boundary. This claim was justified by the fact that consumers in China purchasing goods through foreign platforms not only face obstacles in terms of the language of service, payment and settlement, as well as after-sales guarantee but also have to pay additional charges for delivery, which takes a relatively long time. Furthermore, the Chinese Antimonopoly Authority has indicated that Alibaba Group, a pioneer online retail platform, has accumulated a large number of sellers and buyers, resulting in large volumes of personal data, including but not limited to transaction data, logistics, payments. A deeper investigation of the case revealed that Alibaba Group had implemented advanced algorithms that could implement personalized search and sorting strategies using data processing technology, to purposefully meet the needs of consumers. In conjunction with sufficient financial resources, such advanced technologies can strengthen and increase the market power of the Alibaba Group. Finally, the Antimonopoly Authority found that Alibaba Group had developed a system of “Gray lists” which included sellers who had stores on other platforms or participated in other platforms’ promotional activities.

Dr. Alekseenko outlined the signs indicating the dominant position of an e-commerce platform based on data from the State Administration for Industry and Commerce and Alibaba Group case. These include:

• the financial and technological capabilities of the platform
• the number of sellers and consumers registered on it
• the ability of the platform to collect and analyze data about users(transactions, logistics, payments)

Dr. P.V. Troschinsky, a Leading Researcher at the Institute of Far Eastern Studies, Russian Academy of Sciences, discussed “Digitalization of China in the 21 century: the political and legal aspects” and concluded that in the process of building a digital society China undertook all necessary measures to protect its own “digital sovereignty” ensuring control over the Chinese segment of the Internet. Guided by national interests and independent legal policy, using flexible legislation, the Chinese authorities took the path of ousting foreign technology corporations from the domestic market. The largest American platforms and business projects associated with them were blocked in China which creates favorable conditions for the national Chinese platforms to be created and take up the developing digital space. With the growth in the capitalization of Chinese digital platforms, population control systems were created on their basis and a social rating system appeared. The law enforcement and judicial systems have been gradually digitized. The rapid growth of China's digital economy, which is also dependent on the development of digital technologies, deserves special attention.

Dr Troschinsky examined China’s legislative framework for establishing digital sovereignty, with particular emphasis on measures aimed at technological independence and security. The design of a multi-level system of China’s normative acts in the field of digitization and digital space was analyzed, and an insight into the history of law-making, revealing the background and methodology of Chinese success in creating digital sovereignty was provided.

The Chinese legislation is not keeping up with the pace of the digital technologies development. However, this “delay” is explained more by political reasons. The emergence of “fixed” (hard-to-change) legislation will prevent manual control of the digital sphere, which may jeopardize the state security in the face of new digital challenges and threats. In the current political situation, the Chinese experience in building “digital sovereignty” may be highly regarded in Russia.

An open discussion following the presentations summarized expert opinions on the ways for Russia and China to develop their digital legislation. The session was a big success raising, and the speakers' abstracts were published in the conference proceedings “Russia-China strategic partnership in a changing world” (Moscow 2022).