So I was inspired after talking to Angela Huyue Zhang, a law professor in Hong Kong who's coming to teach at the University of Southern California this fall, about her new book on interpreting the logic and patterns behind China's tech regulations. We talked about how the Chinese government almost always swings back and forth between regulating tech too much and not enough, how local governments have gone to great lengths to protect local tech companies, and why AI companies in China are receiving more government goodwill than other sectors today. To learn more about Zhang's fascinating interpretation of the tech regulations in China, read my story published today. In this newsletter, I want to show you a particularly interesting part of the conversation we had, where Zhang expanded on how market overreactions to Chinese tech policies have become an integral part of the tech regulator's toolbox today. The capital markets, perpetually betting on whether tech companies are going to fare better or worse, are always looking for policy signals on whether China is going to start a new crackdown on certain technologies. As a result, they often overreact to every move by the Chinese government.

"Before providing services to the public that use generative AI products, a security assessment shall be applied for through national internet regulatory departments," the draft law, released by the Cyberspace Administration of China, reads. The draft law -- dubbed "Administrative Measures for Generative Artificial Intelligence Services" -- aims to ensure "the healthy development and standardised application of generative AI technology", it read. AI generated content, it continued, must "reflect core socialist values, and must not contain content on subversion of state power". It must also not contain, among other things, "terrorist or extremist propaganda", "ethnic hatred" or "other content that may disrupt economic and social order." The Cyberspace Administration of China said it was seeking public input on the contents of the new regulations, which under Beijing's highly centralised political system are almost certain to become law. The fresh regulations come as a flurry of Chinese companies including Alibaba, JD.com, Netease and TikTok-parent Bytedance rush to develop services that can mimic human speech since San Francisco-based OpenAI launched ChatGPT in November, sparking a gold rush in the market.

China has released a new draft regulation that it says is necessary to ensure the safe development of generative artificial intelligence (AI) technologies, such as ChatGPT. While it supports the innovative use of AI algorithms to improve user experience and access to information, the growth of such applications can lead to abuse. Emphasis should be placed on such tools and data resources to be used safely and reliably, said the Cyberspace Administration of China (CAC). Regulations were needed to drive a healthy and sustainable development of generative AI algorithms, said the government agency, as it published the draft laws on its website. Under the proposed rules, operators will be required to send their applications to regulators for "safety reviews" before offering the services to the public, according to a report by state-owned media Global Times.

French authorities plan to use an AI-assisted crowd control system to monitor people during the 2024 Paris Olympics, according to a draft law seen by AFP on Thursday. The system is intended to allow the security services to detect disturbances and potential problems more easily, but will not use facial recognition technology, the bill says. The technology could be particularly useful during the highly ambitious open-air opening ceremony with Olympians sailing down the river Seine in front of a crowd of 600,000 people. French police and sports authorities faced severe criticism in May after shambolic scenes during the Champions League final in Paris when football fans were caught in a crowd crush and teargassed. The draft law, which was presented to the cabinet on Thursday, proposes other security measures including the use of full-body scanners and increases the sentences for hooliganism.

Facebook has claimed that a new German law that threatens to impose heavy fines on social media companies if they fail to delete hate speech and fake news, could lead to tech firms deleting legal content to avoid paying the punishing sanctions. The legislation, known as the Network Enforcement Act, was proposed by the German government in March and approved by the cabinet a month later, although it is yet to come into effect. Facebook reportedly issued a statement over the weekend explaining why the law "is not suitable to combat hate speech and false news". According to Business Insider, the company said in the statement that "the draft law provides an incentive to delete content that is not clearly illegal when social networks face such a disproportionate threat of fines." Facebook added: "It would have the effect of transferring responsibility for complex legal decisions from public authorities to private companies. And several legal experts have assessed the draft law as being against the German constitution and non-compliant with EU law. Facebook is committed to working in partnership with governments and civil society on solutions that will make this draft law unnecessary."