China autonomous driving: analysis of the first road testing rules released in Beijing

On 18 December 2017, the first road testing regulations for autonomous driving vehicles (ADVs) in China were released in Beijing (Beijing Regulations). The Beijing Regulations have been issued jointly by the departments responsible for transport, traffic police and industry in Beijing (Beijing Authorities). In the absence of nationwide regulations, the Beijing Regulations mark the first step taken by the government to permit and regulate road testing activities for ADVs in China. Although the Beijing Regulations have been implemented on a trial basis, they are set to influence the drafting of road testing regulations by local governments outside Beijing and, potentially, nationwide.

In this article, we set out the current legal environment for ADV road testing and highlight the key points that companies should pay attention to in respect of the Beijing Regulations.

General rules on road testing

Before the Beijing Regulations, there were no regulations specifically applicable to road testing ADVs. Road testing for ordinary vehicles is permitted on public roads under Road Safety Laws and relevant regulations (Road Safety Laws), with the exception of urban expressways and highways where road testing is not permitted. Additionally, braking function testing on public roads is prohibited.

For ordinary vehicles, the company testing the vehicle must obtain a renewable provisional registration plate from the police's traffic administration department, which is valid for up to 90 days. To obtain a provisional registration plate, the following documents must be submitted:

(1) proof of identity of the vehicle owner;
(2) proof of road accident insurance;
(3) a written application; and
(4) proof of satisfaction of the road safety technical test. This needs to be conducted by an independent third-party testing institution in accordance with the applicable national standards, namely the Technical Conditions for Vehicle Function Safety (GB7258 Standard).

Despite the lack of road testing regulations for ADVs, there have been reports of a number of companies testing their ADVs on public roads, and even on highways.

Highlights of key points

I. Regulations apply to a limited scope of ADVs

The Beijing Regulations only apply to ADVs with a specified level of autonomous driving functionality.

Under the Beijing Regulations, autonomous driving functionality is defined as one that enables safe driving by directing and determining driving tasks of the vehicle in lieu of, and in the absence of, any physical action by a test driver. Vehicles equipped only with assistance autonomous systems such as those with functionality on front safety, parking assistance or lane keeping, are expressly excluded from the Beijing Regulations.

According to the five levels of autonomous driving measurements proposed in China, only vehicles of level 3 or above qualify for road testing under the Beijing Regulations. Level 3 (equivalent to SAE (Society of Automotive Engineers) level 3) describes autonomous systems that complete all driving actions and prompt the driver to take certain actions when necessary.

The Beijing Regulations are not clear on how road tests for autonomous driving systems below level 3 should be conducted. These are, presumably, still subject to the general rules on road testing described above.

II. A powerful third-party institution running the process

The Beijing Regulations establish three main bodies: (i) a joint work group representing the Beijing Authorities; (ii) an expert committee consisting of experts with relevant expertise (Expert Committee); and (iii) an authorized third-party institution (Authorized Institution) responsible for operating the process.

The functions of the Authorized Institution include:

(i) Accepting and reviewing applications filed by applicants (Testing Entities) for road test of ADVs;
(ii) Monitoring and tracking road tests by establishing a monitoring platform, installing monitoring equipment on test vehicles and collecting real-time data;
(iii) Checking test data recorded by monitoring equipment installed by the Testing Entities;
(iv) Organizing expert evaluation by the Expert Committee; and
(v) Suspending and cancelling road testing permits and, as required, banning future applications.

The institution or institutions to be authorized by the Beijing Authorities as an Authorised Institution have yet to be identified. Given the powers and discretion granted to the Authorized Institution, the Beijing Authorities should be transparent with its selection process and ensure impartiality.

III. Safety measures

The Beijing Regulations have set out a series of safety measures to ensure that road tests can be conducted safely. The measures include:

(i) Monitoring systems:

a. Monitoring equipment installed by the Authorized Institution will monitor the behaviour of the test driver, collect information on the vehicle’s location and its autonomous driving status; real-time data will be reported to the Authorized Institution.
b. Data recording equipment installed by the Testing Entity will record the real-time driving data of the test vehicle collected by various sensors, which will be stored for at least three years.

(ii) Liability cover: Road accident insurance for no less than RMB 5 million or an undertaking letter issued by the testing entity to compensate accident liability for no less than RMB 5 million is required.
(iii) Human interference: The autonomous driving system must allow the test driver to take over the vehicle and have a warning system to prompt the test driver to take over.
(iv) Pre-requisite testing: The vehicle must have completed a pre-requisite set of tests simulating real-road scenarios.
(v) Designated time and area: The road tests must be conducted in a designated area within the designated hours.
(vi) Driver qualifications: The test driver must have a safe driving record of at least three years and a minimum 50 hours operating the ADV (including at least 40 hours in the above-mentioned pre-requisite testing scenarios).
(vii) Vehicle: The test vehicle must satisfy the GB7258 Standard. It should be noted that the vehicle must not have been registered before, which means it will have to be a new vehicle.
It appears that the Beijing Authorities are keen to ensure that road testing of ADV is conducted safely.

IV. Road accidents

If a road accident occurs, the test driver will be liable under the law; however, the Testing Entity will be liable for any compensation payable by the test driver. In the case of an accident, the Testing Entity must:

(i) report the incident to the Authorized Institution within 24 hours, together with data recorded at the time of the accident;
(ii) submit a formal report on the accident to the Authorized Institution within ten calendar days; and
(iii) submit an accident liability report and analysis within ten calendar days after the police have determined liability of the parties involved.

The Authorized Institution may suspend road testing of an ADV involved in an accident or, in serious cases, all ADVs of a Testing Entity. In that case, the Testing Entity must apply to the Authorized Institution to restore its testing qualification.

V. Localisation requirement

Under the Beijing Regulations, the Testing Entity must be an independent corporate person registered within the territory of China. A foreign company wishing to test any ADVs in China must, therefore, do so via a Chinese subsidiary or a Chinese partner.

Our observations

I. First regulations to legalise ADV road testing

The Beijing Regulations are the first attempt by local government to regulate road test activities of ADVs in China. This comes at a time when there is local competition to attract investment in ADV companies. In the absence of national regulations, the Beijing Regulations confirm the legality of ADV road tests and provide procedures and requirements for conducting road test activities. By implication, the current road testing of ADVs conducted in Beijing may now be considered illegal.

The Beijing Regulations do not stipulate the penalties that may be imposed on Testing Entities for conducting road tests of ADVs without approval. It is likely that the Road Safety Laws on road testing without a provisional license will still apply, which impose a relatively minor penalty.

Now that the Beijing Regulations are in force, Testing Entities should stop their current road tests in Beijing until they obtain the provisional registration plate for ADVs under the Beijing Regulations.

II. Advice to Testing Entities

Testing Entities intending to conduct road testing in Beijing must be prepared to comply with the Beijing Regulations, including:

(i) Reviewing and redesigning their test programs as required to meet the pre-requisite testing requirements;
(ii) Examining the data monitoring equipment for compliance with the data monitoring requirements;
(iii) Examining the autonomous driving system for compliance with the human interference requirement;
(iv) Checking the qualifications of test drivers;
(v) Checking the adequacy of road accident insurance policies; and
(vi) Using new vehicles for road tests.

In addition, Testing Entities will need to consider whether it would be in their interests or within their policies to share certain test data with the Authorized Institution.

III. Points to be clarified

The Beijing Regulations also leave some unanswered questions that we hope will be clarified by the Beijing Authorities:

(i) Road testing on highways: The Road Safety Laws prohibit road tests on highways. The Beijing Regulations permit road tests of ADVs in designated areas and require that the ADVs be tested in simulated highway scenarios before road tests. However, the Beijing Regulations do not specify whether road tests will be permitted on highways. If they are, there will be a conflict with the Road Safety Laws which will need to be resolved.

(ii) Insurance: The Beijing Regulations seem to allow Testing Entities to choose either to take out a road accident insurance policy or issue an undertaking letter to provide compensation. However, under the Road Safety Laws road accident insurance is compulsory for test vehicles. The Beijing Authorities should clarify the potential conflict between the Beijing Regulations and the Road Safety Laws.

(iii) Data protection: The Authorized Institution responsible for administering the road tests will have access to a large amount of data relating to the autonomous driving systems being tested, including without limitation the specifications of the autonomous driving system, performance of the ADVs in the prerequisite tests, real-time test data collected by the monitoring systems and any data from road accidents.

Such data is likely to contain intellectual property or commercial secrets of the Testing Entities. However, the Beijing Regulations do not impose any obligations of data protection on the Authorized Institution or any restriction on the use of the data by the Authorized Institution. The Beijing Authorities should consider giving adequate assurance to Testing Entities as to the protection of the data that the Authorized Institution collects.