Product Liability and Warranty Litigation in China

In the People's Republic of China (the "PRC"), there are two primary legal grounds for bringing product liability claims:

1. First, there is statutory product liability under PRC law. Statutory product liability according to PRC law is stipulated in the PRC Civil Code which entered into effect on 1 January 2021 and in the provisions of the PRC Product Quality Law as revised on 29 December 2018. 
   
   According to the PRC Civil Code, producers shall bear tort liability for damages caused to others by their defective products. The PRC Product Quality Law stipulates that the producer of a defective product shall be liable for damages if a defect in a product causes personal injury or damages to another person’s property (other than the defective product itself).
   
   Statutory product liability does not require any fault of the producer. It constitutes a strict liability irrespective of any fault, negligence or willful misconduct. As long as the user is able to prove the existence of a product defect, the occurred damage and the causation between the product defect and the damage, he/she can bring a product liability claim without having to prove the producer’s fault.
   
   Further, there is joint and several liability of the producer and the seller. 
   
   According to the PRC Civil Code, where any harm is caused to another person by a defective product, the victim may require compensation to be made by the manufacturer of the product or the seller of the product. The PRC Product Quality Law contains a similar provision. It is a special characteristic of the PRC law on product liability that the victim has the right to choose between the producer and the seller for his/her claim for compensation, regardless of whom of them is internally responsible for the defect. Internally, there can be recourse between the producer and the seller depending on who is responsible for the defect.
    
2. Second, there is contractual liability under the PRC Civil Code for quality defects.
   
   When a party fails to perform its obligations under a contract, or rendered non-conforming performance, it shall bear the liabilities for breach of contract by specific performance, cure of non-conforming performance or payment of damages, etc. 
   
   If the terms in relation to performance are not met, the liability for breach of contract shall be borne in accordance with the agreement between the parties. If there is no agreement in the contract on the liability for breach of contract or such agreement is unclear, nor can it be determined in accordance with the PRC Civil Code, the injured party may, in light of the nature of the subject matter and the degree of loss suffered, opt in a reasonable manner to request the other party to bear liability for breach of contract in such form as repair, reworking, replacement, return of the goods, and reduction in price or remuneration.
   
   Where either party to a contract fails to perform the contractual obligations or its performance of the obligations does not meet the terms of the contract, and after the party has performed its obligations or taken remedial measures, the other party still suffers other losses, the party shall compensate for such losses.
   
   Lastly, where a party failed to perform or rendered non-conforming performance, thereby causing loss to the other party, such other party may claim damages and the amount of damages payable shall, generally, be equivalent to the other party's loss resulting from the breach, including any benefit that may be accrued from performance of the contract, provided that the amount shall not exceed the likely loss resulting from the breach which was foreseen or should have been foreseen by the breaching party at the time of conclusion of the contract.//It is noteworthy that contractual liability under the PRC Civil Code applies irrespective of the fault of the breaching party. 

1. Under the PRC Product Quality Law, "products" are defined as products processed or manufactured for sale. Accordingly, a product is identified by two core elements: (i) it must be processed or manufactured through industrial or commercial activities, such as mechanical manufacturing, food processing, or manual assembly; therefore, natural objects and primary agricultural products which are directly obtained from nature without processing or manufacturing are generally excluded; and (ii) it must be intended for commercial circulation, including paid sales and commercially motivated free distributions (e.g., gifts or samples), while items solely for internal use are excluded.
    
2. The PRC Product Quality Law does not apply to construction projects. However, the construction materials, structural components and fittings, and equipment that are used for construction projects and fall within the category of products as provided in the previous paragraph shall be governed by the PRC Product Quality Law. 
    
3. Under the PRC Civil Code, there is no separate definition of "product". Generally, the definition under the PRC Product Quality Law may also be used for the PRC Civil Code.
    
4. In line with the PRC Product Quality Law, in any case physical items are covered by "products". As to intangible items, such as software, according to cybersecurity related PRC regulations, software is regarded as a "network product". Accordingly, and in line with the prevailing opinion under PRC law as we can see, also intangible products, such as software, should be regarded as "products" for both statutory and contractual product liability. 
    
5. Generally, under PRC law, regarding product liability, there are no fundamental differences between consumer and business products. The PRC Consumer Protection Law also stipulates that consumers or other victims suffering from personal injuries or property damages due to defects of goods have the right to claim compensation either from the seller or from the producer. If the liability is due to the producer, the seller shall, after paying the compensations, have the right to claim compensations from the producer; if the liability is due to the seller, the producer shall, after paying the compensations, have the right to claim compensations from the sellers.

1. Under statutory product liability law, the injured party may raise claims. Where a party whose rights are infringed upon dies, his or her immediate relatives shall be entitled to request the infringing party to be held liable for tort. Where the party whose rights are infringed upon is an organization which has been divided or merged, the successor thereof shall be entitled to request the infringing party be held liable for tort. Where the party whose rights are infringed upon dies, the party who has paid reasonable expenses such as medical expenses and funeral expenses shall be entitled to request the infringing party to pay compensation, unless the infringing party has already paid such expenses. In addition, consumer associations may bring public interest actions where the lawful rights and interests of a large number of consumers are infringed.
    
2. Under contractual product liability, generally, only the contract partner may raise claims. If the contract partner dies or ceases to exist, the legal successor may raise claims.

1. Under statutory product liability law, both material and non-material losses are recoverable. Recoverable damages include: property loss based on the losses suffered by the party whose rights are infringed upon or the gains obtained by the infringing party from the infringing acts; in case of mental distress, compensation for mental distress; in case of bodily injury, compensation for all reasonable expenses incurred for treatment and recovery; where the victim suffers from disability, the infringing party shall pay for the fees for assistive devices and disability allowance; where the infringing party's conduct results in death, it shall pay all funeral expenses and death compensation.
    
2. Under contractual product liability, the breaching party shall bear the liabilities for breach of contract by specific performance, cure of non-conforming performance or payment of damages, etc. 
   
   Where a party failed to perform or rendered non-conforming performance, thereby causing loss to the other party, such other party may claim damages and the amount of damages payable shall, generally, be equivalent to the other party's loss resulting from the breach, including any benefit that may be accrued from performance of the contract, provided that the amount shall not exceed the likely loss resulting from the breach which was foreseen or should have been foreseen by the breaching party at the time of conclusion of the contract.

1. Under statutory product liability law, there are two main rules for determining whether a product is defective. According to the PRC Product Quality Law, a product is regarded as defective if it (i) poses an unreasonable danger to the personal safety or other property than the product itself or (ii) if a product does not meet the applicable standards where there are State or industry standards implemented for the safeguarding of health, personal safety or the safety of property. 
   
   According to relevant court precedents in the PRC, product defects generally refer to and cover defects in product design, defects in production, defects as to the indication and/or information regarding products and others that may pose unreasonable dangers. 
    
2. Under contractual product liability, the seller shall deliver the subject matter according to the agreed quality requirements. If seller provides quality specifications concerning the subject matter, the delivered subject matter shall comply with the quality requirements in such specifications. 
   
   If there is no agreement in the contract on the terms regarding, inter alia, quality, or such agreement is unclear, the parties may supplement the terms by agreement. In case of failure to reach a supplementary agreement, the terms shall be determined in accordance with relevant clauses of the contract or trade practices.
   
   If the relevant terms of a contract are unclear, and cannot be supplemented, the following shall apply: if the quality requirements are unclear, the mandatory national standards shall apply; in the absence of mandatory national standards, the recommended national standards shall apply; in the absence of recommended national standards, the trade standards shall apply; in the absence of national standards or trade standards, general standards or specific standards in conformity with the purpose of the contract shall apply.

1. Under statutory product liability, generally, the victim needs to prove the existence of the product defect, the occurred damage and the causation between the product defect and the damage.
    
2. Under contractual product liability, generally, the party making claims needs to prove the existence of the product defect, the occurred damage and the causation between the product defect and the damage.
    
3. Towards consumers, the PRC Consumer Protection Law, provides for the following special regulation: Where disputes arise due to a defect found by a consumer in the durable commodities or decoration services provided by the business operator such as motor vehicles, computers, televisions, refrigerators, air conditionings and washing machines within six months from the date when he receives the commodity or service, the business operator shall bear the burden of proof with respect to the defect in question.
    
4. In addition, for certain special industries, there are special allocations of the burden of proof. For example, in the case of food and drugs, if a consumer claims liability for breach of contract due to drug quality issues, he or she only needs to prove the fact of purchase and that the drug does not conform to the contractual quality requirements. If the consumer claims tort liability, it is sufficient to provide preliminary proof of a causal relationship between the damage suffered and the use of the drug. In such cases, the drug manufacturer and seller bear the burden of proving that the damage was not caused by the substandard quality of the drug. 

Under PRC law, compliance with regulatory requirements or safety standards is relevant for product defects under both statutory product liability and contractual product liability. For details, see answer under Question 5 above.

However, as already set out under Question 5, item (1) above, compliance with national or industry standards is not the sole determinant of whether a product is defective. E.g., where such standards are outdated or set at an unduly low level, formal compliance alone does not preclude the finding of defect. For instance, in a case published by the People’s Court Daily, the court held that although the jelly food product at issue complied with national food safety standards and bore warning labels on its packaging, it nevertheless posed an unreasonable danger to children’s personal safety, given that children constituted its primary consumer group. Accordingly, the court found the product to be defective and imposed tort liability on the manufacturer, thereby affirming the adjudicatory principle that “compliance with national standards does not equate to the absence of a defect.”

1. Under statutory product liability, according to the PRC Civil Code, where any harm is caused to another person by a defective product, the victim may require compensation to be made by the manufacturer of the product or the seller of the product. The PRC Product Quality Law contains a similar provision. It is a special characteristic of the PRC law on product liability that the victim has the right to choose between the producer and the seller for his/her claim for compensation, regardless of whom of them is internally responsible for the defect.
   
   Under PRC law, if the defect of the product is caused by the manufacturer and the seller has made the compensation for the defect, the seller shall be entitled to be reimbursed by the manufacturer; if the defect of the product is caused by the fault of the seller and the manufacturer has made the compensation for the defect, the manufacturer shall be entitled to be reimbursed by the seller. Further, in case the defect is caused by the fault of a third party, such as a carrier or warehouseman or any other third party, the producer or seller of the product who has paid the compensation shall be entitled to get reimbursed by such third party. 
    
2. Under contractual product liability, generally, only the contract partner faces liability. However, the contract partner can then make further recourse within the relevant contractual relationships.

1. With regard to statutory product liability, generally, the following applies: 
   
   Two or more parties whose joint infringement causes damage to another party shall be jointly and severally liable.
   
   Whoever incites or assists another party to carry out tortious conduct shall be jointly and severally liable with the latter party. 
   
   Where two or more people engage in conduct that endangers another person's personal or property safety, and the conduct of one or more people causes damage to that person, if the specific infringing party can be determined, the infringing party shall be liable; otherwise, all persons involved shall be jointly and severally liable. 
   
   Where two or more people respectively carry out tortious acts that cause the same damage and the tortious acts of each person are capable of causing the entire damage sustained, all persons involved shall be jointly and severally liable.
   
   Where two or more people respectively engage in tortious acts that cause the same damage and the extent to which each person is liable can be determined, the infringing parties shall respectively bear the corresponding liability; in the event that it is difficult to determine the extent to which each person is liable, the infringing parties shall bear equal liability.
   
   If the party whose rights are infringed upon is at fault in the occurrence or expansion of the damage to him or her, the liability of the infringing party may be reduced.
    
2. With regard to contractual product liability, the following applies:
   
   Where two or more persons share civil liability according to the law, they shall bear the corresponding civil liability respectively if their respective liability can be determined; or evenly undertake civil liability if it is difficult to determine their respective liability.
   
   Where two or more persons are jointly held liable according to the law, the obligee is entitled to request part or all of the persons jointly held liable to bear the relevant liability. The share of liability of persons jointly held liable shall be determined based on the liability borne respectively; and they shall evenly undertake the liability if it is difficult to determine the liability borne respectively. Where the liability actually borne by a person jointly held liable exceeds his or her share of liability, he or she is entitled to claim compensation from other persons jointly held liable.

1. Under statutory product liability, the following applies:
   
   According to the PRC Product Quality Law, the producer shall not be liable if they can prove that:
   
   i. they did not put the product into circulation;
   ii. the defect causing the harm did not exist when the product was put into circulation; or
   iii. the level of science and technology at the time when the product was put into circulation was not sufficient to detect the existence of the defect.
   
   However, it is not entirely clear whether the above stipulation exempts the producer from their obligation to compensate a third party after such third party suffered damages due to a defective product or whether it is only relevant for internal compensation between the producer and the seller. 
    
2. Under contractual product liability, the contract partner is generally liable for product defects irrespective of their fault. However, the contractual partner may exempt from liability by proving that the defect was not caused by them. Further, it is possible to limit or exclude contractual liability towards the respective contract partner.

1. In contrast to contractual liability which can be limited to a certain extent between contracting parties, statutory product liability under the PRC Civil Code and the PRC Product Quality Law is mandatory and cannot be contractually excluded or limited towards third parties.
    
2. As to contractual product liability, it is possible to restrict the contractual liability for breach of contract to a certain extent under PRC law. In general, the parties to a contract can agree (i) that the liability shall be capped at a certain fixed amount or at a certain percentage of the contract value; (ii) that a party’s liability is limited to intent and gross negligence; (iii) that indirect and/or consequential damages are excluded, etc.
   
   It is further noteworthy that the following clauses on liability exemption or limitation in a contract are invalid under PRC law: (i) exclusion of liability for physical injury to the other party; and (ii) exclusion of property losses caused by intention or due to gross negligence.

1. As to statutory product liability, the PRC Product Quality Law states that the validity period for claiming compensation for damages due to defects of products is two years, starting from the date when the parties concerned knew or should have known that their rights and interests are impaired. The right to claim compensation for damage caused due to defects of products shall be void ten years after the products with defects that caused damage are delivered to the first consumers, except where the specified safe use period has not expired. The above is now against the regulations under the PRC Civil Law. Considering the fact that the PRC Civil Code is superior to the PRC Product Quality Law, in practice, the limitation of action for claiming compensation for damages due to defects of products may be three years instead. Notably, the draft of the amended PRC Product Quality Law has unified the statute of limitations for product liability disputes at three years, signalling the authorities’ position on this previously existing conflict. For more information regarding this legislative development, please refer to Question 21 below.
    
2. As to contractual product liability, the general provisions on the limitation of action apply. According to the PRC Civil Code, the limitation of action for a person to apply to a People's Court for the protection of civil rights shall be three years, unless otherwise provided by law. A four years period applies for disputes arising in relation to a contract for the international sale of goods and for contracts regarding the import and export of technology.
   
   Under PRC law, the limitation of action starts from the date on which the creditor knew or ought to be aware of that his or her rights have been infringed and who the obligor is. In absence of such knowledge, there is a maximum limitation period of twenty years from the date on which the claim arose.

1. Under statutory product liability, implied contractual warranties are generally not relevant.
    
2. Under contractual product liability, implied contractual warranties can be relevant. As set out under Question 5 above, the following applies:
   
   If there is no agreement in the contract on the terms regarding, inter alia, quality, or such agreement is unclear, the parties may supplement the terms by agreement. In case of failure to reach a supplementary agreement, the terms shall be determined in accordance with relevant clauses of the contract or trade practices.
   
   If the relevant terms of a contract are unclear, and cannot be supplemented, the following shall apply: if the quality requirements are unclear, the mandatory national standards shall apply; in the absence of mandatory national standards, the recommended national standards shall apply; in the absence of recommended national standards, the trade standards shall apply; in the absence of national standards or trade standards, general standards or specific standards in conformity with the purpose of the contract shall apply.

In case of contractual product liability, the following applies:

In case of failure to perform the contract or the performance is not in accordance with what was agreed, the relevant party shall assume the liability for breach of contract such as continuing to perform its obligations (i.e. specific performance), taking remedial measures or compensation of damages.

Where the liabilities for the breach were not prescribed or clearly prescribed in the contract, and cannot be determined in accordance with the PRC Civil Code, the aggrieved party may, by reasonable election in light of the nature of the subject matter and the degree of loss, require the other party to assume liabilities for breach by way of repair, replacement, remaking, acceptance of returned goods, or reduction in price or remuneration, etc.

Further, as a matter of principle, a party breaching a contract shall be liable to the other contracting party for the entire damages arising due to the breach which have been foreseeable, i.e. which the defaulting party foresaw or should have foreseen at the time of the conclusion of the contract.

1. Under statutory product liability, in addition to compensation for actually incurred damages, according to the PRC Civil Code, where a producer or seller knows about any defect of a product but continues to manufacture or sell the product and the defect caused the death or any serious damage to the health of another person, or fails to take effective remedial measures as prescribed in the PRC Civil Code, the victim shall be entitled to ask for “appropriate” punitive compensation. The PRC Civil Code does not contain any further provisions on the amount of such punitive compensation. Some legal scholars want to use the same standards for the calculation of the punitive compensation as set out in the PRC Consumer Protection Law. According to this, the victim could claim for compensation of losses and for punitive damages of up to two times the losses suffered.
    
2. Under contractual product liability, there are generally no statutory punitive damages. However, the parties can contractually agree on penalty / liquidated damages provisions in case of a breach of contract.

Unlike the broad "discovery" process in common law jurisdictions (like the U.S.), the PRC generally follows a "burden of proof" system. Generally, the party making a claim must provide the evidence. However, because manufacturers often are in the possession of relevant technical data, the law provides for certain mechanisms to compel disclosure.

1. Legal Mechanisms for Disclosure
   
   Order to Produce Documentary Evidence: Under the PRCSupreme People's Court's Provisions on Evidence in Civil Proceedings, if a plaintiff can prove that a document is in the defendant's control (e.g., design blueprints or testing logs), they can ask the court to order the defendant to produce it. If one party controls evidence but refuses to submit it without good cause and the party with the burden of proof regarding the fact to be proven claims that such evidence is unfavourable to the party controlling the evidence, the People's Court may determine that the claim is valid.
   
   Shifting the burden of proof: In accordance with Article 23 of the PRC Consumer Protection Law, for certain "durable goods" (like vehicles or electronics), if a defect appears within six months, the manufacturer/seller must provide evidence to prove the product was not defective at the time of delivery.
   
   Court-Appointed Appraisals: Evidentiary documents may be quite technical. According to the PRC Civil Procedure Law, courts can appoint independent technical expert witnesses. Both sides must disclose relevant technical manuals and data to this expert to facilitate the investigation.
    
2. Commonly Disclosed Documents often comprise the following:
   
   Compliance Records: National Standard (GB) compliance certificates and industry permits.
   
   Design & R&D Files: Risk assessment reports and safety testing data (to check for design defects).
   
   Manufacturing Logs: Batch production records and final quality inspection certificates (to check for manufacturing flaws).
   
   Post-Market Surveillance: Internal records of previous consumer complaints or history of similar accidents (crucial for claiming punitive damages).
   
   User Manuals: The exact wording and placement of warnings and instructions.

The PRC does not have a "class action" system, such as the one in the U.S. However, it provides for several mechanisms for handling multi-party product liability claims under the PRC Civil Procedure Law and the PRC Consumer Protection Law. These following mechanisms allow the court to resolve disputes involving a large number of plaintiffs with similar legal and factual issues.

1. Representative Litigation (Fixed Number of Plaintiffs)
   
   A joint action in which one party consists of numerous persons (typically more than 10) may be brought by a representative elected by such persons. The procedural acts of such representative shall be binding on all members of the party he or she represents. However, the representative's modification or relinquishment of claims, or recognition of the other party's claims or involvement in mediation shall be subject to the consents of the parties he or she represents. In such case, the plaintiffs shall elect 2 to 5 representatives to participate in the litigation, and the court’s judgment is binding on all represented parties.
    
2. Representative Litigation (Unidentified Number of Plaintiffs)
   
   If the object of the action is of the same category and a party consists of numerous persons, and upon institution of the action the number of persons is not determined yet, a People's Court may issue a public notice stating the particulars of the case and the claims and requesting that the claimants register with the People's Court within a certain period of time. Claimants who have registered with the People's Court may elect a representative to engage in litigation; if no such representative can be elected, the People's Court may discuss with the registered claimants in determining on such representative. The procedural acts of a representative shall be binding on the party he or she represents. However, the representative's modification or withdrawal of claims, or recognition of the other party's claims or involvement in mediation shall require the consent of the party he or she represents. Judgments or rulings rendered by a People's Court shall be binding on all the claimants who have registered with the court. Such judgments or rulings shall apply to claimants who have not registered with the court but who institute actions during the limitation period.
    
3. Consumer Public Interest Litigation
   
   For a mass infringement upon the legitimate rights and interests of consumers, the China Consumers' Association and its branches in the provinces, the autonomous regions and the municipalities directly under the Central Government may institute legal proceedings before a People's Court. This mechanism is designed to stop acts that harm the interests of many "unspecified" consumers, such as large-scale food safety issues or defective automotive components.
    
4. Joint Action
   
   If one party or both parties consist of two or more persons, the object of the action is the same or of the same category and the People's Court considers that the case can be tried as a joint action, the case shall be tried as a joint action, subject to the consent of the parties. If the persons constituting a party to a joint action have common rights and obligations with respect to the object of the action, and a procedural act by one member of the party is recognised by the other members of the party, such act shall be binding on all the other members of the party. If the persons constituting a party to a joint action do not have common rights and obligations with respect to the object of action, a procedural act by one of those persons shall not be binding on the other members of the party. This is the most basic form of multi-party litigation. 

"Opt-in" Principle: In the field of product liability and warranty litigation, the PRC strictly follows the "Opt-in" model. This means that a claimant is not automatically part of a group lawsuit. To be bound by the judgment and receive compensation, a victim must proactively register their claim with the court during the notice period or file a separate but linked claim.

"Opt-out" Exception: It is important to note that an "Opt-out" mechanism is currently reserved exclusively for securities disputes under the PRC Securities Law. This mechanism does not currently apply to general product liability or warranty cases.

In practice, because formal representative litigation is procedurally complex, PRC courts frequently adopt a "model judgment" approach for mass product defect cases (e.g., defective vehicles or electronics). I.e., the court may select one or a few typical cases to litigate first as "test cases." Once a final judgment is rendered establishing the manufacturer's liability, this ruling may be used as a benchmark. The court may then encourage the manufacturer to settle the remaining similar claims through court-led mediation, significantly speeding up the compensation process.

In the PRC, product liability lawsuits are typically funded through the following three traditional channels:

1. Self-Funding: Most plaintiffs (especially in individual or small-scale claims) pay their own court fees and legal costs upfront. Court fees in China are standardised and calculated based on the amount in dispute, which must be prepaid by the plaintiff to the court upon filing.
    
2. Contingency Fee Arrangements: This is a rather common method for funding product liability claims. Under PRC regulations, lawyers are permitted to charge fees based on the outcome of the case. However, there are strict limits: the maximum contingency fee is generally capped at 30% of the awarded amount.
    
3. Legal Aid: In the PRC, low-income individuals or those in specific vulnerable groups (such as the disabled or elderly) can apply for free legal services. If a product liability case involves significant public interest or severe personal injury, the government-funded Legal Aid Center may assign a lawyer to represent the victim for free.

Actual third-party funding (i.e., where an outside investor funds the litigation in exchange for a share of the recovery) is currently in a "regulatory grey area" in the PRC. There is no specific national law or regulation that explicitly authorises or prohibits third-party funding in civil litigation.

As to legal fees, according to PRC law, litigation fees shall generally be borne by the party that loses the case. If a party partially wins or loses the action, the People's Court may, according to the circumstances of the case, determine the amount of the litigation fees to be respectively borne by the parties. However, litigation costs are limited to court fees payable to the court, and do not include lawyers’ fees.

Regarding lawyers’ fees, there is no regulation according to PRC law and, generally, each party has to bear its own lawyers’ fees. This also applies for the winning party. The winning party can try to claim its lawyer’s fees as damages, but this is difficult, and it is not very likely to achieve that. Notably, pursuant to the Several Opinions of the Supreme People’s Court on Further Promoting the Separation of Complicated Cases from Simple Ones and Optimizing the Allocation of Judicial Resources, where a party abuses its procedural rights or maliciously delays the performance of litigation related obligations, thereby causing direct losses to the opposing party, the court may, at its discretion, support the opposing party’s claim for reasonable lawyers’ fees and other related losses.

Contingency fees, etc. are generally permitted in the PRC. For details, see our answer at Question 18 above.

China’s First AI "Hallucination" Liability Case

Ruling: In December 2025, the Hangzhou Internet Court ruled in favour of a generative AI service provider, holding that it was not liable for inaccurate information (hallucinations) generated by its AI model.

Key Reasoning: The court recognised the inherent technical limitations of current LLMs. It established that providers should not be held to a standard of "absolute accuracy". Instead, liability is determined by whether the provider fulfilled a "reasonable duty of care", including prominent risk warnings, robust technical filtering, and a timely complaint-response mechanism. I.e., the court held that tort disputes arising from such AI related services should be governed under the fault-based liability principle under Article 1165(1) of the PRC Civil Code, rather than by strict statutory product liability.

Impact: This case serves as a crucial precedent for tech companies, shifting the focus from "strict product liability" to "fault-based liability" predicated on regulatory compliance and transparency.

1. With regard to AI, the PRC plans to move towards a dedicated AI regulatory framework. Such framework may introduce strict liability for high-risk AI applications and potentially shift the burden of proof to developers in complex technical disputes.
    
2. New PRC Product Quality Law: The current PRC Product Quality Law was initially promulgated in 1993 and amended respectively in 2000, 2009 and the last time in 2018. Due to reasons such as development of the PRC legal practice for product liability, enhanced customer protection, diversified sales tools (e.g. e-commerce), etc., it has become increasingly necessary to amend and update this law in order to regulate product liability issues in a better structured and systematic way. On 18 October 2023, the State Market Supervision Administration had released a draft of the amended PRC Product Quality Law to seek public comments until 18 November 2023. Subsequently, on 4 January 2024, all comments had been released. It is not yet clear when the drafting process will be completed, and the draft will be submitted to the PRC State Council for review. 
    
3. Modernizing the "product" definition: Revisions to the PRC Product Quality Law could officially classify software, algorithms, and digital services as "products". This would then subject relevant tech firms officially to the same stringent safety standards as traditional manufacturers.
4. Autonomous Vehicle (AV) Liability: New policies may transition liability from the human operator to the AV system provider during automated driving modes, supported by mandatory data disclosure requirements to facilitate forensic investigations in litigation.