China is cracking down on the rapidly growing "digital human" industry, where AI avatars of deceased loved ones are created for grieving families. The country's Cyberspace Administration of China (CAC) issued draft rules in April 2026 to govern how these AI-generated avatars are developed and deployed, marking the latest effort to balance innovation with safety concerns . The digital human industry, which grew 85 percent year-on-year, was valued at approximately 4.1 billion yuan, or about $764 million, in 2024 .

What Are Digital Humans and Why Is China Regulating Them?

Digital humans are AI-generated avatars that mimic the appearance, voice, and mannerisms of real people. In China, they've become ubiquitous on social media, where they're used to promote products and services. But the most emotionally charged use case involves creating avatars of deceased family members, allowing grieving relatives to interact with lifelike versions of their loved ones .

The emotional appeal is undeniable. After her father died from cancer, Ms. Zhang Xinyu, 47, approached the company Super Brain to create an AI avatar of him. She told AFP that conversing with her father's digital clone made her feel "fully recharged in an instant and filled with motivation once again" . However, some of her friends worried she would become too immersed in the virtual world and never move on, calling it a form of "false comfort." Ms. Zhang countered that "even if the comfort itself is simulated, the love behind it is real" .

She

A viral moment in April 2026 highlighted both the technology's power and its ethical risks. A video of an elderly woman unknowingly chatting with a hyper-realistic avatar of her dead son garnered more than 90 million views on Weibo, sparking heated online debate about generative AI ethics . The incident prompted calls for stronger regulation to prevent bad actors, such as scammers, from misusing the technology.

What Do the New CAC Regulations Require?

The draft rules, open for public comment until early May 2026, establish several key safeguards designed to protect consumers and preserve social stability . The regulations address consent, content labeling, child safety, and national security concerns.

• Clear Labeling Requirements: All digital human content must be clearly labeled to inform users they are viewing AI-generated avatars, not real people.
• Consent and Deepfake Protections: Creating deepfake clones of individuals without their explicit consent is prohibited, addressing concerns about identity theft and impersonation.
• Child Safety Restrictions: Services offering minors virtual intimate relationships are banned, as are those that encourage children to "develop extreme emotions, or cultivate harmful habits" .
• National Security Safeguards: Digital humans are prohibited from generating or disseminating content that endangers national security or incites subversion of state power .

Violations of the regulations will result in fines ranging from 10,000 yuan to 200,000 yuan, roughly $1,400 to $28,000 . The CAC has previously cracked down on AI-generated deepfakes impersonating public figures in e-commerce livestreams, which it said "severely damaged" the online ecosystem .

How Is the Industry Responding to New Regulations?

Industry leaders appear to welcome the regulatory framework. Super Brain founder Zhang Zewei told AFP that he views new laws on the sector as "inevitable" and sees them as a positive development .

"I view this as a positive development, as it achieves a balance between standardised regulation and industry growth," said Zhang Zewei.

Zhang Zewei, Founder at Super Brain

Zhang described the case of the elderly woman and her deceased son's avatar as a "well-intentioned lie," emphasizing that the family had approached Super Brain after the son died in a car accident . The company obtained consent from family members before creating the avatar.

Zhang

Why Is China Balancing Innovation With Control?

China's approach to regulating digital humans reflects a broader strategy of "develop first, then regulate, and perfect in the process," according to Associate Professor Marina Zhang from the University of Technology Sydney . This philosophy allows the technology sector to grow rapidly while regulators monitor for risks and intervene when problems emerge.

"Chinese governance of new digital technologies has always followed the logic of 'develop first, then regulate, and perfect in the process'," explained Associate Professor Marina Zhang.

Associate Professor Marina Zhang, University of Technology Sydney

One key motivation for the regulations is preserving China's "sovereignty and political objectives," according to Manoj Harjani, a research fellow at Singapore's S. Rajaratnam School of International Studies . By controlling how digital humans are created and deployed, Beijing can prevent the technology from being weaponized against state interests or used to spread misinformation.

Dr. Lizzi Lee from the Asia Society Policy Institute noted that "Beijing wants to move quickly on AI adoption and deployment, but within a controlled framework" . There is strong support for scaling new technologies, but once "risks become visible," regulators step in quickly .

"Beijing wants to move quickly on AI adoption and deployment, but within a controlled framework," noted Dr. Lizzi Lee.

Dr. Lizzi Lee, Asia Society Policy Institute

How to Understand Digital Human Regulations as a Consumer or Creator

• Labeling Awareness: Look for clear labels on digital human content to distinguish AI-generated avatars from real people, helping you make informed decisions about what you're viewing.
• Consent Verification: If you're considering creating a digital avatar of someone, ensure you have explicit written consent from that person or their family members to avoid legal penalties.
• Platform Responsibility: Platforms hosting digital human content must comply with CAC rules or face fines ranging from 10,000 to 200,000 yuan, incentivizing stricter content moderation.

The digital human regulations represent China's latest attempt to harness the economic potential of generative AI while preventing unfettered development that could pose social, ethical, or security risks. As the technology continues to evolve, the regulatory framework will likely evolve with it, setting a precedent for how governments worldwide approach the governance of increasingly sophisticated AI systems.