Shanghai police will assign a team of officers to monitor all Shanghai-registered websites.
Guidelines will be released instructing businesses to collect personal information only when absolutely necessary and to delete it immediately after use.
In a bid to better safeguard citizens' privacy, China will publish national standards for personal information protection in the first half of this year.
A motion to the ongoing National People's Congress suggested that an information security law should be developed as soon as possible.
As one of the major Internet powers in the world, China is willing to work with the United States to advance the development of information technology and fight cyber crime, a senior Chinese information official said.
The amendment to the Resident Identity Card Law increased punishment to those found guilty of leaking citizens' personal information.
China may impose economic and civil punishments, in addition to criminal penalties, on those found guilty of leaking citizens' personal information.