The suspect alleged corruption on the part of a retired architect, who the suspect claimed owns many properties.
The accusation was widely circulated online but an investigation cleared the retired architect.
In May, Chen Shiqu, director of the anti-human-trafficking office of the Ministry of Public Security, posted a message calling for the public to verify any accusations they made online.
"Public security officers will look into every single piece of information about alleged trafficking, but false information interferes with investigations," he said.
The draft also proposed asking Internet users to identify themselves to Internet and telecom services providers.
But "such identity management could be conducted backstage, allowing users to use different names when publicizing information", Li said.
Since March, leading micro-blogging services, including Tencent Weibo and Sina Weibo, have asked users to identify themselves.
Li Yuxiao, director of the Collaborative Innovation Center of Social Networks and Public Opinion Research, has called to set up a national project to protect personal information as well as legislation to support it.
"The Internet can only achieve sustainable development based on the rule of law," he said.
Ying Songnian, a professor at the Chinese Academy of Governance, said organizations that hold large amounts of information must be responsible and capable of holding it.
"Organizations like websites, banks and hospitals have huge amounts of personal information, but their ability to prevent leakage is weak," he said.
The passwords of about 40 million users at tianya.cn, a major Internet forum, were leaked to outsiders a year ago.
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