Last week the last brick of China’s “Great Legal Wall” was laid. Updates to China’s anti-espionage law went into effect on July 1, sending waves of anxiety through China’s foreign business community. The anti-espionage law is the newest in a series of 15 national security laws passed in recent years for China’s security state, but it has prompted a US intelligence firm to heed a public warning. The US National Counterintelligence and Security Center, a component of the Office of the Director of National Intelligence, warned US corporations about an increased threat of doing business in China, citing the revised law. The law creates new threats to foreign corporations, business travelers, academics, journalists and researchers. Its nebulous language gives China wide leeway to investigate and prosecute foreign corporations. To prevent foreign corporations from inadvertently weaponizing emerging tensions between the United States and China, the U. S. public and private sectors will have to work together to manage this threat.
The updated law expands the definition of espionage to cover “all documents, data, materials, and items related to national security and the interests to which protection is directed. “The previous law only covered “state secrets and intelligence. “the terms “national security” and “interests”. The law describes espionage and espionage activities as “collaboration with espionage organizations and their agents” and “conducting cyberattacks against state entities, privacy-related units, or critical data infrastructure, respectively. “The law also makes “membership in espionage organizations and their agents” a category of espionage activity, without defining what ties qualify as “membership. “”Incitement”, “incitement”, “bribery” and “coercion” of a foreign company. Attempts to defect from an official are also considered espionage activities.
Analysts argue that these general provisions may also apply to normal business activities. Companies that do business with the U. S. government can also be considered to be eligible for a business with the U. S. government. U. S. intelligence activities are carried out. Market research and business intelligence can now be considered espionage if the documents are technology, technology, hardware, and items related to national security. Hiring a former government official can be a limitation. Hiring someone with knowledge of national security or relevant generation issues can subject a company to investigation and sanctions. Foreign companies involved in generating collaborations with Chinese corporations are likely to break the law if their collaboration is for national security reasons. Companies’ knowledge centers and cloud facilities in China can also be investigated if the knowledge is similar to national security.
The revised law gives the Ministry of State Security and its local counterparts unprecedented enforcement powers to penetrate, interrogate, and search individuals’ electronic devices and commercial facilities. Analysts are implicated that the ministry is collecting sensitive information from foreign corporations under the guise of preventing espionage. Company executives could also be subject to bans while under investigation.
Not everyone thinks the anti-espionage law is a cause for concern. China is under pressure for all countries to take measures to protect their national security and fight espionage. The Global Times, considered the mouthpiece of the Chinese Communist Party (CCP), accused the West of fabricating considerations about the law. Bob Guterma, executive director of The China Project, says the law simply clarifies and specifies activities that have been contrary to the Party. The Chinese premier and commerce minister have tried to reassure corporations that they will not de-risk their products.
Perhaps the most productive insurance for Western corporations is that, supposedly, China cannot alienate foreign corporations and investors at this point. China’s economy has experienced a volatile recovery from COVID. Even as it tries to decouple from the United States, China remains dependent. of foreign investment for its growth.
However, experts have sounded the alarm. In addition to the Center, U. S. Ambassador to China Nicholas Burns, major law firms, the U. S. Chamber of Commerce and other business interests have expressed concern. China’s counterintelligence chief also called for a crackdown on espionage activities under the new law. The Global Times reported that China would step up enforcement of legislation that opposes foreign companies. The ambiguous scope of the law is cooling the discourse in China. Some analysts who discuss issues such as the origin of COVID, the number of deaths from the pandemic in China, and even attempts to gather or talk about accurate knowledge about the Chinese economy may all be included in the revised law.
Additionally, the risk environment and timing of reviews are of concern. China’s crackdown on foreign companies has intensified, including the detention of employees. In a recent survey by the EU Chamber of Commerce, almost two-thirds of companies said doing business in China had become more difficult, and six in ten said the sector had become more politicized in the last year. High-profile arrests of Western businessmen have also raised concerns. As a result, last week the US State Department updated its report. notice to China, raising the “risk of wrongful detention. “
The U. S. opposes this risk to its economic interests, with the help of the corporations themselves. The U. S. is pressuring the Chinese government to explain the meaning of the law, in order to safeguard the interests of U. S. corporations in China. The United States also guarantees the People’s Republic of China that it does not use its private sector companies for intelligence and security purposes.
Meanwhile, companies doing business in China want to prepare and protect themselves from the threats inherent in the new law. Companies deserve to review and update their existing processes and policies to ensure they take into account the expanded scope of espionage activities in the new law. law. They deserve to review their due diligence processes for the variety of employees, suppliers, and partners to identify potential exposure to materials, individuals, and organizations covered by the law. They deserve to assess all knowledge systems, classify potentially sensitive data as such, and expand protocols to restrict and identify who has access to it. They deserve to expand transparent reporting and compliance procedures, incident and crisis control programs, and prepare for unannounced visits and raids by Chinese government officials. Businesses also deserve to ensure threat mitigation, security plans, and cybersecurity plans for all business travelers in China.
The parameters for doing business in China have been replaced with the construction of the “Legal Great Wall. “Even if China fails to act to enforce the new law, legal reviews lay the groundwork for investigations and law enforcement against foreign corporations in the future. Businesses will want to conduct ongoing threat testing as competition, threats, and legal environments continue to evolve. If the U. S. bans TikTok or restricts other Chinese technologies, China is now in a position to retaliate by choking Western corporations. and the public sectors to manage this threat will be essential.