A police raid on the offices of the US company Mintz Group, which conducts due diligence on other companies in China, culminated in the arrest of five employees in March. Their boss, a Singaporean, was banned from leaving the country. Similar incidents are likely to become more frequent in the future. Beijing is tightening laws that also affect foreign entrepreneurs.
The expansion of the anti-espionage law was approved by the Chinese parliament last Wednesday. The update focuses on cybersecurity, broadens the definition of what can be considered state secrets, and strengthens the powers of security forces. The legislation attracted attention mainly because of what it can mean for foreign companies or individual entrepreneurs.
The amendment very imprecisely states that the security forces can search any person whose identity they are not sure of or if they are suspected of espionage activity. The same applies to her property, electronics or companies associated with her, writes the British newspaper The Guardian. Foreigners and their companies operating in the Asian powerhouse can thus be included in the definition.
“The uncertainty is huge,” Jorg Wuttke, director of the European Union Chamber of Commerce in China, describes the feelings among European businessmen for the American station NBC News. The American Chamber of Commerce also came up with a similar statement, according to which “the uncertainty and risks of doing business in China have increased dramatically,” the political server Politico quotes from its statement.
Communist authorities can also restrict the free movement of foreigners, especially travel out of the country, as happened to the Singaporean head of the aforementioned company Mintz Group. The ban, which Beijing has long applied to debtors, but also to human rights activists, lawyers and ethnic minorities, will, thanks to the update, apply to “anyone” who is the subject of an investigation or “harms national security and national interests,” writes NBC News. Even in this case, a more specific definition is missing.
“Foreigners will definitely be arrested,” Professor of Modern Chinese Studies Ichoro Korogi tells the Japanese daily Nikkei Asia. “The only thing businesses can do is tell their employees to keep computers and phones away whenever possible and to avoid gossiping about Chinese politics,” he believes.
Data on the wealth of politicians is disappearing from the Chinese Internet
The new anti-espionage law will also affect foreigners indirectly – it limits access to government data published on the Internet. The Chinese regime began publishing them shortly after the turn of the millennium as it sought to improve the reputation of officials and curb corruption. Since then, however, the innermost leadership of the Communist Party has changed, and the media and organizations have, thanks to such published information, revealed, for example, what practices the Communist government is carrying out in Xinjiang province or data on the assets of Party General Secretary Xi Jinping and other top politicians, the American magazine explains Foreign Policy.
The authorities will also remove foreign firms from key Chinese financial market databases that have made doing business in the country more transparent. Foreigners will also lose all access to published academic texts. “A lot of information is simply gone,” Foreign Policy sums up.
Economic growth in second place
The tightening of the law comes as China, whose economy has slowed after three years of the coronavirus, is struggling to attract new investors. However, the current step is excluded with this effort, Foreign Policy assesses. According to him, the reason is the contradiction between what the local governments, drowning in debt and lacking cash, want, and what the security forces, guided by the authoritarian ideas of President Xi Jinping, are aiming for. “Security forces have no reason to care about economic growth. And local governments have no control over them,” he says.
“Potential visitors to China rightly wonder what kind of political and legal system they will face once in China. These updates to the law only heighten their concerns,” adds Professor Lewis.
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