Crackdown 2.0: Beijing's Broadening Espionage Laws To Threaten Foreign Companies

China's new counter-espionage law may restrict transfer of data related to national security, causing concern of more aggressive measures against foreign individuals and companies operating in the country, as reported by Asia Nikkei.

The National People's Congress Committee began reviewing new legislation on espionage on Monday (24 April), with plans to approve it Wednesday (26 April), expanding its definition.

2014 was the last amendment of the law.

The new measure will broaden the law from only state secrets to encompass any materials pertaining to national security and interests. However, there are no specifications as to what specifically qualifies as such.

Cybersecurity will receive more attention and talking about a system's cyber vulnerabilities might violate the new regulations.

Authorities gain more power to search suspected spies' luggage and electronics for added security measures.

China requires citizens and organisations to report suspected espionage, mandates technical support from logistics and telecommunications firms, and charges media outlets with educating the public on espionage.

Foreign businesses fear that these changes may affect their operations in China, including the arbitrary enforcement and detention of individuals without sufficient evidence.

A Japanese employee from Astellas Pharma was detained in March for violating counterespionage law. He had interactions with Chinese officials as part of his job in the drug-making company.

On 7 April, Chinese Ambassador to Japan, Wu Jianghao, stated that the man accused of espionage is backed up by strong evidence and will be dealt with following Chinese law.

Japan has demanded his immediate release, however, little progress has been made, increasing tensions between the two nations.

Amid uncertainties surrounding the amended law, foreign workers in China are anxious about potential violations.

Even routine business operations may be seen as illegal, prompting warnings from Japanese firms to expatriate workers, particularly those in the tech sector, which the Chinese government prioritises for national security reasons.

As business travel to China rebounds following the lifting of zero-COVID restrictions, some companies are now delaying nonessential trips.

Ichiro Korogi, a modern-China expert and professor at Japan's Kanda University of International Studies, advises that foreigners are likely to be detained in China again.

As a precaution, businesses should tell their employees to avoid carrying computers and smartphones and refrain from discussing Chinese politics altogether.

Chinese authorities could monitor foreign companies involved in AI, semiconductors, and other key fields, citing national security. This may include their communication with their headquarters, as proposed changes are expected to provide justification.

China started investigating Micron Technology in March to secure supply chains, without clear details on the reason for the probe.

In March, China detained five Chinese employees of US company Mintz Group and closed its Beijing office; foreign corporations may also face office searches, risking exposure of trade secrets and intellectual property.

In the past few months, Chinese President Xi Jinping has prioritized national security and appointed trusted allies in significant positions.

Chen Wenqing, who played a vital role in Xi's fight against corruption, was designated party secretary for the Communist Party Central Committee's Commission for Political and Legal Affairs. The Commission overlooks all aspects of law enforcement in China, making this a crucial position.

Additionally, Chen Yixing, an associate of Xi from his time as party chief of Zhejiang province, took over as state security minister from Chen Wenqing. Jinping's actions indicate his strong emphasis on security affairs.