Chinese Law Raises Risks for American

 

New Chinese Law Raises Risks for American Firms in China, U.S. Officials Say

U.S. counterintelligence officials say revised Chinese law potentially turns normal business activities into espionage

WASHINGTON—U.S. counterintelligence officials are amping up warnings to American executives about fresh dangers to doing business in China under an amended Chinese law to combat espionage. 

A bulletin being issued Friday by the National Counterintelligence and Security Center and viewed by The Wall Street Journal warns that the revised law is vague about what constitutes espionage and gives the government greater access to and control over companies’ data, potentially turning what would be considered normal business activities into criminal acts. 

The amended counterespionage law, which takes effect Saturday, has unsettled foreign businesses in China. The publication of those revisions this spring came amid a wave of raids, inspections and other acts by Chinese authorities against foreign, chiefly American businesses, as tense U.S.-China relations deteriorated further.

The revised law expands the definition of espionage without defining terms in a way that is “deeply problematic for private sector companies,” said Mirriam-Grace MacIntyre, who leads the counterintelligence center. 

Teams from the center have been stepping up briefings for U.S. business leaders since April, she said.

MacIntyre declined to name the businesses being advised. China’s recent actions appeared to focus on due diligence and consulting firms and other businesses collecting information about China’s economy and business climate.  

China’s government has said that the rights of foreign businesses are protected under Chinese law. “As long as one abides by laws and regulations, there is no need to worry,” a Chinese Foreign Ministry spokeswoman said this week in response to a question about whether the updated counterespionage law would affect foreign journalists and researchers. 

At the briefings, MacIntyre said she and her teams have received questions from U.S. businesses about the raids on U.S. due-diligence firm Mintz Group and Capvision, an expert-network consulting firm. They have also been asked whether officials think it is still safe to travel to China.

“An executive’s decision to travel is their own personal decision,” said MacIntyre, but her team wants to make sure they know the risks. Officials have been flagging to companies a State Department travel advisory in March urging Americans to reconsider travel to China, citing that government’s arbitrary enforcement of laws and use of exit bans blocking the departure of some U.S. citizens. 

The revised law expands the definition of espionage from state secrets and intelligence to any “other documents, data, materials, or items related to national security,” center officials said. The law also imposes new exit and entry restrictions for people deemed to present national security threats, they said, and raises legal risks for U.S. companies, journalists, academics and researchers.

The revised Chinese counterespionage law is among a raft of national, cybersecurity and data privacy laws and regulations that collectively expand Beijing’s oversight of foreign companies operating in China, the counterintelligence center’s bulletin said.

The awareness campaign by the counterintelligence center follows similar efforts, including one last year that warned state and local government leaders and business executives about efforts by China to lobby and otherwise influence