China expands scope of state secrets law in security push
China has passed revisions to an already strict state secrets law, expanding the scope of the type of information that would be considered a national security risk in the world’s second-largest economy.
The changes increase risks for foreign companies operating in the country. Over the past year, China has targeted consultants and business executives in espionage cases as part of an effort to limit the spread of information sought by investors and foreign companies.
The changes to the state secrets law, which were passed by China’s top legislative body on Tuesday and will come into effect in May, include a new legal concept called “work secrets.” It is defined as information that is not an official state secret but “will cause certain adverse consequences if leaked,” according to the text of the law.
“The law is vague and the definition of state secret is so broad that it could include anything the party-state decides it should,” said Diana Choyleva, chief economist at Enodo Economy, a London-based research firm focused on China. “It will also further complicate life for foreign companies and their employees in China.”
Ms Choyleva said many companies will be trapped in a state of “paralysis” as they wait to see how China applies the new provisions in the law.
It is the latest example of the country’s increased vigilance over state security under Xi Jinping. In recent years, China has gradually strengthened its national security and data-sharing laws, while warning of the risks of corporate espionage.
But the strengthening of China’s national security laws has roiled many foreign companies and investors. Many of the changes apply unclear and broad criteria for what would constitute a national security risk, raising the possibility that the rules could be applied arbitrarily.
The crackdown has compounded the challenges of investing in China at a time when foreign direct investment in the country has fallen to its lowest level in three decades, as companies become increasingly unwilling to tolerate the trade-offs of operating in China with an economy no longer entails. is growing by leaps and bounds.
Jens Eskelund, chairman of the European Union Chamber of Commerce in China, noted that the changes to the state secrets law came a week after the country’s cabinet, the State Council, said one of this year’s priorities was attracting more foreign investments by strengthening investor confidence.
“The scope of issues considered ‘sensitive’ appears to be constantly expanding, making it more difficult for companies to access information necessary to make investment decisions related to their China operations,” he said in a written statement.
The State Secrets Law was first passed in 1988 and then amended in 2010, when China imposed stricter requirements on internet and telecommunications companies to cooperate with police, state security officials and prosecutors in investigating leaks of state secrets.
China’s ruling Communist Party determined the law needed to be updated because of advances in science and technology that created “new problems and challenges” in maintaining confidentiality, an official from the National Administration of State Secrets Protection told state media.
China also revised its counterintelligence law last year to expand the definition of what can be considered espionage. It determined that sharing “documents, data, materials and objects” could be considered espionage if the information “affected national security and interests.”
The series of legal changes coincides with increased scrutiny of businesses across the economy. Chinese financial sector executives are being targeted by large-scale anti-corruption campaigns. Government authorities last year targeted consulting and consulting firms with foreign ties through a series of raids, detentions and arrests as part of enforcing counterintelligence laws.
In addition, Beijing has arrested foreign executives and accused them of espionage while using its authority broadly to prevent others from leaving the country. In January, China’s Foreign Ministry said a British adviser who disappeared from public view in 2018 would be sentenced to five years in prison in 2022 for “purchasing and unlawfully providing intelligence for an organization or individual outside China.”
China has been trying to educate its citizens about the national security risks posed by its economy through a series of comics from China’s Ministry of State Security. The online series is based on actual espionage investigations, the ministry said.
In the latest episode released This week, a special investigator from the agency goes undercover to infiltrate a consulting firm in China and obtain evidence that this company was illegally contacting experts in sensitive industries. The investigator is on the hunt for a “big fish,” a foreign spy named “Jason,” who is part of the business owner’s network of associates. In the final scene, the investigator finds a list of experts in the company’s document room, but is discovered by a colleague.
The comic does not identify the company as foreign or domestic. Last year, Chinese authorities raided the offices of consultancy firm Capvision Partners, which offered a matchmaking service to connect clients looking for information with a selection of “experts” from different sectors.