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China’s counter-espionage law could impact foreign businesses

On Behalf of | Jun 8, 2023 | Blog, Business Law

China’s expansive counter-espionage laws pose significant risks to foreign businesses. Recent changes to those laws could come with increased risks.

What changed and how may it impact foreign businesses operating in China?

Changes to counter-espionage laws

Recent changes to Chinese law expand the definition of espionage from state secrets and intelligence to any data, documents, items or materials related to national interests and security. The amendment reflects the country’s increasing emphasis on national security.

Legal concerns for foreign businesses

The amended language of the law suggests that any person or organization could become a suspect and Chinese officials could arbitrarily declare any action a threat to Chinese national security. Because the law provides little clarity about what kind of documents, materials or data China may consider relevant to national security, businesses could run afoul of the law without knowing it.

The law could also pose challenges when it comes to collecting data on the Chinese economy. Some experts fear that normal business activity, such as market research and analysis could result in espionage accusations.

In recent years, China has arrested several foreign nationals on espionage charges. Some believe those arrests may be politically motivated and accuse China of violating due process.

While Chinese officials maintain that laws are necessary to protect China as it reopens its borders to foreign investors, businesses around the world have begun to question whether it is safe to operate in the country. Foreign companies already operating in China or considering investing must navigate these legal changes carefully.