China’s intentionally vague new espionage law is aimed at western companies

When China took over Hong Kong and ended protests and press freedoms there, it also passed a new law aimed at suppressing anyone who resisted their efforts. Now China has just passed a new espionage law which is vague in form but which seems aimed at exerting additional control over foreign companies.

The US government, analysts and lawyers say that the revisions to Beijing’s anti-espionage law are vague and will give authorities more leeway in implementing already opaque national security legislation.

The US National Counterintelligence and Security Center (NCSC) said the law, which came into effect on Saturday, gives Beijing “expanded legal grounds for accessing and controlling data held by US firms in China”…

Under the revised law, “relying on espionage organisations and their agents” as well as the unauthorised obtaining of “documents, data, materials, and items related to national security and interests” can constitute a spying offence…

The changes “have raised legitimate concerns about conducting certain routine business activities, which now risk being considered espionage”, Craig Allen, president of the US-China Business Council, wrote in a recent blog.

Nikkei also notes that the vagueness of the law presents a challenge for businesses trying to ensure they comply with it and don’t wind up in prison.

“What is it that we are supposed to comply with?” Jens Eskelund, president of the European Union Chamber of Commerce in China, asked in an interview with Nikkei Asia. “What constitutes a state secret? What kind of information [is it] that we are not supposed to have?”…

AmCham’s Hart said there seems to be “mixed messaging,” as demonstrated by the government’s raids on American business consultancies in recent months. “We hear China wants foreign investment,” Hart said. “On the other hand, we hear about these raids.” The chamber, Hart said, had raised the raids with the authorities, asking for transparency but it has not received any feedback so far.

I wrote about the raids on American businesses here. Those came as the law was passed but before it even took effect. One focus of that crackdown was a US chipmaker called Micron whose products China banned.

Based in Boise, Idaho, Micron Technology makes memory chips used in phones, computers, data centers, cars and other electronics. It has longstanding ties in China and is an emblem of America’s leading position in the global semiconductor industry. But now Micron has gotten ensnared in China’s drive to become self-sufficient in advanced technology…

China’s decision to put Micron under review followed sweeping restrictions placed by the United States on China’s semiconductor industry. Those measures, unveiled in October, targeted some of Micron’s Chinese competitors.

What China is doing is something is mirroring US moves as a way to exert control. The difference of course is that China really is stealing all sorts of information from Americans and American companies and, because our tech companies are well ahead of theirs, we’re not stealing from them. One example of this strategy came when Huawei CFO Meng Wanzhou was arrested in Canada in 2018. She was facing extradition to the US. In response, China kidnapped two Canadian citizens and charged them with the identical charges that Meng was facing. It’s not subtle but it can be effective.

So as the US is limiting China’s access to advanced chipmakers and considering maybe blocking TikTok from the US entirely, it makes a certain sense that China would be preparing to flex its muscles against US companies almost at random. The actual evidence isn’t the point. The point is that any resistance to China’s bullying can be punished against anyone they designate for any reason.

VOA reports that this law could be particularly challenging for reporters in China.

“Quite a few of us are worried about what it is and what it might mean. It’s a little bit difficult to tell at the moment because it’s not entirely clear what it means or how it’s going to be implemented,” a foreign correspondent in Beijing told VOA. He requested anonymity over concerns for his safety.

“Any kind of news gathering seems like it could be construed as a violation of this law,” the reporter added.

China denies it of course but we’ll have to wait and see. The whole point of the new law being so vague is that it becomes very flexible. But one thing that’s not in doubt is that this is aimed at the west. Even state media has said as much.

State media outlet The Global Times called the law a “key step to enrich the legal toolbox against Western hegemony”.

Dr Chong Ja-Ian, a non-resident scholar at Carnegie China, said it was a “signal” of Beijing’s intention to “actively pursue their interests in ways that include more coercion and pressure, even as they hold out the attraction of cooperation and economic gains”…

The law puts in writing for the first time that it is the ruling Communist Party, instead of the state, that directs foreign policy – it also represents Mr Xi’s tightening grip on power.

“[The law] is strikingly explicit on party leadership over foreign relations, underscoring the Xi era trends of migration of power – from the state to the party, and within the party, to Xi,” said Dr deLisle.

So the next time an American company in China is raided or an American executive is accused of espionage, the legality will be vague but it will be very clear who is to blame.