Michael Martina
WASHINGTON (Reuters) – The United States on Friday issued a warning over China’s new counterintelligence law, saying U.S. and other foreign companies in China May face penalties from Chinese authorities for regular conduct. business activities.
Chinese lawmakers this year passed a broad update to Beijing’s anti-espionage legislation, which will take effect on July 1, banning the transmission of any information related to national security and expanding the definition of espionage .
China has also cracked down on U.S. consulting and due diligence firms this year in a move that business lobby groups say has rattled foreign investors in the world’s second-largest economy.
The US National Counterintelligence and Security Center (NCSC) said in a statement that China views the outbound flow of data as a national security risk and that new and existing laws could force companies to hire Chinese nationals assist Chinese intelligence work.
“These laws provide the government of the People’s Republic of China with additional legal basis to access and control data held by U.S. companies in China,” the NCSC said.
“U.S. companies and individuals in China may also face penalties for traditional business activities that Beijing believes engage in espionage or conduct that Beijing believes facilitates foreign sanctions against China,” the report said.
It said the law’s vagueness meant that “any document, data, material or item” could be deemed relevant to China’s national security, which also exposed journalists, academics and researchers to risk.
The Chinese embassy in Washington said Beijing has the right to pass domestic legislation to safeguard national security.
“China will continue to promote high-level opening up to the outside world and provide a more law-based and international business environment for companies from all over the world, including the United States.” Liu Pengyu, spokesman for the embassy, said.
Chinese leader Xi Jinping has emphasized national security since took office. China is increasingly suspicious of the United States and its allies as U.S.-China rivalry intensifies, but Beijing insists it is opening up to overseas investment.
U.S. officials told Reuters that they have received a flood of questions from businesses and other groups about the risks of traveling to China since the bill was enacted in April.
The U.S. State Department also updated its travel warning for China on Friday, escalating the “risk of wrongful detention” in a warning to Americans to reconsider travel to China “.
US Ambassador to China Nicholas Burns said Beijing’s attacks on US companies were politically motivated and Washington would fight back.
