2LT International News

WASHINGTON D.C.: The US has said that under a new Chinese counterespionage law, companies from the US and other foreign countries operating in China could face penalties from Chinese authorities for regular business activities.

Earlier this year, Beijing updated anti-espionage legislation that will ban the transfer of any information related to national security and broaden the definition of spying.

The law will come into force on 1st July.

In a move that concerned business lobbies and foreign investors in the world’s second-largest economy, China has also cracked down on US consultancy and due diligence firms this year.

In a bulletin, the US National Counterintelligence and Security Center (NCSC) said, “China viewed outbound flow of data as a national security risk, and that the new and existing laws could compel companies’ locally employed Chinese nationals to assist in Chinese intelligence efforts.”

“These laws provide the PRC (People’s Republic of China) government with expanded legal grounds for accessing and controlling data held by US firms in China,” it added.

“US companies and individuals in China could also face penalties for traditional business activities that Beijing deems acts of espionage or for actions that Beijing believes assist foreign sanctions against China,” it said.

In response, Liu Pengyu, spokesman for China’s embassy in Washington, said the country had a right to safeguard national security through domestic legislation.

“China will continue to promote high-level opening-up and provide a more law-based and international business environment for companies from all countries, including the US,” he said.

Meanwhile, the travel advisory for China was updated by the US State Department, which upgraded the “risk of wrongful detentions” and urged Americans to reconsider travel to China.

Commenting on concerns fro US businesses, US Ambassador to China Nicholas Burns said Beijing’s targeting of US firms was politically motivated and Washington would push back.