US Spies Issue Warnings Over Risks of Doing Business in China

US intelligence officials renewed warnings for American companies doing business in China، citing an update to a counterespionage law that’s due to take effect in the next day.

A bulletin issued by the National Counterintelligence and Security Center on Friday warns executives that an update to China’s counterespionage law، which comes into effect on July 1، has the “potential to create legal risks or uncertainty” for companies doing business in China.

It adds that the law broadens the scope of China’s espionage law and expands Beijing’s official definition of espionage. “Any documents، data، materials، or items” could be considered relevant to the law due to its “ambiguities،” the bulletin says.

Counterespionage law

The revisions to China’s counterespionage law have raised further concerns for US companies، which already find themselves in caught in the middle of an increasingly fraught US-China relationship. The law is just one of a slew of measures taken by President Xi Jinping to strengthen state power and clamp down on foreign influence.

Earlier this year، authorities in China questioned staff at the China offices of US consultancy Bain & Company. Officials also raided the Beijing office of New York-based due diligence firm Mintz Group and detained five of its Chinese employees. China’s foreign ministry put out a short statement saying Mintz was suspected of illegal business operations، while separately stating that it wasn’t aware of any raid at Bain’s Shanghai office.

The bulletin also draws attention to other pieces of Chinese legislation، including the 2021 Cyber Vulnerability Reporting Law، which it says could provide Beijing with the “opportunity to exploit system flaws before cyber vulnerabilities are publicly known.” It also discusses the 2017 National Intelligence Law، which it says may force locally employed Chinese nationals working at US companies to assist in intelligence efforts for Beijing.