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U.S. Companies In China Brace For Risks As New Counterespionage Law Takes Effect

Intelligence officials warn of legal uncertainties and expanded espionage scope, raising concerns for American businesses.

U.S. intelligence officials reiterated their warnings to American companies engaged in business in China, highlighting the country’s imminent implementation of an updated counterespionage law.

“The upcoming implementation of China’s revised counterespionage law, which is set to take place on July 1, has raised concerns about possible legal risks or uncertainties for companies that have business operations in China,” said the National Counterintelligence and Security Center (NCSC) in a statement. 

The center said 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,” said the NCSC.

The center also said that the 2021 Cyber Vulnerability Reporting Law could provide Beijing with the “opportunity to exploit system flaws before cyber vulnerabilities are publicly known.” “The country’s 2017 National Intelligence Law might force locally employed Chinese nationals working at U.S. companies to assist in intelligence efforts for Beijing,” said the Center. 

The recent amendments to China’s counterespionage law have exacerbated the apprehensions faced by U.S. companies, which have been caught in the crosshairs of an increasingly strained U.S.-China relationship.

The recently updated law is part of a series of measures implemented by Chinese President Xi Jinping to bolster state authority and tighten control over foreign influence.

Earlier in May, Chinese authorities questioned and investigated employees at Bain & Company’s Shanghai office as part of a crackdown on foreign businesspeople in China. 

For over a year, business relations between China and the U.S. have been unstable. Escalating tensions between China and Taiwan have further deterred numerous investors from engaging with Chinese companies.

GettyImages-1251876522.jpg
A mobile phone displays the TikTok logo with the flags of the United States of America and the People’s Republic of China in the background. This year, U.S. lawmakers conducted congressional hearings to investigate the potential security risks associated with TikTok, owned by the Chinese company Bytedance. STANISLAV KOGIKU/SOPA IMAGES/LIGHTROCKET VIA GETTY IMAGES.

During the hearings, TikTok executives faced questioning from legislators regarding the extent to which the Chinese government accesses the data collected by the app.

Meanwhile, in a meeting with Microsoft co-founder Bill Gates, Xi emphasized the importance of people-to-people connections as the foundation of U.S.-China relations, expressing his hope in the American people and their potential to foster activities beneficial to both nations and humanity.

© 2023 Zenger News.com. Zenger News does not provide investment advice. All rights reserved.

Produced in association with Benzinga

Edited by Judy J. Rotich and Newsdesk Manager

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