China’s National Security Drive Leads to Expansion of State Secrets Law

China’s National Security Drive Leads to Expansion of State Secrets Law

China’s recent amendment to its state secrets law has raised concerns for foreign businesses operating in the country. The revised “Law on Guarding State Secrets” expands the scope of information deemed sensitive by the authorities, leading to potential uncertainty and risks for foreign firms.

The changes to the state secrets law have been under discussion for months and were finally published after passing through the National People’s Congress Standing Committee, China’s top legislative body. The amended law, signed by President Xi Jinping, is set to take effect on May 1.

One significant change in the law is the introduction of a new concept called “work secrets.” This category includes information that is not considered state secrets but could have adverse effects if leaked. The specific rules governing the management of work secrets will be provided separately, though no timeline has been given.

An official from the National Administration of State Secrets Protection stated that the revision also emphasizes the Communist Party’s control over secrecy. The official argued that technological advancements and changes in domestic and international situations necessitated these legal changes to safeguard state secrets.

The amendment to the state secrets law comes in the wake of a massive leak of over 500 documents from Chinese cybersecurity contractor I-S00n. This incident has brought China’s cyber espionage operations under scrutiny, further highlighting the importance of tightening control over sensitive information.

However, critics perceive this revision as a reflection of China’s societal instability. Yao Cheng, a former lieutenant colonel in the Chinese military, suggests that the Chinese Communist Party aims to strengthen control over society using the state secrets law. By broadening the definition of sensitive information, authorities can exert greater influence on individuals and organizations.

Foreign businesses operating in China face heightened risks due to these changes. This is the second time that Beijing has amended the state secrets law since its inception in 1988. The previous revision in 2010 was criticized for its vague definition of state secrets, and this latest amendment only adds to the concerns.

Experts worry that the provision concerning “work secrets” may lead to overzealous identification of sensitive information, thereby compromising the public’s right to know. Jeremy Daum, a senior research scholar at the Paul Tsai China Center in Yale Law School, warns that this could also expose workers to increased risks.

Recent incidents involving foreign firms in China have further fueled concerns. Last year, Chinese authorities detained employees of a U.S. corporate due diligence firm and arrested an executive of a Japanese drugmaker on suspicion of spying. In January, a British national was sentenced to five years in prison on espionage charges.

American companies have expressed their concerns about conducting business in China, citing an increase in risks. Factors such as revisions to counterespionage laws and raids on foreign firms have contributed to China becoming perceived as “uninvestable.” This sentiment was echoed by U.S. Commerce Secretary Gina Raimondo during her visit to China in August last year.

As China’s state secrets law expands its reach, foreign businesses operating in the country face heightened uncertainty and risks. The broadening definition of sensitive information and the potential overzealous identification of work secrets could harm both the public’s right to know and individuals conducting business in China. These developments further compound concerns surrounding China’s investment climate and its impact on foreign firms.