Even as China Reopens, Security Visits Spook Foreign Businesses

With China’s pandemic restrictions lifted and its leader poaching executives to fly to the country again, this was supposed to be a new spring of investor confidence in the world’s second-largest economy.

But with the beating of government security measures, including the expansion of anti-espionage laws, and unannounced visits by investigators to the Chinese offices of several foreign companies, under Xi Jinping, economic pragmatism is again pushing state control. .

In recent weeks, international consulting and advisory firms have faced questions from Chinese security officials, and among foreign investors, the authorities have warned about the market, competitors and potential deals in China. There are growing concerns that they are trying to block access to non-public information. The scrutiny has left some companies wondering whether their operations in China are at risk.

Bain said in late April that it had visited the Shanghai office of Bain & Co., a major U.S. consulting firm, to interview employees. And the Mintz Group, an American firm that specializes in corporate investigations, said in late March that officials visited its Beijing office and detained five Chinese employees.

“The business community is nervous given the number of visits by foreign companies without explanation,” he said. Michael HartChairman of the American Chamber of Commerce in China.

Broadly speaking, it reflects demands from President Xi and other senior leaders to strengthen national security and block the flow of potentially sensitive information, especially to foreign governments and investors. It seems that. Since coming to power in 2012, Xi has become more wary of US and Western influence. His vigilance has doubled as relations with Washington have deteriorated sharply under the Trump and Biden administrations.

Matthew Johnson, a visiting fellow at the Hoover Institution, said, “The Chinese Communist Party has adopted a multipronged approach to achieving supremacy in data control, through which it will be able to influence broader social and geopolitical issues. We are managing it academically,” he said. China’s quest for data dominance.

Xi Jinping and other officials say the United States is on a long-term offensive to deter China’s rise by cutting off access to technology for cutting-edge industries and military innovation. . The Biden administration’s tough restrictions on the sale of advanced semiconductor and chip-making equipment to China, introduced last year, undermine Mr. Xi’s belief that Washington is involved in “total containment, siege and suppression of China.” seems to have strengthened

The American consulting firm in particular seems to have caught the attention of China’s Ministry of State Security, with officials showing up to ask questions about the company’s work and its contact with the embassy.

This is part of an increasingly dangerous environment for foreign companies.Beijing has ordered a cybersecurity review of US chip maker Micron Technology in a move seen as retaliation for semiconductor trade restrictions. Japanese pharmaceutical company executive Arrested on suspicion of spying.China intensifies Use of exit ban To prevent the departure of business owners, etc.

While China has fall on a foreign company In the past, big consumer brands were often targeted, and the stigma spread in the media. The recent crackdown is different. Mintz and Bain are cogs in the global business fabric, but they are not household names and China says little about visiting.

Beijing’s concerns about security vulnerabilities may be driving the activity, according to official Chinese media reports.

official reportPublished to mark China’s annual National Security Education Day on April 15, an unnamed consultancy firm in southern China said it had provided a study to a foreign group on labor in Xinjiang. Uyghur people are mostly Muslim.

The Chinese government denies that forced labor was used in Xinjiang’s cotton, textile, mining and other industries. A Chinese report said the consulting firm’s work on Xinjiang violated anti-espionage laws and regulations and “posed serious risks and dangers to national security and national interests.”

To strengthen China and the Communist Party, President Xi is pushing a sweeping program for “comprehensive” national security, expanding new security measures across the economy, business and data management.

“National data security must be effectively ensured,” Xi said in March. at a Politburo meeting20 top officials of the Communist Party who discussed China’s “big data” strategy.

Mr. Xi’s security demands have rippled through the Chinese government.

Last year, China’s Cyberspace Administration Introduce new rules Data transferred internationally must be assessed by authorities for its “degree of sensitivity” and potential risks to “national security”.

Since March, the China National Knowledge Base (CNKI), which distributes Chinese research papers, dissertations and statistics to foreign universities and overseas users, strictly restricted access to them. CNKI cited the need to stop such services While considering how to apply the data export rules introduced last year.

Since the Communist Party Congress in October, Xi has promoted a group of security officials. They seem to want to continue this movement for tighter controls.

“With the severe changes in the international and domestic environment, the scope of national security is constantly expanding,” Chen Yixin, Minister of State for National Security, wrote in the party article. Major ideological journals of the last month.

US Ambassador to China R. Nicholas Burns on Tuesday criticized the Espionage Act.

“This is a law that could make routine activities illegal in China where companies must seek due diligence before agreeing to large investment deals,” he said.

European national leaders have generally taken a more tolerant stance toward China than the Biden administration, so European companies appear to be out of the spotlight of China’s security regime. However, European companies say it is also important to maintain public access to information about markets and companies.

“There is a huge need to clarify which information is sensitive and which is not,” said Jörg Wuttke, president of the European Union Chamber of Commerce in China.

Dan Harris, a Seattle-based attorney who works with foreign companies in China, said last week that at least two people were looking to leave China after seeing signs that appeared to be coming from the Chinese Communist Party. He said he was contacted by an American company. in a recent scrutiny.

“The message is: ‘We don’t really care about the economy. All we care about is keeping you in line,'” Harris said. If you don’t do what we want you to do, we will chase you.”

Anna Swanson and Edward Wong contributed to the report.

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