China's Counterespionage Law Targets Foreign Companies

The US has warned about a new Chinese counterespionage law, saying American and other foreign companies in the country could face penalties from Chinese authorities for regular business activities, Martin Martina reported for Reuters.

Photo Insert: The US National Counterintelligence and Security Center (NCSC) said in a bulletin that China viewed the outbound flow of data as a national security risk.

Chinese lawmakers this year passed a wide-ranging update to Beijing's anti-espionage legislation that goes into effect on July 1, banning the transfer of any information related to national security and broadening the definition of spying.

China this year has also cracked down on US consultancy and due diligence firms, a move business lobbies have said unnerved foreign investors in the world's second-largest economy.

The US National Counterintelligence and Security Center (NCSC) said in a bulletin that China viewed the outbound flow of data as a national security risk and that the new and existing laws could compel 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," the NCSC said.

"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.

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