China has a new foreign relations law

For foreign businesses in China, geopolitics hold more sway than new Chinese laws, according to analysts.To get more news about Legal assistance for foreign businesses in Shanghai, you can citynewsservice.cn official website.

National security is a growing priority for the country. Two new laws, one on espionage and the other on foreign relations, took effect July 1. They contain catch-all phrases such as “state secrets” that are open to interpretation by local and central authorities.

Adding to the worries of those considering doing business in China is news earlier this year of three raids on international consulting firms with little public explanation.

In strictly legal terms, however, the legislative changes themselves don’t increase the risk for foreign businesses in China, said Jeremy Daum, senior fellow at Yale Law School’s Paul Tsai China Center.

Rather, he said, “the current international relations climate and competing political pressures may be making some businesses re-evaluate their cost-benefit analysis in accepting the risks of doing business in China.”
U.S.-China relations have deteriorated over the last several years, after decades of increased engagement.

High-level dialogue beyond the presidential level has only resumed partially this year with U.S. Secretary of State Antony Blinken’s visit to Beijing, among others.

“The current environment lends itself to more occasions where a regulator or someone in the government in China may choose to take action that is non-transparent. That creates a risk for U.S. business,” said Michael House, partner at Perkins Coie and based out of offices in Beijing and Washington, D.C.

“And when there is no real opportunity for the two governments to talk about the reason for that action or at the government level try to get some better read on what’s motivated those kinds of actions, that becomes then detrimental for U.S. business when that kind of opportunity doesn’t exist,” House said.

When it comes to industries, he pointed out, advanced technology and its links to the military are a concern to the U.S. and China, while other sectors bear less risk.

The new laws
The new Espionage Law expands the “acts of espionage” definition to include “seeking to align with an espionage organization” and attempts to illegally obtain data related to national security, according to an English-language translation on China Law Translate, a website Daum founded.

The law also calls on “all levels” of government in China to educate and manage related security precautions, according to the translation.

The website’s translation of the Foreign Relations Law notes that foreign organizations in China “must not endanger China’s national security, harm the societal public interest, or undermine societal public order.”

Corporate disconnect
The uncertainty lies in implementation. News of the laws came as reports of Chinese probes into foreign firms made headlines from March to May.

Chinese authorities raided the office of U.S. corporate due diligence firm Mintz Group in Beijing, visited U.S. consultancy Bain & Company’s office in Shanghai and investigated international consulting firm Capvision Partners, according to Reuters.

It’s not clear how extensive the investigations were, or what exactly prompted the probes despite a general link to national security. No other reports of similar raids at major foreign companies have since emerged.