Context

China has updated and expanded its espionage law. The amended law broadened the scope of what may be ‘defined’ as activities related to spying and national security. 

Background

• The expanded law follows the Chinese government’s increasing focus on “security” and a recent policy shift that now emphasises the dual importance of “development and security”, rather than a focus solely on economic development.
• The recent amendments are to China’s 2014 anti-espionage law. The latest amendments are the first changes since 2014, and will take effect on July 1, 2023.

What is China’s anti-espionage law?

• Objective: Article 1 of the law says the idea behind the legislation is “to prevent, stop and punish espionage conduct and maintain national security.” 
• Defining espionage: The law does not define what falls under China’s national security or interests. It expands the definition of espionage to include cyber-attacks against state organs or critical information infrastructure.

The revised law defines as espionage “collaborating with spy organisations and their agents” and “conducting cyber-attacks against state organs, confidential-related units, or critical information infrastructure and etc.”

• Promoting national anti-espionage efforts: The law encourages ordinary citizens to take part in national anti-espionage efforts by reporting to the authorities any activity deemed to be suspicious and endangering national security.
• Protecting State secrets: They have further broadened the law’s scope, with one of the changes declaring that “all documents, data, materials, and items related to national security and interests” will be protected on par with what are deemed state secrets. 
• Extended definition of espionage: The definition of espionage has also been expanded to include cyber-attacks. 
  • Essentially, the transfer of any information deemed by authorities to be in the interest of what they define to be “national security” will now be considered an act of espionage.
• The latest change “improves the regulations on cyber espionage” and “clearly defines cyberattacks, intrusions, interference, control and destruction” as espionage.

What are the areas of concern?

• Concerns for foreign enterprises: The broad ambit of what constitutes “national security” as well as the law’s focus on involving a “whole of society” approach to counter-espionage, including from Chinese enterprises and organisations, evoked concerns among both rights groups and foreign enterprises in China.
• Foreign governments are especially concerned whether Chinese companies, particularly in the tech sector, would be mandated to offer their vast amounts of data to the authorities. 
  • For instance, one article of the law mandates that “all State organs, armed forces, political parties and public groups, and all enterprises and organisations, have the obligation to prevent and stop espionage activities and maintain national security.” 

What are the likely impacts?

The amended law is likely to have a chilling impact both within China and beyond.

• Restriction on Chinese journalists: Chinese journalists, academics and executives who frequently engage with foreign counterparts are likely to think twice before doing so, at least without explicit government sanction.
• Toll on unrestricted engagements: Unrestricted engagement between Chinese and foreign scholars, which has already become limited in the Xi Jinping era, is likely to become even rarer. 
• Close watch on foreigners: Foreign enterprises are also likely to be concerned.

How Indian Companies (in China) would be impacted?

• Indian companies with a presence in China, particularly in sectors deemed to be sensitive such as pharma and IT, will likely need to review their exposure to risks under the expanded law and broadened definitions of “national security”, particularly amid deteriorating relations between the neighbours.