Foreign companies in China are on tenterhooks following a series of national security raids on consultancy firms that have highlighted the risks of doing business in the era of Chinese leader Xi Jinping.
\nEric Zheng, the president of the American Chamber of Commerce, said on Tuesday he was concerned about reports that due diligence firms had been targeted by authorities as their work is \u201cessential to doing business in China.\u201d
\nChinese authorities should \u201cmore clearly delineate the areas in which companies can or cannot conduct such due diligence,\u201d Zheng said in a statement.
\n\u201cThis would give foreign companies more confidence and enable them to comply with Chinese regulations.\u201d
\nZheng\u2019s remarks follow a similar warning by the US business group last month that China\u2019s recent expansion of its espionage law \u201cdramatically increases uncertainties and risks of doing business in the People\u2019s Republic.\u201d
\nThe EU Ambassador to China Jorge Toledo Albinana on Tuesday said the legislation was \u201cnot good news\u201d for those hoping to see a further opening of the Chinese economy.
\nThe EU Chamber of Commerce said in a statement Beijing\u2019s crackdowns \u201csend a very mixed signal\u201d as China seeks to restore business confidence following the abrupt end of its strict \u201czero COVID\u201d strategy in December.
\nChinese state media said on Monday that authorities had launched an investigation into Capvision, a consulting firm with offices in New York, Shanghai, Beijing, Suzhou and Shenzhen, for offering to share state secrets and critical intelligence with firms overseas.
\nIn a lengthy news report on Monday, CCTV said unspecified Western countries had carried out \u201crampant theft\u201d of intelligence in critical industries related to China\u2019s military and economy and accused \u201coverseas institutions\u201d of using consultancy firms to collect sensitive information.
\nThe report accused Capvision of pressuring local experts to reveal company or state secrets on behalf of unknown clients, and said a senior researcher at a state-owned enterprise was sentenced to six years in prison on espionage charges related to their work for the consulting company.The probe comes after Chinese law enforcement last month questioned staff of US consulting giant Bain & Company, and in March raided the Beijing office of New York-based due diligence firm Mintz Group and detained five employees.
\nCapvision, Bain and Mintz, all of which are US-based, source information and data on Chinese firms for clients like investment banks, hedge funds, and private companies that may invest in China or do business there.
\nBeijing has signalled a growing distrust of foreign institutions in recent months, expanding the country\u2019s anti-spying law in April to encompass all \u201cdocuments, data, materials, and items related to national security and interests.\u201d
\nWhile the amended legislation does not come into effect until July, it has already sent a chill through foreign businesses, which have reported being cut off from access to corporate registries containing valuable information about Chinese companies.
\nWhile the recent investigations only directly affect a handful of foreign firms operating in China, the lack of transparency around the probes has sparked anxiety throughout the foreign business community, said Nick Marro, a global trade and China analyst at the Economist Intelligence Unit.
\nChinese Premier Li Qiang said in March there would be \u201cbroad space\u201d for international companies to operate in China and foreign professionals to return after the scrapping of pandemic curbs and border controls.
\nChina\u2019s economy last year grew just 3 percent amid widespread lockdowns and travel restrictions, but gross domestic product is so far on track to hit Beijing\u2019s target of around 5 percent growth for this year.
\nChinese Foreign Ministry spokesperson Wang Wenbin said on Tuesday that authorities were carrying out \u201cnormal law enforcement action\u201d aimed to ensure the \u201csound development of the industry and safeguard national security and development interests.\u201d
\nThe crackdown\u2019s focus on American companies in particular comes amid strained relations between the US and China, which are locked in a heated competition for geopolitical power and influence.
\nSome 87 percent of respondents to an AmCham survey in April said they were pessimistic about bilateral relations, even as 59 percent reported a positive outlook on China\u2019s economic recovery.
\nOne foreign businessman working at a mid-size consulting firm in China said most of his colleagues were less concerned about the national security raids than about the speed and shape of China\u2019s recovery from \u201czero COVID\u201d and burdensome regulation of private industry.
\n\u201cThere\u2019s a lot of hesitation about going to China \u2013 not because of spying concerns but because last year during lockdown there was this hard press on people who make a lot of money in China and concerns about how the common prosperity campaign was going to affect wealthy and successful corporations.\u201d
\n\u201cFrom our perspective that puts your IP in China at risk and that\u2019s different from the recent news about companies that do due diligence on Chinese companies and sell the information to Wall Street firms,\u201d the businessman added.<\/p>\n","protected":false},"excerpt":{"rendered":"
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