“There’s just a big question mark right now, over how welcome investment is,” Hart says. “The combination of these things has made people a little bit more concerned about data in general, transparency around how you could transgress rules.”Business intelligence and due diligence firms are crucial to entering business in China, especially to foreign companies.
But the anti-espionage law is a growing cause for concern. “Some things that companies used to consider to be basic, economic data, or production data, there is the interpretation that some of this could be considered national security,” Hart adds. The U.S. National Counterintelligence and Security Center, also said in a bulletin that the uncertainties in the law can extend to journalists and academics in their daily work.
The revised law may be “particularly tricky” to navigate, says Anna Ashton, director of China Corporate Affairs and U.S.
But the spring raids on due diligence firms have already started to create a chilling business environment. Hart says the lack of transparency over why consulting firms have been cracked down on is making it difficult for businesses to navigate what’s illegal and what’s not. The law is also just part of a slew of reforms Xi has pushed in order to regulate the information pouring out of China in the name of national security.