EXPLAINER
Taiwan is warning its citizens against traveling to China, fearing the new law could be used to penalize regular business activities.
A revised state secrets law has come into force in China, prompting Taiwan to warn its citizens against traveling to China and rattling foreign companies amid fears the law could be used to punish regular business activities.
The changes to the state secrets law, which took effect Wednesday, come as President Xi Jinping’s government increases its focus on national security, including by updating China’s anti-espionage law and tightening scrutiny of companies Foreign relations.
These included police raids on consulting firms and arrests of foreign executives on espionage charges.
Here’s what you need to know about the latest law.
What’s new in the revised State Secrets Act?
First passed in 1988, the Law on Safeguarding State Secrets covers a wide range of areas, including politics, economics, national defense and diplomacy.
Law changes made by China’s top legislature in February expanded the scope to include “work secrets” – information that does not constitute state secrets but “could have adverse effects if leaked.”
The revisions also require internet companies to crack down on suspected leaks and cooperate with the investigation. Article 34 of the revised law states that in the event of a suspected state security breach, “network operators must immediately stop the transmission, store relevant records and report.” [the case] to the secret service authorities or public security organs and state security organs”. The operators are also obliged to delete the information upon request.
The amended law also requires government agencies to dedicate resources to protecting state secrets and subjects government employees who handle state secrets to a “classification-separation management period,” during which they are barred from new employment for a specified period of time to find and/or leave China.
State news agency Xinhua quoted an official from China’s National Administration for the Protection of State Secrets as saying the revisions were necessary to respond to “new problems and challenges in the new era.”
Why are foreign companies worried?
The passage of the revised state secrets law comes a year after China’s top legislature passed sweeping changes to its anti-espionage laws, including a ban on sharing any information related to national security.
This also comes as the foreign business community in China remains on edge following the arrest last year of a senior Japanese Astellas Pharma employee on espionage charges as well as a series of police raids on the offices of due diligence firm Mintz Group and that of two consulting firms Bain & Company and Capvision.
Against this backdrop, WilmerHale, a US-based law firm, said the changes to the state secrets law have created uncertainty and compliance challenges for companies operating in China.
WilmerHale particularly referred to the “work secrets” provision. It said what constituted “work secrets” under the law was unclear and susceptible to arbitrary, inconsistent or broad interpretations.
“Work secrets could presumably include information obtained through conventional research and due diligence… The inclusion of this term in the State Secrets Act… may lead to self-censorship and interfere with normal business operations,” it said.
But Baker McKenzie and FenXun, an American-Chinese partnership, said they believe the law’s “impact on the normal course of business of most multinational companies is unlikely to be significant.” Still, it advised companies to “raise awareness of protecting state secrets and take operational measures to strengthen data management.”
What did Taiwan say?
The law’s passage has alarmed Taiwan, the self-governing island that Beijing claims as its own. The territory’s Mainland Affairs Council issued a statement Tuesday warning that the expanded law means the risk associated with visiting China is likely to “significantly increase.”
The council said the revised law was “very vague and could lead to people breaking the law at any time” and criticized Beijing for “continuously applying laws” to strictly monitor foreign visitors to China.
“We would like to once again remind the public to refrain from traveling to China for now unless necessary,” it added.