According to Business Insider, a law recently passed in China is a matter of serious concern to market participants. The document seeks to protect national security by expanding anti-espionage activities. However, it does not clearly define what constitutes Beijing's national security or interests.
Notably, the law broadening the definition of spying as well as banning the transfer of information related to national security came into effect on July 1, 2023.
Previously, the legislation targeted the mishandling of state secrets, which was already seen as an "ambiguously defined term." However, the terms of the updated law are still "not explicitly defined," Insider analysts note.
Its adoption followed a barrage of sanctions, probes, and detentions with respect to foreign firms based in China. Some of them were accused of intellectual property infringement. In this way, the Chinese authorities have announced that they are ready to protect national interests amid simmering geopolitical tensions with the United States.
Now Beijing will heighten the scrutiny of foreign firms providing business services in the country. This increases the risks of doing business in China and raises uncertainty among foreign investors.