Business groups say probes into firms’ handling of information has raised uncertainty about operating in China.
Eric 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 “essential to doing business in China.”
Chinese authorities should “more clearly delineate the areas in which companies can or cannot conduct such due diligence,” Zheng said in a statement.
“This would give foreign companies more confidence and enable them to comply with Chinese regulations.”
Zheng’s remarks follow a similar warning by the US business group last month that China’s recent expansion of its espionage law “dramatically increases uncertainties and risks of doing business in the People’s Republic.”
The EU Ambassador to China Jorge Toledo Albinana on Tuesday said the legislation was “not good news” for those hoping to see a further opening of the Chinese economy.
The EU Chamber of Commerce said in a statement Beijing’s crackdowns “send a very mixed signal” as China seeks to restore business confidence following the abrupt end of its strict “zero COVID” strategy in December.
In a lengthy news report on Monday, CCTV said unspecified Western countries had carried out “rampant theft” of intelligence in critical industries related to China’s military and economy and accused “overseas institutions” of using consultancy firms to collect sensitive information.
The 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.
Capvision, 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.
Beijing has signalled a growing distrust of foreign institutions in recent months, expanding the country’s anti-spying law in April to encompass all “documents, data, materials, and items related to national security and interests.”
While 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.
While 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.
“[Foreign companies] are on board with the fact that Chinese authorities need to punish law-breaking when it occurs. However, given that a lot of these activities are occurring with a high degree of opacity, and not a lot of people know what’s going on, we’re operating based on rumours, rather than facts,” Marro told Al Jazeera. “And that uncertainty really undermines the efforts by the Chinese government to really restore that confidence.”