The United States Chamber of Commerce has sounded the alarm about a dramatic increase in the hazards and uncertainties associated with conducting business in China due to the regime’s “increased official scrutiny” of U.S. corporations there.
The influential business group said that it was “closely monitoring” the situation and noted that industries subject to “heightened official scrutiny” include professional services and due diligence firms.
The warning came just a few days after the communist regime passed its newly revised anti-espionage law, which will take effect on July 1.
The revision has expanded the definition of espionage, making it broader and vaguer, which increased the range of information and resources the nation considers relevant to national security, the chamber added.
The U.S. group called the growing scrutiny as a result of the legislative change “a matter of serious concern for the investor community and likely is as well for their local business partners in China.”
Probes of Foreign Businesses
The business environment in China has worsened following a spate of probes and investigations against foreign businesses.Last week, Chinese authorities interrogated staff at the Shanghai offices of American consultancy firm Bain & Company, and seized laptops and other papers. The purpose of the surprise raid on April 26 is unclear, as is the status of the employees who were questioned and their nationalities.
The incident followed a March raid on the Beijing offices of the Mintz Group, a due diligence firm. Five Mintz employees were reportedly detained on suspicion of engaging in illegal business operations, and the regime confirmed those charges. Although the detained workers are Chinese nationals, Mintz is headquartered in New York.
According to a Wall Street Journal report, a Mintz executive said that the company had no idea who was detaining its employees or when they might be released, nor why the raid was carried out.
Due to the arrests, Mintz closed its sole office in China’s mainland. The company’s closure is a setback for China’s global business community, which depends on it for trusted international corporate investigations as part of hiring, transactions, and litigation in China.
Meanwhile, China’s Ministry of Finance accused Huarong and its investment arms of internal governance lapses, failing risk controls, and seriously distorting accounting information from 2014 to 2019.
Foreign Companies Should Be ‘Very Worried’
Mr. Huang, an executive of a foreign company in Hong Kong, told The Epoch Times on April 27 that the revision of the CCP’s anti-espionage law may have the greatest impact on companies and employees involved in three types of businesses.“The first type is those whose business in China involves investigation, or those who have accounting capital review business, such as Deloitte and four other major accounting firms. They may have some sensitive information.
“The second is the investment analysis report companies,” he said.
“The third type is enterprises that have cooperation or economic and trade exchanges in medical biotechnology and software in China.”
Huang said China’s national security laws are not comparable with the national security and anti-terrorism laws of most Western countries, and the Chinese communist legal system is incompatible with common international laws.
“Because the CCP’s legal operations often violate human rights, foreign companies and their employees will be very worried,” he warned.
