China's latest piece of security legislation will have a further chilling effect on foreign investment and the economy by creating a new category of confidential information called 'work secrets,' analysts said in recent commentaries and interviews with RFA Mandarin.
President Xi Jinping on Tuesday signed an executive order that will see the Law on Safeguarding State Secrets take effect from May 1, after the law was revised and adopted by the National People's Congress Standing Committee on Feb. 27.
The move follows a number of police raids last year on foreign consultancy firms including Mintz Group and Bain & Co, prompting concerns from foreign investors that Beijing's widening national security focus could hurt investor confidence.
All government departments and state-owned enterprises will be required under the law to "determine the confidentiality level" of state secrets they work with, and implement new rules about managing a "declassification" period for employees who leave their posts, including bans on overseas travel and new employment, state media reported.
"During the declassification period, personnel who have access to secrets are not allowed to work or leave the country ... nor are they allowed to disclose state secrets in any way," state broadcaster CCTV reported.
What are ‘work secrets’?
However, the measures don't just apply to state secrets -- they will also apply to "work secrets," according to Article 64 of the new legislation.
“Work secrets" refers to "information produced or collected by departments in the performance of their duties, the leaking of which would cause an adverse impact," according to Chinese law expert Jeremy Daum.
In a commentary on his China Law Translate blog, Daum said an earlier draft had defined a "work secret" more narrowly "but the final version seems even broader."
"Work secrets and internal documents aren’t a new issue, but it is unfortunate to see them further enshrined in law," he wrote, adding that the clause could lead to "overzealous identification" of work secrets, leading to increased risk for workers and decreased transparency for the general public.
China has also recently broadened the scope of its Counterespionage Law, and detained an employee of Japanese drugmaker Astellas Pharma last March on suspicion of "spying," prompting a protest from Foreign Minister Yoshimasa Hayashi.
Market research
Xia Ming, professor of politics at New York's City University, said the new law could have an impact on foreign companies wanting to carry out market research in China.
"The first thing any company that wants to invest in China does is to carry out market research on China," Xia said. "But all kinds of data are regarded as confidential by China, because they touch on the political security [of the regime]."
"They think people could interpret specific and minor fluctuations in the data to create information that is unfavorable to their political system and regime [stability]," he said. "So everything is confidential."
U.S.-based economist Li Hengqing said there has already been an impact from last year's legislation and consultancy firm raids.
"Everyone is definitely feeling the chill now," Li said. "The more [Beijing] does this, the more foreign businesses and entrepreneurs will be discouraged from investing in China."
He said the move runs counter to recent claims from the ruling Chinese Communist Party Central Committee that it is expanding its economy to more global participation.
"Preferential policies for foreign investors would take them in the complete opposite direction," Li said.
Stability of the regime
But for Beijing, all sensitive information must now "adhere to the overall concept of national security," and follow the ruling party's approach to managing secrets, state media reported.
According to the party's Central Security Office director Li Zhaozong, the revised law provides a "strong legal guarantee for better protecting national sovereignty, security and development interests."
Writing in party newspaper the People's Daily on Feb. 28, Li said the same principles of secrets management would apply to any domain into which the party's national security approach is extended, although he didn't mention "work secrets" by name.
According to Li Hengqing, that can mean any area that affects the security of Xi Jinping's grip on power or that of the ruling party.
"It's all about the stability of the regime," Li said. "Xi Jinping once said, 'What is the point of economic development if we neglect the stability of the regime?'"
"He doesn’t really care about the people’s livelihood or the country's economic development," he said.
Xia Ming said the law will also have a huge impact on internet service providers, who will be required to cooperate with the authorities in investigating any cases involving the leaking of unauthorized information online.
Translated with additional reporting by Luisetta Mudie. Edited by Malcolm Foster.