In a significant move to tighten control over information, China recently unveiled details of a revised state secrets law. This new legislation, which takes effect in September, imposes stricter regulations on the handling of confidential information by government officials and private entities, particularly focusing on data security.

The revised law prohibits officials entrusted with state secrets from traveling abroad without prior approval. The State Council issued comprehensive regulations to enforce these changes, emphasizing that state secrets have become increasingly digital and networked. This shift heightens the risks of leaks and theft, necessitating stringent measures to protect sensitive information.

Key Provisions of the New Law

1. Establishment of Secret-Keeping Offices: All central Communist Party and government units must set up dedicated offices with designated staff to manage state secrets. Each unit is also required to create a detailed list of classified information, ensuring a clear chain of responsibility for confidentiality.
2. Travel Restrictions and Training: Staff handling state secrets are barred from leaving the country without approval and must undergo confidentiality training. This measure aims to prevent unauthorized disclosures and strengthen the security of sensitive information.
3. Reporting and Handling of Leaks: In the event of a leak or potential leak of state secrets, the incident must be reported to a higher authority within 24 hours. This rapid response requirement underscores the law’s focus on minimizing the damage from any breaches.
4. Security Measures for Physical and Digital Materials: The law mandates that items containing state secrets be managed by designated personnel, repaired by approved technicians, and stored in secure locations. “Top secret” documents are subject to even stricter controls, prohibiting unauthorized extraction, copying, or downloading.
5. Legal Consequences: The revised law outlines severe penalties for individuals and organizations that fail to comply with data security procedures or fail to report breaches promptly. This includes potential criminal charges, underscoring the seriousness of the law.

The expanded definition of what constitutes a state secret and the broader powers granted to law enforcement could significantly impact the ability of foreign firms to access and manage digital information. This concern is particularly acute in the technology and data sectors, where the boundary between state and commercial data can be blurred.

The backdrop to these developments includes a prior revision to China’s state secrets law earlier this year, which raised alarms due to its vague provisions on “work secrets.” This earlier law compelled businesses to disclose information deemed relevant to national security, creating uncertainty and potential risks for companies operating in China, including fears of espionage and intellectual property theft.

China’s tightening of its state secrets laws comes amid increasing global tensions, particularly with the West. The Chinese government frames these measures as necessary to protect national security and counter foreign infiltration. However, critics argue that the laws provide a legal framework for the Chinese government to exert control over foreign entities and gain strategic advantages.

The implications for international business are profound, as companies must navigate a complex legal landscape that could compromise their operations and data security. The U.S. government and other international bodies may respond with policies to protect national security interests, potentially escalating tensions further.

One on hand China may seek to protect itself from the kind of attack China itself has perpetrated against the West, i.e. the stealing of trillions of dollars in intellectual property. On the other hand, it gives them the ability to exert control of their people and foreigners, basically granting China the right to arrest anyone at any time.