China Amends its Counter-Espionage Law

On 26 April 2023, the Standing Committee of the 14th National People's Congress passed the amended PRC Counter-Espionage Law ("Amended Counter-Espionage Law"), which took effect on 1 July 2023.  The Amended Counter-Espionage Law introduces changes to the Counter-Espionage Law that was issued in 2014 ("2014 Counter-Espionage Law"). According to the official interpretation, the Amended Counter-Espionage Law is a response to the proliferation of non-traditional espionage activities in recent times, to better safeguard the national security of the PRC. A summary of the key highlights in the Amended Counter-Espionage Law is set out below.

1. Expanding the scope of application of the Counter-Espionage Law
   
   The Amended Counter-Espionage Law refines the definition of espionage activities. Compared to the 2014 Counter-Espionage Law, Clause 4 of the Amended Counter-Espionage Law explicitly provides that "collaborating with spy organizations and their agents" and "conducting cyber-attacks, intrusions, interferences, controls, destructions against governmental authorities, confidential-related organizations, or critical information infrastructure" will be categorised as espionage activities. The Amended Counter-Espionage Law also includes "documents, data, materials, and items related to national security and interests" in the scope of protection, which are comparable and in addition to "national secrets and information" which have already been included in the 2014 Counter-Espionage Law.
   
   In addition, the Amended Counter-Espionage Law introduces a new provision in Clause 4 which includes espionage activities against a third country within the territory of the PRC or making use of the PRC’s citizens, organisations or other conditions, which may endanger the national security of the PRC, in the scope of the Amended PRC Counter-Espionage Law.


2. Clarifying and detailing the authority and power of Law Enforcement Agencies
   
   The Amended Counter-Espionage Law further clarifies and details the authority and power of relevant law enforcement agencies when investigating and dealing with espionage activities, such as inspecting personal belongings, retrieving necessary electronic data, summoning relevant persons, inquiring into property information, etc., provided that necessary legal procedures such as obtaining approval from the officials in charge of national security authority at the municipal level, etc., are followed.
   
   The Amended Counter-Espionage Law also broadens the scope of application of administrative penalties for minor offenses.


3. Strengthening the support for the counter-espionage work
   
   The Amended Counter-Espionage Law provides support for the counter-espionage work by establishing a counter-espionage coordination working mechanism and implementing security precautions. It also provides that any citizens and originations shall support and assist in the counter-espionage work and keep any national secret in relation to counter-espionage work confidential.
   
   As the media have reported several cases of enforcement carried out by the Government and investigations at the offices of some foreign consulting firms in China, the Amended Counter-Espionage Law has aroused special concerns and discussions among foreign-invested companies (especially consulting firms) in the PRC. Generally speaking, it is advisable for foreign investors to act prudently in handling data-related matters and pay special attention to the legality of the collection, storage, use, processing and export of data originating from China. For foreign investors in certain sensitive industries such as consulting and financing, regular compliance training and review of the PRC Counter-Espionage Law is recommended.