BEIJING — China’s growing emphasis on national security has rattled U.S. and European companies that fear their ability to do business here could be significantly compromised.
The security clampdown reflects President Xi Jinping’s concerns that foreign forces are intent on overthrowing China’s Communist Party, propagating dangerous Western values such as democracy and free speech, and inspiring a popular uprising or “color revolution,” experts say.
Three proposed new laws have been drafted to further empower China’s national security apparatus, giving it wide-ranging and potentially arbitrary powers over a range of foreign activities in China, with apparently very little consideration of the views of the business community.
The definition of national security enshrined in these laws is so vague and so extensive “that we are in effect looking at a massive national security overreach,” said Joerg Wuttke, president of the European Union Chamber of Commerce in China.
“The language on economic security is so hazy and so vague, it could apply to a pig farm, it could apply to a car components manufacturer, it could apply to anything,” he said in an interview. “We want as candid and as clear and as transparent language as possible.”
In a letter to China’s National People’s Congress, more than 40 American trade associations and lobby groups, including the U.S. Chamber of Commerce, complained that a law intended to regulate foreign nongovernmental organizations could hamper their own activities in China, as well as those of a range of other important nongovernmental groups.
Foreign industry associations, universities, environmental organizations and science and technology institutes play a vital role in the daily operations of businesses in China, they argued, helping in research, innovation, market development and information sharing. They also play a key role in promoting “corporate social responsibility.”
“We are therefore deeply concerned that the Draft NGO law will inhibit our ability to effectively operate and contribute to China’s economy and consequently hinder China’s economic development,” they wrote in the letter, a copy of which was obtained by The Washington Post.
The law puts significant new restrictions on the activities of foreign NGOs, putting them under the direct supervision of the Public Security Bureau, forcing them to disclose detailed work plans and funding, and finding a government agency to sponsor them. Some fear they could be forced out of China.
The U.S. industry associations said their work also helps deepen the commercial relationship between the United States and China, which remains “the ballast” of the broader bilateral relationship.
“Our organizations believe that the Draft NGO law, if enacted without major modifications, would have a significant adverse impact on the future of U.S.-China relations,” the letter said.
The letter was signed by organizations ranging from the Motion Picture Association of America to the U.S. Soybean Export Council — as well as by the Asia Securities Industry and Financial Markets Association.
James Zimmerman, chairman of the American Chamber of Commerce in China, said the letter reflected “shared concerns” that the law would not only affect the ability of companies to do business but also commercial and people-to-people exchanges between the two countries.
“This is increasingly important as China globalizes and its companies and NGOs expand overseas,” he said in an e-mailed statement.
Wuttke said the NGO law “doesn’t fit in with the opening up of the economy,” arguing that environmental groups, for example, help China transition to a cleaner, healthier lifestyle and environment.
“For Chinese companies, it’s the same thing. If they go global, they have to deal with exactly these players in international markets, they have to deal with trade unions and political associations,” he said, explaining it would be better if they had more of a “training ground” at home so they could learn how global business is conducted.
There are also concerns that China’s ever-growing controls over the Internet hamper foreign businesses and stifle innovation.
The European Chamber’s annual business confidence survey, released Wednesday, showed that 57 percent of member companies believed that an inability to access certain Web pages has an adverse effect on their business, harming productivity, research and data exchange.
Premier Li Keqiang vowed this year to make the Internet cheaper, faster and more accessible. But at the same time, China has reinforced its system of Internet censorship known as the Great Firewall.
Wuttke said it was “simply not fitting” that China’s Internet speed was five times slower than South Korea’s. He applauded efforts to speed it up but said that only addressed part of the problem. “Still, access to some Web sites makes it hard for companies to do business,” he said.
German Ambassador Michael Clauss shares the concerns, arguing that the entire security clampdown is a drag on innovation.
“Problems with the Internet are amongst the main concerns of German companies operating here,” he said in a statement, citing not only speeds but also concerns about the security of data and intellectual property.
Earlier this year, China also proposed a law that would have forced IT companies operating in the banking sector to hand over passcodes and encryption keys, as well as providing Chinese security agencies with “back door” access to their systems.
But China later shelved the law when it encountered significant opposition. President Obama had argued the law would force out U.S. IT companies, while China’s own banking industry was concerned that it would undermine its efficiency and data security.
Lobbying groups hope their protests will have a similar effect this time around, but Clauss told the South China Morning Post last month that he was “doubtful” that foreign business concerns would be addressed.
“The Party has always balanced its security interests with its economic opening up and business interests,” said a Western diplomat, who spoke on the condition of anonymity because of the sensitivity of the subject. “But the balance is shifting more and more towards security.”
Human rights groups have already come out strongly against the new laws, arguing that they will be used to silence critics and give a thin legal veneer to repression in the name of national security.