Why are the Chinese authorities cracking down on U.S. based companies and domestic firms dealing with overseas clients?
The Chinese government made efforts to enforce stricter control and scrutiny over American consultancies and domestic firms involved in overseas activities.
Example : The Capvision Raid, Raid on Bain and Co, Raid on Mintz.
The Chinese government has been delaying approval for mergers and acquisitions involving foreign entities, resulting in increased operational costs for foreign businesses.
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The government’s actions are claimed by China as an aim :
To protect national security,
Prevent the transfer of sensitive information.
Maintain tighter regulation over foreign business operations in China.
The crackdown can be seen as a response to the U.S.-led efforts to tighten export controls, particularly regarding advanced computing chips and supercomputers.
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The U.S. actions, implemented in October 2022, were aimed at restricting China's access to critical technologies.
In this context, the Chinese government's actions against American firms can be viewed as a form of retaliation or vengeance, aiming to counteract the constraints imposed on China's technological advancement.
By heckling American firms and restricting their access to the vast Chinese market, Beijing seeks to capitalise on the divergence that exists between the U.S. administration and the American business community over the former’s China policy.
This strategy aims to leverage the differing interests and perspectives to its advantage.
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The Chinese authorities have their own motivations and objectives for cracking down on these firms.
These motivations could include:
Maintaining tighter control over national security and sensitive information.
Regulating the flow of intellectual property.
Enhancing domestic capabilities in various sectors.
How is China trying to balance development and security concerns?
Under President Xi Jinping, Chinese discourse on national security has repeatedly underlined that the idea of ‘development’ cannot be isolated from that of ‘security’.
Non-traditional security issues have acquired greater significance in its developmental narrative.
And among all the non-traditional security issues, cybersecurity and data/information security seem to concern Chinese authorities the most.
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Counter-Espionage Law:
Aims to treat all “documents, data, materials, and items relating to national security and interests,” at par with state secrets, thus, broadening the scope of espionage.
It also expands the definition of espionage to include cyberattacks against state organs or critical information infrastructure.
The revised law also empowers authorities to seize data, electronic equipment, information on personal property, and even ban border crossing.
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Position paper on Global Digital Governance:
China also unveiled in late May its position paper on Global Digital Governance.
That calls upon States to
“Respect the sovereignty, jurisdiction and governance of data of other States,” and
To “not obtain data located in other States through companies or individuals without other States’ permission.”
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Comprehensive National Security concept:
Initially introduced in 2014.
It signifies that the idea of national security has become an integral part of every governance domain, including economic development, technology, and information exchange.
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What is the view from India?
From India’s perspective, one cannot help but notice the outright contradiction that China’s discourse presents when it comes to its relationship with New Delhi.
While Beijing insists on the need to hyphenate development with security, it calls on India to keep the border issue (security) at its proper place and not let it derail the overall relationship (economics and development) with China.
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