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Business Group: Changes in security rules, companies in China want 'clarity' after raids on consultants

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BEIJING – Foreign companies in China are unsure what they are allowed to do after police raids on consulting firms and want “more clarity” about how newly expanded national security and other rules will be enforced, a foreign business group said. said on Tuesday.

The British Chamber of Commerce in China said a survey of its members found they are more optimistic after the lifting of anti-virus controls in December that blocked most travel in and out of China. It said it wanted to invest but was waiting for steps to “restore confidence and certainty” in China amid tensions with Europe and Washington and official plans to promote economic self-reliance.

“If there is more clarity and more certainty, we believe companies will be more committed to China,” chamber president Julian McCormack told a news conference. Some 70% of companies are “really waiting to see” how conditions develop before taking action.

President Xi Jinping’s government says foreign companies are welcome and is trying to encourage them to invest more. But they are uneasy after expanding national security and other regulations with little explanation and official plans to make them competitive to global suppliers of processor chips and other technology, sometimes using subsidies and market barriers that the European Union, Has strained relations with Washington and others. trading partners.

On Sunday, the government banned the use of products from Micron Technology Inc., the biggest US maker of memory chips, in computers that handle sensitive information. It said Micron had unspecified security flaws but gave no explanation.

The companies are in trouble after police raided the offices of two consultancies, Bain & Co and Capvision, and a due diligence firm, the Mintz Group. The authorities have not given any explanation. He says the companies are bound to comply with the law, but has given no indication of possible violations.

The British chamber represents around 650 companies, many of them in the finance, consulting and other service industries affected by tight restrictions on what information can be collected in China and how it can be used and stored. Can be

People shop at a Brompton Folding Bicycles retail shop in Beijing on Tuesday, May 23, 2023. Foreign companies in China are uncertain about what they are allowed to do after police raids on consulting firms and want “more clarity” about how new national expansions are being carried out. Security and other rules will be implemented, a foreign trade group said on Tuesday. Credit: AP / Andy Wong

Tuesday’s report included 171 suggestions for Chinese regulators, including “greater clarity” about data restrictions on the auto industry and what it said are unfair treatment of foreign companies in government purchases.

Sally Xu, the chamber’s director of government relations, said member companies that responded to a request for questions ahead of a meeting next week with a commerce ministry official all asked about the advisers’ investigation.

“Our companies are concerned about this,” Xu said. “They wonder, where is the line between what we can do and what we can’t do?”

According to the chamber, a survey in April found that 76% of companies that responded are more optimistic following the end of anti-virus controls that blocked most travel in and out of China. But its report said the outlook was clouded by an unpredictable business environment, political tensions and “increasing talk of self-reliance”.

Alexandra Hurst, Secretary for Policy and Advocacy in China with the British Chamber of Commerce, speaks at a press launch for a position paper on British Business in China at The Hotel in Beijing, Tuesday, May 23, 2023. Foreign companies in China are unsure about what they are allowed to do and how newly expanded national security and other rules will be enforced, a foreign trade group said Tuesday, after police raids on consulting firms. Want to. Credit: AP/NG Han Guan

“This language around security and self-reliance needs to be balanced against the message of ‘Welcome to China,’ because I think there is some trepidation,” McCormack said. “It raises uncertainty about what the future holds for me as a company in China?”