How Does China’s State Secrets Law Impact High Tech Companies?

China has revised its State Secrets Law to expand coverage to high technology industries and improve security in areas near military sites. The amendment, which will take effect on May 1, supports the research and application of new technologies to protect state secrets.

The amendment will provide a legal basis for protecting the intellectual property of information security product makers and strengthen the connection between the State Secrets Law and the Data Security Law. The Data Security Law, established in June 2021, prohibits foreign judicial authorities from requesting data on Chinese citizens without first seeking permission from Chinese authorities.

The amendment also strengthens the connection between the State Secrets Law and the Data Security Law, which prohibits the opening of military restricted and management areas to outsiders without approval. The Chinese Communist Party (CCP) has amended its State Secrets Law to emphasize the responsibility of all citizens to protect state secrets.

The amendment mandates government departments to improve security around classified military facilities and secret-related units, with the Central Military Commission enhancing confidentiality in the People’s Liberation Army and People’s Armed Police.

The amendment also requires internet and network operators to report suspected leaks of state secrets to authorities and remove related content from the internet. The amendment was announced on the same day as former Foreign Minister Qin Gang resigned from his position in the NPC Standing Committee.

The report alleges that Qin and the relatives of top rocket force officers assisted in transferring Chinese nuclear secrets to Western intelligence agencies. The Chinese government has not commented on the report. Some commentators argue that Beijing attempted to use Qin’s resignation to dismiss the report, but the public will only be convinced if Qin can appear in public.

China’s state secrets are classified as top secret, highly secret, and just plain secrets, and should be automatically declassified after 30, 20, and 10 years if created after January 1, 1991. However, the government has not yet declassified any classified political documents. In June 2020, the National Administration of State Secrets Protection published temporary rules to ensure public right to know and consider the impact on national security and social stability.

In December, Taiwan’s Legislative Yuan amended its State Secrets Law to change the confidentiality period of 4,500 political documents from “indefinite” to 30 years, with about half of these documents expected to be made public in 2024. Government departments must provide reasons to extend the confidentiality period by 10 years, and if a document has been kept secret for 60 years, they must seek approval from their superior.

China’s increasing focus on national security has raised uncertainty for businesses, as the scope of “sensitive information” seems to be expanding. The European Union Chamber of Commerce in Beijing has urged local governments to implement temporary regulations to protect “work secrets,” which are not state secrets but can be adversely affected if leaked. The amended law aims to address the growing difficulty for foreign firms to access necessary information.

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