China Cybersecurity Laws and Law Enforcement: Content and Control

We are watching you….

One of the things I love about being back in Seattle are the opportunities to meet with people passing through from Asia. Just this month I met with people I’ve known forever from China, Vietnam, Thailand and Japan, all of whom were “passing through Seattle” on 1-3 week U.S. trips. One of my best meetings was with a leading expat “risk person” (I’m not sure I can mention his name here so I won’t) who has been in China for about three decades. This is a person who has always understood China and — unlike many China hands — his knowledge of China is in no way rooted in 1983 (I picked that date entirely at random).

Much of our discussion involved China’s recent crackdowns against foreigners and cybersecurity. The insights this person relayed were based on what he and his company have been seeing in China the last year or so, along with his conversations with Chinese government officials that matter.

If I had to pick two buzzwords for our lunch, they would be “enforcement” and “control.”

1. China Has Stepped Up Law Enforcement

On the enforcement front, this person said that China has stepped up both its ability to enforce its laws and its desire to do so, and this holds true for foreigners and Chinese and for foreign companies and Chinese companies.

In particular, China has gotten serious about enforcing its anti-corruption and tax laws against all who do business in China. See e.g., Doing Business in China Without a WFOE: Will the Defendant Please Rise. This person also said that China’s ability to enforce its laws has increased exponentially due to increased computerization and communication/cooperation between various Chinese government agencies. As an example of that, if you owe China taxes or owe on a China court judgment, China customs will likely know this and will not let you leave the country.

See e.g. Shutting Down a China WFOE: Don’t Go There.

2. China Focuses on Control