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CWA # 510, 18 July 2021

China Reader
Loud Echoes of the National Security Law in China

  Dincy Adlakha

The strong legal toolkit will silence voices against China but will not affect investments in China

Recently, China passed the Anti-Foreign Security Legislation providing itself with a thrust in higher-level power politics. The law targets all entities who are deemed as a “threat” to the security of the country. It also extends its scope to spouses, relatives, employees, controller or senior managers of the connected organizations, and entire institutions. The law grants China the legal right to refuse or cancel visas, deny entry, deport, freeze/seal/seize assets, restrict transactions among other actions. The strongly-worded law is passed to “oppose hegemonism, safeguard national security, and halt interference of other countries in China’s internal matters.” In a nutshell, the law will help China to strongly retaliate at any sanction imposed or other measure launched against its interests.

The law is passed in a context where the western opposition of the Chinese expansion is seen evidently. Beginning as a technological ban on Huawei and ZTE equipment, the usage of strong sanctions against China has grown manifold in the past couple of years. For example, the ban on import of cotton from Xinjiang due to the concerns over forced labour, the UK’s resolution to term China’s actions as “genocide”, and the latest move by the US to ban imports of silicon created chips used in solar panels from Xinjiang. In a sense, this has created a culture of moves against China which are met with an aggressive response from the dragon. Through this law, China can also bypass the previous handicap on retaliation. For a long time, China had opposed the policies of sanctions and only resorted to UN regulated resolutions on sanctions. But, this law (in sync with a previous order passed by the Ministry of Commerce on the Chinese Blocking Statute) will provide China with its legal backing to undertake strict actions against its opponents. This will provide stability to the Chinese responsive strategy and a firm warning to the ones working against China. The previously present sense of unpredictability around Chinese actions will be replaced by powerful notice of caution to others.

In terms of effects/fallouts, the law will create two major trajectories.

Silencing opposition
The ambiguity and broad provisions of the law create thin ice for others to walk on when concerning themselves with China. Messages like “other necessary measures” on “other connections deemed relevant” due to “actions that threaten interests of the country” make it too strong for a defence policy and hint towards possible anticipatory attacks as well. Combined with the rapidity of the process of passing the law, fears in the minds of those connected to China are bound to take place. The law was read in a secret first meeting and passed in a rushed second meeting, completely skipping over the third meeting.

Apart from these factors, the biggest reason behind the future success of the law will be China’s experience in the domain. 30 June is the completion of one year of the National Security Law which has killed innumerable democratic voices within a year. From a raging Hong Kong to a silent city, China is backing itself on the immense success it received in suppressing opposition.

Investments staying strong
Despite such robust provisions of the law, investments in China will not drop. Since the law has been passed, multiple predictions focus on the problems that foreign firms will face in China due to the law. But, a look at the Chinese history with foreign business will reveal that there will be no significant effect on investments in China. Businesses in China have faced political and legal hurdles for a time now. From nationalistic opposition to political pressure and coercion, the firms have witnessed many obstacles and yet have continued to choose China. Although China is business unfriendly, it has proven to be profit friendly for multiple reasons. The mass consumer base available in China is unmatched. Coupled with the cheap human resource (skilled and unskilled), China is the optimum destination for gaining high revenues. Even the most valuable country, Apple Inc., has also bowed to the pressure from China. It has agreed to provisions that go against the values of the foundation. It has found loopholes in laws from its homeland to comply with Chinese demands. Mulan, the multi-million dollar blockbuster Hollywood movie, has seen the same fate. Just these few instances depict the range of profits that can be generated in China which will continue to attract foreign firms despite its unfriendly environment. Furthermore, China is just the 31st ranked country in ease of doing business, and yet receives second most foreign investments from the world. While New Zealand, the most business-friendly country in the same rankings, does not receive even half the amount of investments as that of China. This points to the preference towards China as a destination for investments.

Nonetheless, the above arguments hold ground only from a historic perspective. It is yet to be seen how the situation pans out, post-Anti-Foreign Sanctions Law. China has thrown an open challenge but the behaviour of firms cannot be taken for granted. It should also be noted that the organizations with a foot in the US and the other in China may face a tough choice. They need to decide whether or not to comply with the American sanctions on China and face the wrath of the law. Since the law also provides for individuals to be targeted, the choice is much tricky. 

Yet, it seems like the profits will outweigh these concerns and the world will still choose to deal with China. Either way, China has reawakened the spirit of the National Security Law to further its reach to the rest of the world.


Dincy Adlakha is a research intern at the School of Conflict and Security Studies, NIAS, Bangalore. She is currently pursuing Masters of Arts in International Studies at CHRIST (Deemed to be University). Her research areas include China’s society and demography with special reference to the minorities in China. She is currently working on the Chinese position in the new world order.
 

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