US Trade Group Warns: China's Tight Grip on Security Hinders Prosperity

The US business lobby has advised China to reduce its intense focus on national security and consider the interests of foreign companies when formulating industrial policies. This approach would encourage these corporations to increase their presence in the Chinese market.

The American Chamber of Commerce in China has issued a comprehensive 600-page document containing various policy reviews and recommendations. In this document, they advocate for the equal treatment of foreign organizations in competition with domestic firms and the clarification of how China's national security laws are applicable to businesses.

"While China desires to attract increased foreign investment, certain factions within the government tend to hinder such investment due to an excessive focus on national security," stated Lester Ross, chair of the chamber's policy committee, during the release of its annual white paper on Tuesday.

Beijing's updated legislation on state secrets, which expands the range of classified sensitive material to include "work secrets," will be implemented on May 1. This follows the enactment of an anti-espionage law in April of last year, which has frequently been cited by foreign chambers as a hindrance to corporate interests.

"This extends to work security or occupational security," Ross stated. "Although we have a law in place, we have not yet established specific regulations that clearly define what constitutes a work secret." "It is a grave issue."

China has enacted comprehensive national security regulations and has also pursued measures to promote foreign investment as part of a broader strategy to accelerate economic growth and rebuild confidence in the country's economic future.

Nevertheless, according to the chamber's document that expressed concerns and presented suggestions to both the Chinese and US governments, American companies questioned said that they are still exercising prudence in their investments.

According to Chamber head Sean Stein, the positive shift in attitude among international investors would be advantageous, as members have observed a lack of effective execution of Beijing's 24-point program, a framework introduced in August to enhance foreign investor trust.

"Currently, we are in a phase where commitments and strategies do not have an impact on market movements or stimulate investment," stated Stein. "Taking action results in investment, which has the potential to significantly alter sentiment."

Stein highlighted that foreign investment can face obstacles when the Chinese government restricts competition from international companies in specific industries, favoring domestically produced goods.