State Secrets to know if you do business in China:

1. In recent years China has passed or revised 20 laws enhancing the protection of state secrets. (You should know them)

2. In 2024, China updated the “People’s Republic of China on Guarding State Secrets” law adding several new provisions:

– Article 64 establishes “work secrets” at government and party bodies. As yet, “work secrets” are undefined but appear to be the PRC’s “Internal use documents” similar to USG “unclassified but sensitive.”

– Article 46 of the updated legislation also restricts travel and work by people who formerly held sensitive positions. No time length is given for the “classification separation management period”.

– Article 9 calls for expanded public education for keeping national secrets and adds new rules governing the practices of government agencies when conducting business that touches upon areas of state secrecy with private companies or state-owned enterprises.

3. On an interesting note, the PRC copied the US three tiered classification system (Top Secret, Secret, Confidential). The definitions for each are copied (word for word) as well. Years ago the PRC had a much different classification system.

Why this matters

The rules and regulations on state secrets are created, promulgated, and enforced by the State Secrets Administration Department. This department has subordinated bodies down through municipal and provincial levels. The responsibility to identify what information should be restricted in local governments, State Owned Enterprises, and companies is executed at these levels. Local information sharing requirements will be different between provinces and cities. More importantly, corrupt practices by local officials will challenge or even threaten foreign companies trying to develop information for investments, joint ventures, or operations. Beijing policy shifts could result in aggressive classification and enforcement actions at provincial and municipal levels.