As China beefs up its military to focus on “preparations for war” (per the US State Department-funded Radio Free Asia), Beijing is also ramping up restrictions on corporate information provided to overseas clients, as well as exit bans on corporate executives who simply want to leave the country.
In recent months, Chinese financial data providers have stopped providing detailed information on the nation’s companies to outsiders, Bloomberg reports.
Wind Information Co. in recent months ended allowing clients using its platform outside mainland China from accessing its corporate registry database, according to multiple people familiar with the matter. The change is due to regulatory requirements, and other parts of their service are continuing as normal, they said, declining to be identified because the matter is sensitive.
Investors operating in China are facing a more challenging environment despite Beijing’s push to improve ties globally. US consultancy firms are under the spotlight in particular, with authorities in recent weeks targeting the China offices of Bain & Company, Mintz Group and Capvision, according to media reports. The government last month passed a new counter-espionage law that expanded the list of activities that could be considered spying, intensifying the risks for foreign firms. -Bloomberg
According to George Magnus, the move “underscores” the CCP’s construction of a new wall to the rest of the world.
“In decades of private sector and academic research, I’ve stumbled into occasional publishing problems with sensitive governments, but never come across sensitive governments shutting down or restricting access to domestic data sources,” he said.
Wind Information Co. collects data on over 200 million enterprises as well as 270 million legal representatives and executives, according to its website. The information includes shareholder and affiliate data, as well as fundraising and investing activities, legal disputes and operation risks.
Meanwhile, Beijing is also implementing exit bans – barring people from leaving the country, including foreign executives, Reuters reports.
Scores of Chinese and foreigners have been ensnared by exit bans, according to a new report by the rights group Safeguard Defenders, while a Reuters analysis has found an apparent surge of court cases involving such bans in recent years, and foreign business lobbies are voicing concern about the trend.
“Since Xi Jinping took power in 2012, China has expanded the legal landscape for exit bans and increasingly used them, sometimes outside legal justification,” according to a report from Safeguard Defenders.
“Between 2018 and July of this year, no less than five new or amended (Chinese) laws provide for the use of exit bans, for a total today of 15 laws,” said the group’s campaign director, Laura Harth.
According to the group, which cites a 2022 academic paper which found 128 cases between 1995 and 2019, “tens of thousands” of Chinese are being banned from exit at any given time – a huge escalation assuming this is accurate. Reuters, having analyzed records on exit bans, reports an eight-fold increase in cases between 2016 and 2022.
One such person prevented from leaving China earlier this year is Singaporean executive at the US due-diligence firm Mintz Group, which said in late March that authorities had raided the firm’s China office and detained five local staff under suspicion of engaging in unlawful business operations. CCP police also visited Bain & Co’s Shanghai office and questioned the staff.
“Because of rising tensions between the U.S. and China, the salience of this (exit ban) risk has risen,” said Lester Ross, a veteran lawyer in China who has handled exit ban cases.
“I’ve seen a rise in companies and entities being concerned about this and asking for our advice on how to prepare and reduce risks” of exit bans, Ross said.
