China details expanded law on state secrets, eyeing data security

By Laurie Chen

BEIJING (Reuters) - China revealed details this week of a revised state secrets law that changes curbs on government officials' handling of confidential information, banning those entrusted with state secrets from going abroad without approval.

The State Council, or cabinet, issued regulations on Monday for implementing the law, a set of working-level procedures that take effect from September, with a sharper focus on data security.

Chinese officials responsible for the regulations see them as part of Beijing's effort to defend its national interests at a time of increasing competition with the West in areas of science and technology.

"With the popularisation of information technology, state secrets have become increasingly digital and networked and the risks of leaks and thefts have become more diverse and hidden," state news agency Xinhua quoted officials of the justice ministry and agency for protection of state secrets as saying.

"The struggle between theft and anti-theft has gradually manifested itself as competition and confrontation in scientific and technological capabilities," the unidentified officials said.

The rules are part of an overhaul of the state secrets law passed this year, which spurred concern among foreign businesses operating in China the law could impact their ability to access digital information amid the expansion of what is deemed sensitive, as President Xi Jinping steps up focus on national security and targets foreign infiltration.

The revised law gives police broader powers to conduct investigations into breaches and requires private companies to take steps to protect state secrets, as well as threatening legal punishment for those who disclose state secrets.

Monday's regulations require every central Communist Party and government unit to set up its own secret-keeping office with designated staff.

Each work unit must formulate its own "list of state secrets", with its head responsible for confidential work, the regulations showed.

Staff entrusted with classified information cannot leave the country without prior approval and must undergo confidentiality education training before doing so, the regulations said.

They cannot leave their posts without facing strict declassification procedures.

The rules showed leaks or likely leaks of state secrets must be reported to a higher department within 24 hours, while individuals at companies and institutions handling state secrets must be Chinese citizens unless the state makes an exception.

The regulations also require pre-employment background checks and regular confidentiality training for government officials hired to work in positions handling state secrets.

They extend even to physical equipment or items carrying state secrets, which must be handled by designated staff, repaired by designated internal technicians, read and stored in designated locations, and transported via confidential means.

Such items must be delivered by two or more staff and cannot be taken abroad, while "top secret" documents cannot be extracted, downloaded, copied or compiled.

Criminal offences include failing to report leaks in time or skipping data security procedures, the regulations showed.

An update to a separate anti-espionage law, as well as laws curbing cross-border transfers of data, have posed challenges for foreign firms operating in China, especially in the due diligence sector.

Chinese police raided several foreign management consultancies last year and detained a Japanese pharmaceutical executive on spying charges.

(Reporting by Laurie Chen; Editing by Clarence Fernandez)