New data restrictions make it difficult to obtain details about what is happening in the country.
China’s Communist Party has long maintained tight control over information, and the effort has intensified under leader Xi Jinping. The country has become increasingly closed in the past year, even as its presence on the global stage has grown.
The new information security law makes it difficult for foreign companies and investors to obtain information, including on supplies and financial statements. A number of suppliers of ship locations in Chinese waters have stopped sharing information outside the country, destroyed documents related to political opposition cases from an official judicial database, and closed the exchange of academia with other countries.
“China has always been a big black box,” said Stephen Nagy, a professor of politics and international studies at the International Christian University in Tokyo. The declining access to information makes it even more difficult for foreigners to understand what is happening in the country, he said, “and this black box is becoming even blacker.”
Companies and governments are still trying to figure out how to communicate with a country whose economy is approaching the size of America and its military is becoming more assertive. Data from the International Monetary Fund indicate that the country will drive a significant portion of world growth in the next two years.
“There is a gap in what is happening within China, but also in terms of its goals and objectives as a nation, and that drives distrust,” said Cameron Johnson, a management consultant in China who talks annually with lawmakers in Washington, D.C. As part of a regular check-in organized by the American Chamber of Commerce in Shanghai.
China’s growing secrecy is not the result of a single policy, say businessmen and political analysts, but a combination of factors: response to the epidemic, growing concerns about information security and a political environment in which the outside world is viewed with suspicion. .
The U.S. has also taken steps to partially cut off the two major economies in the world, including restricting Chinese access to American technology and research universities through visa trade restrictions.
Faced with growing antagonism on the part of the U.S. and other democracies, Mr. Shay has turned his path from the emphasis of his predecessors that included humility and openness to a path of national pride and a desire to show strength.
Strict border control related to Corona, including canceled flights and weeks of closures, added a drastic drop in face-to-face interactions between Chinese citizens and the world, exacerbating the rift. Airlines carried about one million people in and out of China during the first eight months of 2021, down from nearly 50 million in the same period in 2019, according to data from the China Civil Aviation Administration.
Some Chinese seeking to travel abroad say they have been denied passport renewals or pulled aside at the airport by border officials who have tried to dissuade them from leaving, citing government directives to cut travel.
China’s National Immigration Administration did not respond to a request for comment.
One of the driving forces behind the expanding confidentiality is the “New Information Security Act” that went into effect on September 1, after Chinese officials raised concerns about the transfer of potentially sensitive data overseas.
Since the law was enacted, companies in mainland China have grown more than sharing information with multinational companies in strategic sectors such as finance, healthcare, public transportation and infrastructure, according to Jonathan Crompton, a Hong Kong lawyer at the Reynolds Porter Chamberlain law firm. LLP.
Authorities are blurring concepts about what sensitive information is, and this adds uncertainty to Chinese companies about what they can share with foreign partners.
Vendors of metals like cobalt and lithium used in electronics have been reluctant to share information with customers outside China, said a senior U.S. technology company executive. Which makes it difficult to plan production and ensure compliance with environmental regulations.
Zero2ipo Holdings Inc., which operates one of China’s most common investment financing databases, PE Data, has stopped selling its data to overseas clients. A spokeswoman said the company’s funding data is for Chinese-based users and domestic use only, and that any changes are related to the Information Security Act and other corporate considerations.
Steve Dickinson, a lawyer at the U.S. law firm Harris Bricken, recalled a recent episode in which an American client asked a Chinese company for audited financial statements to determine if she was eligible for credit. The latter refused, citing a Chinese policy stating that they could not publish financial statements to foreigners, he said. The client was forced to move forward with the partnership without the information, he said.
The significance of China’s new data rules for Tesla and the automotive industry
Cars today offer high-tech features and collect a lot of data to train algorithms. While China is stepping up oversight of new technologies, WSJ is examining the risks for Tesla and other global brands that are now required to maintain data within the country.
The lack of data increases the risk of scams and frauds for companies interested in doing business with China, he said. Mr. Dickinson added that he also has difficulty accessing China’s trademarks and corporate databases and other Chinese sites from his Seattle office, resulting in the company hiring a team in China to perform Chinese due diligence and intellectual property work.
In early November, global ship tracking platforms began to notice disruptions in the flow of vessel location data in Chinese waters. Some local vendors have stopped sharing detailed information about the ship’s positions, citing the new Information Security Act. A report in the Chinese state media on November 1 described a nationwide attack against local suppliers of such data, citing national security implications.
While satellite imagery is still available, removing access to more detailed, real-time vessel movements across China makes it difficult for companies to accurately track their shipments to and from the world’s largest exporting country, said Nikos Pasaltapoulos, chief operating officer in Athens. Global Marine Analytics Company MarineTraffic. It also hinders the ability of financial institutions to gather information on port activity to create accurate macroeconomic forecasts for growth and trade, he said.
Samir Madani, co-founder of TankerTrackers.com oil tanker data site, said that without such accurate positioning tools from Chinese suppliers, it is much more challenging to understand the extent of China’s oil trade with North Korea, Venezuela and Iran, countries. Subject to UN or US sanctions.
Last year, with rising coal prices in China, privately managed commodity pricing providers stopped posting daily prices and data on Chinese batteries.
Fenwei Digital Information Technology, which manages SXcoal.com, with data on China’s coal industry, issued a statement saying it would stop sharing some pricing data last December to “prevent miscalculation of the price trend by market participants”. Fenwei did not respond to requests for comment.
Other closely maintained indices on coal demand, such as inventory in Chinese service companies, darkened in the summer of 2020. Data shortages became particularly problematic this fall when coal prices rose, partly due to a shortage of domestic supply, triggering an energy crisis.
One veteran coal analyst in Singapore said the scale of the power crisis surprised traders and analysts due to a lack of timely information on coal demand and use.