WASHINGTON- The United States issued a warning on Friday regarding a newly enacted Chinese counterespionage law, cautioning that American and other foreign companies operating in China may be subjected to penalties by Chinese authorities for their routine business activities.

This year, Chinese lawmakers approved comprehensive amendments to Beijing's anti-espionage legislation, set to be implemented on July 1. The updated law prohibits the transfer of any information related to national security and expands the scope of what is considered espionage.

This year, China has taken measures to crack down on U.S. consultancy and due diligence firms, causing concerns among foreign investors in the world's second-largest economy, as reported by business lobbies.  

According to a bulletin from the U.S. National Counterintelligence and Security Center (NCSC), China considers the outbound flow of data as a national security threat. The newly enacted and existing laws could potentially require Chinese employees of foreign companies to assist Chinese intelligence efforts.

The NCSC highlighted that these laws grant the Chinese government broader legal authority to access and control data held by U.S. firms in China. Additionally, it warned that U.S. companies and individuals in China could face penalties for engaging in traditional business activities that Beijing considers espionage or actions that are perceived to support foreign sanctions against China.

The broad language of the law raises concerns as it could potentially encompass a wide range of materials, including documents, data, and items, putting journalists, academics, and researchers at risk, according to the bulletin. The embassy of China in Washington defended the law, asserting that Beijing has the right to protect national security through domestic legislation.

The spokesperson emphasized China's commitment to creating a business environment that adheres to the rule of law and international standards. Since the law was passed in April, U.S. officials have reported an increase in inquiries from businesses and other organizations about the potential risks associated with traveling to China, as the rivalry between the U.S. and China continues to intensify.

In addition, the U.S. State Department recently revised its travel advisory for China, specifically highlighting an increased risk of wrongful detentions as a factor for Americans to reconsider their travel plans to the country. U.S. Ambassador to China, Nicholas Burns, has characterized Beijing's actions against American companies as politically driven and affirmed that the United States will take a firm stance in response.