Electronic surveillance without warrants, surrender of corporate and customer data to the Chinese government and increasing pressure from the international community against China's abuse and detainment of the Uyghur population is driving up the cost of doing business in China.
On July 16, the U.S. departments of State, Treasury Commerce and Homeland Security issued an advisory warning U.S. businesses about new risks of doing business in Hong Kong following China's implementation of new national security laws there last year, according to Reuters.
The advisory warns that under the new national security laws, businesses now face electronic surveillance without warrants and the surrender of corporate and customer data to Chinese authorities and recommends that businesses exercise due diligence to gauge the potential reputational, economic, and legal impacts of continuing to do business in Hong Kong.
"Developments over the last year in Hong Kong present clear operational, financial, legal, and reputational risks for multinational firms," a senior Biden administration official said, according to Reuters. "The policies which the PRC government and the government of Hong Kong have implemented undermine the legal and regulatory environment that is critical for individuals and businesses to operate freely and with legal certainty in Hong Kong."
The Biden administration has also issued warnings about the risks to companies from operations in China's Xinjiang region, due to the human abuse and detainment of the local Uyghur population.
China's northwest Xinjiang region, also known as the Xinjiang Uyghur Autonomous Region, is home to approximately 12 million Uyghurs, a mostly Muslim ethnic group.
The Chinese government is accused of the detainment of hundreds of thousands of Uyghurs in "re-education camps," according to BBC News. China says that the camps are necessary to ensure the citizens adherence to Chinese Communist Party ideology and to stem Islamic radicalism.
There is evidence that hundreds of thousands of Uyghurs have been used for forced labor and that women in the detainment camps have been sterilized against their will. Former detainees have also reported incidents of torture and sexual abuse.
China's actions against the Uyghur population has drawn widespread accusations of genocide and international condemnation. Various human rights groups have accused China of crimes against humanity.
In light of these human rights violations, the advisory warns that the international community may pressure businesses that continue to do business in the region, especially American companies.
"Sanctions have proven to U.S. and global businesses that human rights violations and corruption directly impact them," according to the advisory. "The recent actions of the U.S. government and multilateral partners have shown that the cost of companies performing increased due diligence is less than that of economic and reputational impacts of economic sanctions."