As the research director of an activist investor, Anne Stevenson-Yang made business trips to China from the US almost monthly before the coronavirus hit. But the J Capital Research co-founder has strong reservations about going back, even after the pandemic subsides.
Some who do business with China are increasingly worried about the risk of being swept up by security agents and becoming casualties of geopolitical tensions between Beijing and the West.
Stevenson-Yang’s concerns, which previously focused on run-ins with local officials, grew after the detention of two Canadians in late 2018. An Australian citizen, Cheng Lei, has been held since August on national security concerns.
“You may have a very small chance of being the one they decide to detain, but it’s years of your life,” said Stevenson-Yang, who moved to the northeast US with her Chinese spouse and children around six years ago, after a quarter of a century in China. “I have lots and lots of friends and relatives in China, as well as a business. But I feel like it’s just not worth the risk.”
Interviews with a dozen executives, diplomats, consultants and academics show many of them believe there is an increased risk in traveling to China and — since the passage of a security law in June — the financial hub of Hong Kong. In China’s opaque justice system, the police, prosecutors and courts answer to a secretive Communist Party committee, and authorities can hold suspects for long periods without trial under increasingly broad national security laws.
Haze Fan, a Bloomberg News staffer who is a Chinese citizen, was detained earlier this month in Beijing. While China has confirmed that Fan is being held by the Beijing Municipal National Security Bureau on suspicion of endangering national security, authorities haven’t released further details about her case.
Concerns over travel will likely outlast President Donald Trump or any deal to end the US extradition proceedings against Huawei Technologies Co. executive Meng Wanzhou, the case Beijing blames for a collapse in ties with Canada, the country that originally detained her. How to ease the risk of arbitrary detention will be among the key challenges facing President-elect Joe Biden.
Tensions between the US and China have continued to rise in the final weeks of Trump’s presidency, with his administration including Semiconductor Manufacturing International Corp. — China’s biggest chipmaker — on a blacklist along with more than 60 other companies. China’s Ministry of Commerce has threatened to retaliate for the move, which denies companies access to US technology from software to circuitry.
“Beijing’s record of detaining individuals in retaliation for the perceived transgression of their home government should be a geopolitical risk on the radar of every C-suite executive,” said Hugo Brennan, the principal Asia analyst at risk consulting firm Verisk Maplecroft.
Separating political detentions from legitimate law enforcement can be difficult. China has rejected the label of “hostage diplomacy” as “totally groundless,” saying that no one who follows the country’s laws should fear arrest, and Chinese executives have expressed concern in turn about visiting the US Foreign Ministry spokeswoman Hua Chunying this month said Meng’s case was “100% a political incident.”
Still, Chinese diplomats have indicated the fates of the two Canadians detained on Dec. 10, 2018 — days after Meng’s arrest — were open to negotiation. Zhao Lijian, another Foreign Ministry spokesman, told a briefing in June that political intervention to stop proceedings against Meng “could open up space for resolution to the situation” of the Canadians, Michael Kovrig and Michael Spavor.
“We have received calls from member companies about the possibility of arbitrary detentions,” Ker Gibbs, president of the American Chamber of Commerce in Shanghai, said via email last month. “Our view is that the risk is small, but it’s not zero.”
The Australian Strategic Policy Institute compiled data on eight categories of “coercive measures” in a recent report, noting such actions have risen sharply in the past few years: arbitrary detention or execution, popular boycotts, pressure on specific companies, state-issued threats and restrictions on official travel, investment, trade and tourism.
One senior American executive said he and others — especially former government officials working as consultants — were increasingly wary. “I know a lot of business people who are out of China now and are very afraid of going back,” said the executive, who asked not to be identified discussing an issue that could impact business.
Although China hasn’t arrested any Americans, the State Department warned US citizens in July they face the risk of arbitrary arrests and exit bans. Hu Xijin, editor-in-chief of the Communist Party’s Global Times newspaper, said in October it was “common sense” for the US to worry after pursuing criminal cases against Chinese scholars with military links.
Australians have also found themselves under pressure. The Australian government is embroiled in disputes with China over issues including Canberra’s support for an investigation into the origins of the coronavirus. Two prominent Chinese-born Australian citizens — Cheng and Yang Hengjun — are in detention on national security charges, and in September the last two journalists working for Australian media outlets in China were flown out of the country after being visited by security agents in the middle of the night.
The risks may stretch beyond China’s mainland. In October, Chinese Ambassador to Canada Cong Peiwu warned that Ottawa’s acceptance of political refugee claims from Hong Kong protesters could threaten the “good health and safety” of more than 300,000 Canadian passport holders there.
“It works because, while it is shocking, deeply harmful for the detainee and places enormous political pressure on the foreign government, it is also judged by foreigners as sufficiently rare as to be a manageable risk, something that doesn’t really disrupt profitable business for China,” said David Mulroney, a former Canadian ambassador to China.
J Capital Research’s Stevenson-Yang said it’s no longer as crucial for her to visit China because her business is less reliant on the country. The company has however compartmentalized information to protect the organization on the ground, “because you never know what can be construed in the wrong way,” she said.
“We’ve become very careful about that sort of thing,” Stevenson-Yang said. “And we didn’t used to be.”