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Xue Feng, Stern Hu, State Secrets And China’s Rule Of Law

When is publicly available information a state secret? When it is business information held by China’s state-owned firms. The sentencing of Xue Feng, a 44-year old Chinese-born American geologist, to eight years in jail in China for stealing state secrets, which in his case involved an attempting to buy data about the oil industry for the U.S. energy consultancy he worked for, follows the 10-year sentence given in March to Stern Hu, formerly of the Australian mining firm Rio Tinto, for accepting bribes and dealing in state secrets.

It doesn’t take much to draw comparisons between Xue and Hu’s cases. Both involved men who had gone abroad, gained a second nationality and then returned to work in the country of their birth as executives for a foreign company. Both have received exemplary sentences in comparison with those handed down to the Chinese nationals tried alongside them (three in both cases). Both were working in what are regarded as strategic natural resources industries (oil and steel respectively).  Both cases strained relations between Beijing and a foreign government (the U.S. and Australia) that had raised the cases at the highest levels; handing down the sentencing of Xue on the same day that the U.S. was celebrating its own Independence Day holiday was a particularly pointed rebuff, especially as Washington had not publicized Xue’s case previously in the way that Canberra had done with Hu’s.

The lessons to be drawn from all this, for foreign businesses at least, is that those competing in any of the 20 industries that China has designated as strategic and in which it is grooming national champions need to remember that the line dividing market intelligence from industrial espionage is a fine one and that the one dividing market intelligence from a state secret finer still. And while it might appear to foreign companies that the distinction is vague, it is not to Chinese law makers: draft regulations released earlier this year defined business information held by state firms as state secrets.

Second, that Chinese-born foreign nationals who return to work in China for foreign companies are seen as a special kind of threat; those operating in sensitive industries doubly so (Reuters has a list of a dozen or so examples of ethnic Chinese punished for stealing secrets and spying here). Third, that the due process of law in China — which has been applied in both these cases (more or less) — is still the application of a rule of law in which law is regarded as an agency of the state.

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