Report: China Escalating Use of Exit Bans

Lede: A report by Safeguard Defenders, a human rights NGO, found that China has steeply increased imposition of exit bans on both Chinese citizens and foreigners, contradicting claims of openness to business and foreign investments, and raising concerns among foreign business communities.

What we know:

• The group's investigation found that exit bans have been on the rise since 2012, with five new or amended laws between 2018 and 2021 that expanded the government's authority to impose them. In its report, Safeguard Defenders said human rights groups estimated at least 14 million people were affected by exit bans in China in 2015, calling it an "astonishing" number.
• The authors of a 2022 paper published in the Thunderbird International Business Review found 128 exit bans imposed on foreigners, including 29 Americans and 44 Canadians, between 1995 and 2019. The authors said they concluded the true number was much higher. Lack of government data and underreporting by the companies involved made it difficult to pin down the real number of cases, they said.
• According to the Straits Exchange Foundation, which which the Safeguard Defenders report described as Taiwan's "semi-official agency for handling business matters with China,  "many Taiwanese businesspeople" found themselves subjected to exit bans in 2016 as a result of their participation in civil disputes. This highlights the broad scope of the problem and its potential influence on a diverse range of international business sectors.
• Despite reaching out to China's Ministry of Public Security for input on exit bans, including inquiries about the number of affected individuals, both local and foreign, Reuters did not receive a response.
• China-U.S. tensions have risen over trade and security disputes, highlighting the risk of exit bans.
• Foreign businesses are concerned about the vague wording of counter-espionage legislation and heightened scrutiny.

The Background: During the past three years, China tightened its coronavirus restrictions while claiming to be open for business. Exit bans have been applied to a variety of individuals, including those involved in financial disputes, rights defenders, activists, lawyers, and ethnic minorities such as Uyghurs in China's northwestern Xinjiang region. Safeguard Defenders found that there has been a significant increase in exit bans, with 34,000 people being placed under them between 2016 and 2018 for owing money, representing a 55% increase from the previous three years.

Likely Outcomes:

• Increased scrutiny and uncertainty for foreign businesses operating in or considering investments in China.
• Potential for further strain on China-U.S. relations and other diplomatic ties.
• Possible calls for increased transparency and clarity on exit bans and related legislation.

Quotables:

• "Because of rising tensions between the U.S. and China, the salience of this [exit ban] risk has risen," – Lester Ross, Head of the American Chamber of Commerce's China policy committee.
• "China doesn't have the rule of law. The law is used to serve the purposes of the Chinese Communist Party. It's very effective," – Xiang Li, Chinese rights activist who received asylum in the United States.
• "At a time when China is proactively trying to restore business confidence to attract foreign investment, the exit bans send a very mixed signal," – Statement from the European Union Chamber of Commerce.

Good Reads:

Trapped - China’s Expanding Use of Exit Bans (Safeguard Defenders)

China’s exit bans multiply as political control tightens under Xi (NBC News)

China's exit bans multiply as political control tightens under Xi (Reuters)