As the ol’ saying goes: never put all your tech experts in one country.
Morgan Stanley has reportedly pulled more than 200 tech developers out of mainland China. The decision has impacted around a third of the bank’s China tech experts, who’ve mostly relocated to Hong Kong and Singapore.
Why’s this happening?
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Revisions to Beijing’s anti-espionage law came into effect on 1 July:
- ⛔ they regulate the transfer of sensitive info out of China, so…
- 🕵️ anything authorities deem relevant to China’s “national security and interests” can now effectively be treated like a state secret.
The techies left behind are now building stand-alone China infrastructure for Morgan Stanley (reportedly at vast cost), to comply with the new rules.
Morgan Stanley isn’t the first multinational reassessing its China operations in response to tighter national security laws:
- Mintz’s Beijing office was shut andfive local staff arrested in March
- Bain’s Shanghai office was raided and staff questioned in April, and
- Capvision offices across the country were raided in May on allegations they paid officials to leak secrets for offshore clients.
Intrigue’s take: Whatever Beijing gains in national security here, it risks losing in international investment and business confidence. And given its latest GDP numbers, that’s no longer such an easy trade-off.
Also worth noting:
- Beijing released its expanded counter-espionage law for public comment in December, before China’s top legislative body rubber-stamped it in April.
- Responding to criticism, China’s foreign ministry said “every country has the right to safeguard national security through domestic legislation” and “as long as one abides by laws and regulations, there is no need to worry”.