Pedestrians at the Chunxi Road shopping area in Chengdu, Sichuan province, China, on Saturday, Jan. 14, 2023. China's key economic data this week will likely show a marked weakening in growth at the end of last year after the Covid Zero policy was abruptly ended, although attention is quickly shifting to a strong rebound in 2023.
China's economy rises 4.5% in first quarter of 2023
02:51 - Source: CNN
Hong Kong CNN  — 

Chinese police have questioned staff at the Shanghai offices of Bain & Company, the US consultancy said Thursday, in a development that insiders say has alarmed the wider American business community in China.

The news was confirmed one month after Chinese authorities closed the Beijing offices of Mintz Group, an American corporate due diligence firm, detaining five of its local staff.

The cases coincide with a rise in tension between the United States and China, which has badly damaged the confidence of American businesspeople working in the world’s second largest economy.

Few details were known about the Bain case, including the reason for the visit, the status of employees who were questioned or their nationalities.

“We can confirm that the Chinese authorities have questioned staff in our Shanghai office,” Bain said in a statement to CNN, without confirming when they were questioned.

“We are cooperating as appropriate with the Chinese authorities. At this time, we have no further comment,” the statement added.

Several phone calls from CNN to police in Shanghai went unanswered. The American Chamber of Commerce in Shanghai did not immediately respond to a request for comment.

Michael Hart, the Beijing-based president of AmCham China, told CNN that the news had had a chilling effect on US businesses in China.

“Our business community is spooked,” he said in written comments. “The Chinese government has continuously said it welcomes foreign investment. However, a flurry of recent actions taken against US enterprises in China has sent the opposite message.”

With the latest news, “our members are asking, ‘Who’s next?’” Hart said. “Irrespective of the government’s intention, that’s the message being received.”

News of the police visit was previously reported by the Financial Times, which said on Wednesday that the authorities had shown up at Bain’s office about two weeks ago.

The police took some computers and phones, though they did not detain any employees, according to the FT, which cited unidentified sources.

Mintz said last month it had not received any official legal notice of the case against the company and asked authorities to release its employees.

The New York-based firm added that it was licensed to conduct legitimate business in China and had “always operated transparently, ethically and in compliance with applicable laws and regulations.”

Investigation continues

Days later, however, a Chinese Foreign Ministry spokesperson said that Mintz was “suspected of illegal business operations.”

“Further investigation is underway,” Mao Ning, the spokesperson, told a news briefing.

Mintz did not immediately respond Thursday to a request for an update.

In recent weeks, Micron (MICR), the US chipmaker, has also faced scrutiny from Chinese authorities.

China’s tech regulator launched a cybersecurity probe into the company last month, saying it would review its products to safeguard security in its supply chains and check for any “hidden product problems.”

The move was seen as a potential attempt at retaliation after US allies such as Japan moved to restrict exports of advanced chipmaking equipment to China. It also comes amid strained relations between the US and China.

On Wednesday, AmCham China said in a white paper that respondents to an annual business climate survey had cited deteriorating US-China relations as their biggest challenge.

In a separate, smaller survey conducted this month, 68% of companies polled also cited bilateral tensions and other geopolitical risks as the top consideration by expatriates when deciding whether to move to China for work.

More than one fifth of the 109 respondents to that survey said that foreign employees were refusing China-based assignments.

CNN’s Beijing bureau and Juliana Liu contributed to this report.