This is CBS I On The World with John Bacheler.

Here's John Bacheler.

BBC Headline, China tightens Xi Jinping's powers against the West with new law.

Gordon Chang at Gordon G. Chang, my colleague and co-host, Gordon, new law, espionage, counter-espionage, anti-espionage.

Why? What does it mean? Good evening to you.

Good evening, John. China's previous counter-espionage law applied only to state secrets.

These amendments would into effect on July 1st, apply not only to state secrets, but also to anything relating to national security, or get this, national interest, which means everything.

We know that this codifies what's been occurring this year, John, because China has been raiding the due diligence firms, most notably the Minsk Group in March, detaining all the employees and closing the office.

And essentially what they're doing is they're criminalizing the possession of business information, which is absolutely necessary for foreign companies, and of course others in China.

We welcome Jonathan Ward, author of the decisive decade, to help me understand what appears to be a paradox.

Jonathan, I understand that the Chinese leadership is on a charm offensive, not to the United States or European allies, but to private enterprise, to entice, encourage, embrace the return of foreign investment and foreign companies to China, to share in the rebuilding of the economy after the catastrophe of the COVID-19 lockdowns.

How does this match with this attempt to intimidate people because they took a picture of a menu? Good evening to you, Jonathan.

Good evening, John. Good evening, Gordon. Well, look, as I've been saying for a long time, I mean, business leaders at this point need to look for the exit in China.

If companies are building supply chain strategies or growth strategies or any of that, essentially at the dawn of Cold War II, they're going to be very badly punished for that in the 2020s and beyond.

So Beijing has always sought to bring our business leaders on to its side. And we've seen that this year is they've welcomed many high profile CEOs from Tim Cook to Elon Musk to Jamie Diamond.

You know, people that are building real businesses in China, people that have not yet figured out how to diversify their supply chains fully away from this problem.

So on the one hand, the business dining and ex-argeous driving continuous FDI into China. I mean, that's happening both from the US and from Europe.

You know, companies are looking for growth major investment banks want access to what are actually relatively large capital markets and wealth management opportunities.

At the end of the day, what China is going to do with the Communist Party is going to do is to manage this all on their terms. And they want to start creating examples out of Western companies.

We've seen that through the raids on companies like Bain and other risk management and due diligence firms. And ultimately for companies to base their operations or growth strategies in an adversary state is a really a fatal.

And it's going to be a self-inflicted wound. And I think shareholders need to start looking at this as much as policymakers and American citizens because it's just such a damaging strategy that's going to create all kinds of, you know, risk and lost value in the Fortune 500 in the stock markets.

I mean, to have these bad strategies is going to be very damaging for our country to say nothing of the fact that we're building a strategic adversary.

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