Taiwan to tighten laws to protect against industrial and 'economic espionage' from China

The Taiwan cabinet on Thursday announced a proposition of new and tightened laws to protect its booming semiconductor chip manufacturing from Chinese "economic espionage," and punish anyone leaking cutting-edge technology to China or hostile countries. The draft law mulled over by Taipei would carry up to a 12-year prison sentence. Taiwanese Executive Yuan approved the draft amendments to the National Security Act that would recognise "economic espionage" as a crime.

The draft law is also expected to protect Taipei from being a victim of the unapproved use of critical national technologies and trade secrets outside of Taiwan. As per the draft regulation, individuals or organisations entrusted, subsidised, or funded by Taipei to conduct operations involving critical national technologies will need to avail government approval for trips to China for businesses involving the country's core and key technologies, failing to which will incur a fine between 2 million to 10 million New Taiwan Dollars, Nikkei Asia reported.

"In order to respond to expectations from all sectors that we protect our high-tech industries and prevent the outflow of important and key technologies, it is necessary to establish a stricter and more complete national security defense using the law-enforcement system," a spokesperson for Executive Yuan, Lo Ping-cheng, told reporters, as quoted by RFA.

Draft law to prevent 'illegal' Chinese capital investment in Taiwan

According to Mainland Affairs Council (MAC), as cited by RFA, the amendments will set up a vetting process to prevent the investment of illegal Chinese capital in Taiwan through shell companies. The proposed law will help prosecute anyone doing Beijing's bidding in Taiwan, MAC added.

"China's economic espionage is laying siege to the rest of the world right now," said Legislative Yuan secretary-general Cheng Yun-peng, as per RFA.

As per current regulations, Chinese companies are required to apply for regulatory approval to develop operations in Taiwan. However, in a bid to reap benefits, Beijing has been using foreign affiliates and other representatives to bend the rules. The new amendments, which are yet to be passed in the Legislative, will ascertain that anyone helping Chine companies to set up operations in Taiwan could be jailed for up to three years with a 15 million New Taiwan Dollars fine.

Supply-chain bottleneck due to the COVID-19 pandemic has also led to frequent infiltration of Taiwan's high-tech industry, which is the country's lifeline. Talking about the intensity of the problem, Yuan spokesperson Lo emphasised that Chinese tech companies are "luring away talent, stealing national critical technologies and circumventing Taiwan's regulations." The number of theft and infringement cases increased from 153 in 2025 to 352 in 2020, statistical analysis by Taiwan Ministry data said, as reported by RFA.

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