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China

Anti-Bribery and Corruption Laws in China

China
Source of law The PRC Criminal Law (revised in 2020), the PRC Anti Unfair Competition Law (revised in 2019) and the Interim Rules of the State Administration for Industry and Commerce on Prohibition of Commercial Bribery .1 The PRC Criminal Law and PRC Anti-Unfair Competition Law are currently subject to proposed amendments from the Chinese regulator, which however become not yet effective. It is expected that both laws will further strengthen China’s anti-bribery regime following the anti-bribery campaign in the country. The specific sanctions in relation to bribery, which are provided by China’s Corporate Social Credit System, are not stated in this overview. Key sanction is the blacklisting of the company, which will trigger a number of negative regulatory impacts on the company.
Offence 

Active Bribery 

Criminal Offence 

An individual or entity gives money or property to state working personnel  2 “State working personnel” refers to government officials, persons who perform the management functions in state-owned enterprises (SOEs) and persons who are assigned by SOEs to non-SOEs to perform management functions, such as Directors, Supervisors, General Managers, department managers, accountants, etc. , non-state working personnel (including state working personnel of a foreign country or officials of an international public organization), close relatives of state working personnel or other persons closely related to that state working personnel as well as close relatives of ex-state working personnel or other persons closely related to that ex-state working personnel, state organs, state-owned enterprises, public institutions or organisations for the purpose of obtaining improper benefits. 

Administrative Offence 

A business operator offers money or property to the following entities or individuals in order to seek a transaction opportunity or competitive advantage: 

  • the business counterparty or working personnel of the business counterparty in a transaction; 
  • units or individuals entrusted by the business counterparty to handle relevant matters; and 
  • units or individuals that can affect the transaction by taking advantage of their powers and influence.

Passive Bribery 

Criminal Offence 

An entity or an individual working for the entity (including close relatives of state working personnel or other persons closely related to that state working personnel as well as close relatives of ex-state working personnel or other persons closely related to that ex-state working personnel) demands or receives illegal money or property by taking advantage of its or his/her position for the purpose of obtaining benefits for other entities or individuals. 

Administrative Offence 

An entity or an individual working for the entity demands or receives illegal money or property in the course of purchasing and selling products.

The bribe   
Is there a presumption that the advantage was given/received corruptly? Yes Yes 
Would facilitation payments be caught? Yes Yes 
Would corporate hospitality be caught? Yes 3 If expenses are unreasonable and intended for the purpose of obtaining improper benefits. Yes 
Is there any de minimis? No 4 Offering or receiving gifts with significantly low value (in practice less than RMB 300) does not constitute an offence. No
Does the bribe have to be monetary? No  5 The bribe can be either money or material gifts as well as benefits with monetary value including building decorations, membership cards, travelling expenses, etc. No
Public officials   
Does the offence only apply to bribing public officials? No No 6 In the public sector, the recipients of the bribery are so-called “state working personnel”, which include not only public officials but also persons performing management functions in SOEs (see definition in footnote 1). They are subject to more severe criminal liabilities than non-state working personnel should they commit crimes.
Acts performed outside China  
Can bribery performed outside China be caught? Yes (for Chinese citizens if the act constitutes a criminal offence, but may be exempted from punishment or given a mitigated punishment if already received criminal punishment in the foreign country)Yes (for Chinese citizens if the act constitutes a criminal offence, but may be exempted from punishment or given a mitigated punishment if already received criminal punishment in the foreign country)
Does the act also need to be illegal in the foreign country of performance? NoNo
Who can be liable?   
Chinese nationals? YesYes
Chinese company? YesYes
Chinese partnership (including limited liability partnerships) incorporated? YesYes
Director of Chinese company? Yes (only the person in charge or directly responsible for the act)Yes (only the person in charge or directly responsible for the act)
Chinese company if the bribe is committed abroad by its foreign subsidiary? NoNo
Foreign subsidiary of a Chinese company if the bribe is committed abroad? NoNo
Foreign national/company/partnership if bribe is committed in China? YesYes
Foreign national domiciled or “ordinarily resident” in China if bribe is committed outside China?NoNo
Foreign company/partnership if bribe is committed abroad? NoNo
Penalties   
Penalties include: 

Individuals 

  • Fine 
  •  Criminal detention 
  •  Fixed-term/ life imprisonment 
  • Confiscation of property

Companies 

  • Fine 
  • Confiscation of illegal income
  • Revocation of business licence 
  • Fixed term imprisonment for up to ten years (the person in charge or directly responsible) 

Individuals 

  • Fine 
  •  Criminal detention 
  • Fixed-term/ life imprisonment 
  • Confiscation of property 
  • In extreme cases: death penalty

Companies 

  • Fine 
  • Confiscation of illegal income 
  • Revocation of business licence 
  • Fixed term imprisonment for up to five years (the person in charge or directly responsible) 
Defences   
Are there any defences available? 

Defences for Criminal Offence 

1. Any person who offers money or property to state working personnel through extortion but gains no illegitimate benefits shall not be regarded as offering bribes. 

2. The offence shall not be prosecuted if the following periods have elapsed: 

  • Five years, when the maximum prescribed punishment is fixed-term imprisonment of less than five years 
  • Ten years, when the maximum prescribed punishment is fixed-term imprisonment of not less than five years but less than ten years. 
  • Fifteen years, when the maximum prescribed punishment is fixed-term imprisonment of not less than ten years. 
  • Twenty years, when the maximum prescribed punishment is life imprisonment or death (if after 20 years it is considered necessary to prosecute a crime, the matter shall be submitted to the Supreme People's Procuratorate for examination and approval). 

Defences for Administrative Offence 

  • A business operator may offer or receive some advertising gifts in small amount according to business practice. 
  • The act of an employee of a business operator bribing any other individual shall be deemed as an act of the business operator itself, unless otherwise proven by the business operator with evidence that such act is not related to efforts in seeking a transaction opportunity or competitive advantage.