China: China Beefs Up Its Anti-Bribery Law With Its Very Own Version Of The FCPA

Companies doing business in the People's Republic of China ("PRC") have yet another path to potential criminal liability. On February 25, 2011, the PRC legislature passed 49 amendments to the PRC Criminal Law. One such amendment – Amendment No. 8 of the PRC Criminal Law – criminalizes the payment of bribes to non-PRC government officials and to international public organizations (the "Amendment"). While the Amendment is brand new and no interpretive guidance has been issued, it appears to be the PRC's version of the United States Foreign Corrupt Practices Act ("FCPA").

Overview of Pre-Existing PRC Anti-Bribery Law

The PRC currently has various laws prohibiting both commercial and official bribery.

Pre-Existing Commercial Anti-Bribery Law

Two PRC laws prohibit commercial bribery: (1) Article 8 of the PRC Anti-Unfair Competition Law ("AUCL") and (2) Article 164 of the PRC Criminal Law.

Article 8 of the AUCL prohibits business operators from "giving bribes in the form of property or other means for the purpose of selling or purchasing products." The State Administration for Industry & Commerce ("SAIC") enforces the AUCL. According to Article 2 of the SAIC Provisional Rules of Prohibition of Commercial Bribery Activities, commercial bribery is defined as "an activity by which a business operator bribes the other party to a transaction, either an entity or an individual, in the form of property or other means for the purpose of selling or purchasing products." Under Article 20 of the AUCL, violators of Article 8 of the AUCL may be held liable to persons damaged as a result of the bribery. Moreover, Article 22 provides that violators shall be investigated pursuant to the PRC Criminal Law.

Article 164 of the PRC Criminal Law – the other PRC law prohibiting commercial bribery – criminalizes the act of "giving money or property to any employee of a company or enterprise . . . for the purpose of seeking illegitimate benefits." Any person found to be in violation of Article 164 "shall be sentenced to a fixed term of imprisonment of not more than three years or criminal detention" if the amount involved is "relatively large." If the amount involved is "huge," the violating person "shall be sentenced to fixed term imprisonment of not less than three years but not more than 10 years and shall also be fined." An entity that violates Article 164 "shall be fined," and the "persons who are directly in charge and other persons who are directly responsible for the crime shall be punished" as if they themselves committed the crime.

Thus, in addition to the Amendment – which prohibits the making of bribes to non-PRC public officials – and other PRC laws prohibiting the making of bribes to PRC officials, PRC law already provides for civil and criminal liability for making commercial bribes to private parties for the purpose of obtaining illegitimate benefits. Companies doing business in the PRC must remain wary of these PRC anti-commercial bribery laws.

Pre-Existing Official Anti-Bribery Law

The PRC's pre-existing official anti-bribery law is found in Articles 385 and 389 of the PRC Criminal Law. Article 385 creates criminal liability for taking official bribes; Article 389 criminalizes offering official bribes.

Article 385 provides in relevant part that "[a]ny State functionary who, by taking advantage of his position, extorts money or property from another person, or illegally accepts another person's money or property in return for securing benefits for the person shall be guilty of acceptance of bribes." Violators of Article 385 are subject to fines and imprisonment based on the value of the bribe taken.

Article 389 provides in pertinent part that "[w]hoever, for the purpose of securing illegitimate benefits, gives money or property to a State functionary shall be guilty of offering bribes." Persons who violate Article 389 are subject to imprisonment based on the seriousness of the offense. Entities that violate Article 389 are subject to a fine.

Thus, before the Amendment, the PRC prohibited bribery of PRC officials, but had no law on the books criminalizing the making of bribes to non-PRC officials. This has all changed with the passing of the Amendment – the PRC's first statutory assault on the payment of bribes to non-PRC officials.

Text of the Amendment

The Amendment adds the following language to Article 164 of the PRC Criminal Law:

Whoever, for the purpose of seeking illegitimate commercial benefit, gives property to any foreign public official or official of an international public organization, shall be punished in accordance with the provisions of the preceding paragraph.1 (emphasis added)

The Amendment, which takes effect on May 1, 2011, is short and direct, and contains no affirmative defenses or exceptions. Significantly, while the PRC has long banned the making of bribes to PRC officials, the Amendment marks the PRC's first stab at prohibiting the payment of bribes to non-PRC public officials.


The PRC Criminal Law applies to all PRC citizens (wherever located); all natural persons in the PRC regardless of nationality; and all companies, enterprises, and institutions organized under PRC law. Thus, in addition to PRC domestic companies, the PRC Criminal Law applies to all business entities organized under PRC law, including joint ventures, wholly foreign-owned enterprises ("WFOE")2 and representative offices.

Both PRC companies and non-PRC companies alike must therefore remain cognizant of the Amendment. Any joint venture or other business entity formed under PRC law – including ones involving non-PRC companies – may be criminally liable under the Amendment. Non-PRC companies with representative offices in the PRC may also be subject to the Amendment.

Interpretation of the Amendment

The Amendment is brand new and contains several key undefined terms, such as "illegitimate commercial benefit," "property," and "foreign public official." While these key terms are surely to be defined or at least explained in the future, companies and individuals in the meantime are left with only interpretations of similar terms in existing anti-bribery laws for guidance.

"Illegitimate Commercial Benefit"

On November 28, 2010, the Supreme People's Court ("SPC") and Supreme People's Procuratorate ("SPP") jointly issued their Opinion on Some Issues Concerning the Application of the Law in Criminal Commercial Bribery Cases (the "Opinion"), which sheds some light on the meaning of the phrase "illegitimate commercial benefit." According to the Opinion, the phrase "seeking illegitimate benefits" in the PRC Criminal Law's commercial bribery law means seeking any advantage in violation of laws, regulations, rules or policies, or requiring the other party to provide assistance or facilitation in violation of laws, regulations, rules, policies or industry codes of practice.

The PRC may very well end up applying this broad definition to the term "illegitimate commercial benefit" in the Amendment. If so, the Amendment will criminalize the making of bribes to foreign officials in exchange for any commercial advantage. This would clearly include securing new contracts and renewing existing ones, and would likely include other benefits such as favorable contract terms in otherwise lawful contracts.


The Opinion also provides guidance on the definition of "property" in the context of the PRC anti-bribery laws. According to the Opinion, the term "property" in the PRC Criminal Law anti-bribery laws includes any property interest that can be quantified with a monetary value.

Moreover, at least in theory, there is a monetary threshold for criminal prosecution under the pre-existing official bribery laws. According to the Threshold for Criminal Prosecution in Bribery Cases issued by the SPP, criminal prosecution for bribery is justified only if the property offered is at least RMB10,000 for an individual, or at least RMB200,000 for an entity. According to the Opinion, however, other factors are also considered in determining whether criminal prosecution is warranted, including past contacts between the offeree and offeror, whether the offeree and offeror are relatives or friends, the reason for the offer, whether the offeror made any request in connection with the offeree's official position and whether the offeree actually rewarded the offeror by using his or her official position in a corrupt manner.

Though the term "property" as used in the Amendment has not yet been defined or otherwise interpreted, it is reasonable to predict that the term will be given the same meaning it has been given in other parts the criminal law, i.e., any property interest that can be quantified with a monetary value. If so, the term will cover expense reimbursements, entertainment, gifts and any other benefits that can be assigned a monetary value.

"Foreign Public Official"

Neither the Amendment nor any other PRC law defines "foreign public official." In fact, the Amendment is the first provision of the PRC Criminal Law to utilize this term. The PRC may, however, borrow the definition of "foreign public official" from Article 2 of the United Nations Convention Against Corruption, ratified by the PRC in 2006, which defines the term as follows:

'Foreign public official' shall mean any person holding a legislative, executive, administrative or judicial office of a foreign country, whether appointed or elected; and any person exercising a public function for a foreign country, including for a public agency or public enterprise.

If the PRC adopts the broad United Nations definition of "foreign public official," companies must be careful when dealing with any persons who have any connection to the public functions of a foreign country. Moreover, as with the FCPA, companies must ensure that the businesses that they deal with are not state-owned before taking any action with respect to the businesses that would be considered bribery under the Amendment.

Implications of the Amendment

On its face, the Amendment appears to be the PRC's version of the FCPA. Like the FCPA, the Amendment is meant to prevent individuals and companies from obtaining unfair business advantages by paying bribes to foreign government officials. The Amendment, however, is in its infancy stages and is not nearly as detailed as the FCPA. The Amendment also has not been the subject of any judicial interpretation. Only time will tell if the Amendment actually develops into the PRC's analogue to the FCPA.

Even so, the Amendment gives companies around the world – both PRC companies and non-PRC companies – yet another cause for worry when doing business in the PRC. Non-PRC companies that are part of joint ventures or other similar business entities organized under PRC law, or that have representative offices in the PRC, are for the first time subject to the risk of criminal liability under PRC law for bribing non-PRC public officials.

The Amendment will have a great impact on American companies doing business in the PRC. The PRC's fast-growing economy has made it one of the most attractive countries in which to do business for American companies, so much so that many American companies have offices in the PRC. While American companies should already be cognizant of the FCPA implications of doing business in China, they must now also be aware of the risks posed by the Amendment. More specifically, American companies entering into joint ventures or other business collaborations organized under PRC law, or that have representative offices in the PRC, must take steps to ensure that neither they nor their business partners offer bribes to non-PRC public officials for the purpose of obtaining an unfair business advantage.

The Amendment also gives American companies another reason to carefully choose their business counterparts in the PRC. While companies should always conduct due diligence on any company with which they seek to form a joint venture or other similar business entity, the Amendment further strengthens the incentive to do so. Before teaming up with another company in the PRC, companies should carefully vet the potential partner and identify any red flags suggesting that the partner is prone to engaging in corrupt business practices. In conducing this due diligence, companies should identify and assess any relationships that the potential business partner has with non-PRC public officials themselves, as well as any state-owned business from outside the PRC.

American companies also now have more of a reason to closely monitor the activities of their representative offices in PRC. Because representative offices in the PRC are subject to the Amendment, companies should take steps to ensure that employees stationed at those offices do not engage in any activities that would violate the Amendment.


As with the FCPA, the first – and most effective – step in avoiding criminal liability under the Amendment is to establish a robust internal compliance program. An effective compliance program should address third party relationships by requiring joint venture partners in the PRC to certify their compliance with the Amendment and all other PRC anti-bribery laws. Due diligence procedures should also be implemented to require a detailed investigation into all potential joint venture partners to minimize the risk of doing business with a partner that is prone to engaging in bribery. Finally, like all compliance programs, regular reviews of the compliance program are essential to ensure that the policy is being properly followed.


1 The "preceding paragraph" to which the Amendment refers is the pre-existing Article 164 of the PRC Criminal Code, discussed supra.

2 WFOE is a limited liability company established under PRC law that is wholly owned by foreign investors. There are no PRC investors in a WFOE.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Mondaq Advice Centre (MACs)
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.