The amendments to China’s Criminal Law on bribery offences are targeted at strengthening anti-bribery regulations in three key aspects.

Stronger focus on private sector bribery

The amendments to Articles 165, 166, and 169 extend the anti-bribery provisions for key individuals of state-owned entities to those of private entities, in circumstances where the corrupt conduct caused major losses to the interest of the private entity. This includes the abuse of power and taking advantage of his/her position within the entity to obtain illegal benefits by operating competing businesses, to illegally favour relatives or friends or their businesses, or to sell discounted company assets for personal gains.

Similar to the anti-bribery provisions for state-owned entities, the amendments place the onus on senior personnel of private entities, such as directors, supervisors, and senior managers. These targeted amendments signal the Chinese government’s commitment to strengthen corporate governance of private entities, a welcomed move given that private entities are increasingly contributing to the growth of China’s economy.¹

Higher penalties for bribe givers and receivers

The amendments impose harsher penalties on certain categories of bribe givers and receivers.

1. Key individuals for State-affiliated Entities that receive bribes: The amended Article 387 adopts a nuanced approach towards punishing key individuals responsible for state organs, state-owned companies, enterprises, public institutions, and people's organizations (“State-affiliated Entities”) that receive bribes. The current law imposes a maximum imprisonment term of five years provided that the circumstances are serious. The amended law distinguishes the penalties based on the severity of the circumstances. For offences with serious circumstances, an individual faces a maximum of three years’ imprisonment. For offences with especially serious circumstances, an individual faces a minimum of three years’ imprisonment and a maximum of 10 years’ imprisonment.

2. Giving of bribes to state functionaries and State-affiliated Entities: The amended Article 391 sets out increased penalties for individuals who give bribes to State-affiliated Entities. The current law imposes the maximum imprisonment term of three years regardless of the circumstances. The amended law stipulates that for such offences with serious circumstances, an individual will face a minimum of three years’ imprisonment and a maximum of seven years’ imprisonment. Likewise, the amended Article 393 sets out increased penalties for responsible individuals at entities that give bribes to state functionaries.

The amended legislation does not define “serious” and “especially serious” for offences under Articles 387, 391 and 393, and it remains to be seen how the Chinese authorities would interpret these terms in the context of bribery offences involving state functionaries and State-affiliated Entities.

New aggravating factors for bribery offences

While the existing Article 390 only sets out mitigating factors, the amended Article 390 stipulates seven aggravating factors that could increase penalties for the offence of offering bribes:

1. Offering bribes repeatedly or to more than one person,

2. Offering bribes as a state functionary,

3. Offering bribes in connection with national key projects or major programmes,

4. Offering bribes to obtain positions, promotions, or adjustments,

5. Offering bribes to supervisory, administrative law enforcement, or judicial officials,

6. Offering bribes and engaging in criminal conduct in fields such as environment, fiscal and finance, workplace safety, food and drugs, disaster prevention and rescue relief, social security, education, and healthcare, or

7. Using illegal gains to pay bribes.

Interestingly, the amended law only provides for aggravating factors in relation to the offering of bribes, and not the receiving or accepting of bribes. This reinforces the Communist Party’s strong policy focus on cracking down on the conduct of offering bribes, seen as the source of corruption, in order to effectively curb the conduct of receiving bribes (行贿不禁，受贿不止).²

It remains to be seen whether this legislative change would in practice result in heavier punishment on bribe givers compared to receivers, or if the Chinese Courts would apply similar considerations in the sentencing of bribe receivers.

Next steps

The latest legislative amendments will unlikely be the last amidst China’s active anti-corruption movement. However, the effectiveness of the legislative amendments and the success of the anti-corruption movement would heavily depend on the enforcement activities in practice.

That said, for businesses operating in, or looking to operate in China, it is important to note the government’s increasing focus on private sector bribery. We recommend:

• Reviewing bribery risks in the context of local and industrial norms;
• Updating ABC compliance and training programmes, particularly for key responsible personnel within the company; and

Monitoring transactions involving state functionaries or national projects closely in order to detect and remediate misconduct at an early stage.