含羞草社区

With the adjustment of China’s economic structure and changes in the trade environment in recent years, bribery and corruption in the business environment have shown new trends.

In firm response, significant progress has been made in combating commercial bribery, with continual improvement in the legal system and strengthened enforcement, along with enhanced corporate compliance awareness. Among development trends in anti-bribery and anti-corruption, the most prominent is a sustained, positive evolution of the legal and regulatory framework.

Legislative improvement

The latest Amendment (XII) to the Criminal Law is focused on revising provisions related to bribery and corruption within private enterprises.

The scope of three offences — illegal operation of similar businesses (article 165); illegal profit-making for relatives and friends (article 166); and abuse of power to undervalue shares or sell state-owned assets (article 169) — has been expanded from “state-owned companies and enterprises”.

Now it includes “other companies and enterprises”, making these offences applicable to private enterprises.

Stricter penalties

Additionally, stricter penalties for bribery have been introduced by amending articles 390, 391 and 393 of the Criminal Law.

The Draft Amendment to the Anti-Unfair Competition Law was approved in principle by the State Council Executive Meeting in September 2024, and submitted to the Standing Committee of the National People’s Congress (NPC) for review.

The draft raises the upper limit of fines for commercial bribery to between RMB100,000 (USD13,600) and RMB3 million, significantly enhancing the deterrent effect of the law against commercial bribery.

In October 2024, the State Administration for Market Regulation also issued the Guidelines for Compliance in Preventing Commercial Bribery Risks in Pharmaceutical Enterprises (Draft for Comment).

Providing compliance guidance for enterprises, these guidelines detail compliance measures, risk identification and prevention for nine common scenarios in the pharmaceutical sector such as academic visits, hospitality, discounts, commissions, outsourcing and clinical research.

Strengthened enforcement

Another key trend is strengthened supervision and enforcement in anti-bribery and anti-corruption.

The Work Plan of the Central Anti-Corruption Co-ordination Group (2023-2027) emphasises the need to “resolutely address corruption in high-risk industries, systems and regions”, further clarifying the focus areas of anti-corruption efforts.

In its 2024 work plan, the Third Plenary Session of the 20th Central Commission for Discipline Inspection highlighted the combination of individual case investigations with systemic rectification — deepening anti-corruption efforts in sectors such as finance, state-owned enterprises, energy, tobacco, pharmaceuticals, infrastructure projects and bidding.

The State Administration for Market Regulation and other departments have additionally intensified supervision of activities such as infringement of trade secrets and unfair competition.

As a result, market regulation authorities at all levels nationwide notably handled 11,036 unfair competition cases in 2024, including 120 cases of trade secret infringement.

With the 2024 Work Report of the Supreme People’s Court presented at the NPC, courts correspondingly recorded concluding 6,779 cases involving bribery and embezzlement by non-state employees involving 8,124 individuals — a year-on-year increase of 26.6%. The report also emphasised supporting private enterprises in combating corruption and addressing internal threats.

From January to July 2024, procuratorial authorities also prosecuted 62,000 individuals for crimes disrupting the market economy, a year-on-year increase of 36.5%, according to the August 2024 Special Action Report on Procuratorial Protection of Enterprises issued by the Supreme People’s Procuratorate.

Among these, 5,827 individuals were prosecuted for enterprise-related crimes such as embezzlement, misappropriation of funds, and bribery by key personnel in private enterprises — a year-on-year increase of 41.1%.

Emerging industries

Another new regulatory focus is on emerging industries.

New Energy. The rapid development of industries such as photovoltaics, energy storage and new energy vehicles has been accompanied by numerous bribery and corruption cases, highlighting the lack of sufficient regulatory capacity and experience in these sectors. For instance, bribery and corruption in the supply chain of the new energy vehicle industry have significantly increased production costs, leading to reduced competitiveness and, in severe cases, bankruptcy.

Internet. Bribery and corruption cases in the internet sector remain prevalent, often linked to industry-specific characteristics such as operational services, traffic monetisation and data rights. Annual anti-fraud and integrity reports from leading internet companies frequently reveal cases of senior executives being referred to law enforcement for bribery and corruption.

Pharmaceuticals. Regulatory and enforcement efforts in the pharmaceutical sector have intensified, with numerous executives and medical institution leaders being referred to law enforcement for bribery and corruption. Some 52,000 cases were filed in the pharmaceutical sector nationwide in 2024, with 40,000 individuals disciplined and 2,634 referred to prosecutors, according to the National Supervisory Commission’s Report on Addressing Corruption and Misconduct in Proximity to the Public.

Cunning concealment

As the crackdown continues, perpetrators of commercial bribery are correspondingly concealing their crimes with more cunning.

Disguised transfers of benefits. Enterprises or individuals often use seemingly legitimate methods, such as “research funding” or “academic conference fees” to transfer benefits, masking bribery as normal business transactions.

Third-party intermediaries. Bribers may employ intermediaries to indirectly transfer benefits, complicating investigations.

Commercial opportunity. This involves leveraging positions to create business opportunities in exchange for improper benefits.

Stock and futures markets. Bribery through insider information or undisclosed data in the stock and futures markets has been observed, with cases involving market manipulation and information leaks.

Challenges and solutions

The era of new technology such as digitalisation and even brand new financial transactions through cryptocurrency presents an entirely new set of challenges.

While blockchain and cryptocurrency are being used for bribery, complicating regulatory efforts, authorities are also rising to the challenge through digital tools of emerging technologies.

Big data and AI. These technologies enable real-time monitoring and risk identification in transactions.

Blockchain. Its transparency and immutability make it a valuable tool for ensuring supply chain integrity and preventing bribery.

Data security and privacy. At the same time, new laws such as the Data Security Law and Personal Information Protection Law aim to safeguard data and prevent misuse.

International co-operation

Global rule-making. China actively participates in international anti-corruption rule-making, such as under the UN Convention against Corruption.

Cross-border supervision and enforcement. China has established extradition and judicial assistance treaties with numerous countries to combat cross-border bribery and corruption.

Takeaway

China’s anti-bribery and anti-corruption efforts are crucial for ensuring the healthy development of enterprises and their competitiveness.

Enterprises must adapt to evolving trends, enhance internal governance and strengthen compliance systems. This includes implementing strict anti-bribery policies, conducting due diligence on third parties, and leveraging technology to improve compliance.

JINGTIAN & GONGCHENG
Room 1401A, Tower 2, Kerry Center Qianhai,
Qianhai Avenue, Nanshan District, Shenzhen, China
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Email: jingtiansz@jingtian.com