The problem of corruption in China is evident to many who operate there. While foreign companies are competing in a country where the practice is pervasive, they are subject to anti-bribery laws in China and laws in their home countries that prohibit the bribery of Chinese officials. As foreign companies plant deeper roots in China and expand business connections, being tainted by this crime becomes ever more likely. It is imperative that investors and other companies doing business in China review People’s Republic of China (“PRC”) anti-bribery laws and establish policies for their employees involved in China operations.

The following article discusses Chinese legislation on the bribery of government officials. This problem is exacerbated by the involvement of the Chinese government officials, especially those responsible for approvals, in a broad range of economic and business activities. There also is a very brief discussion of commercial bribery.

PRC Criminal Law

The PRC Criminal Law prohibits any domestic or foreign individuals or entities from making payment in money or property to State functionaries in order to gain improper benefits.1 “State functionaries” is defined broadly to include not only government officials, but also certain personnel working for State-owned enterprises.2 “Seeking improper benefits” means seeking “illegal benefits,” or “illegal assistance or illegal preferential treatment” from a government official.3 For instance, a company giving money or property to a Customs inspector to obtain smuggling profits, or to a Beijing Olympics official for the latter to act in favor of the company in a bid evaluation, would be considered seeking “illegal benefits.” An act of giving money or property to a government official does not necessarily constitute a crime of bribery unless an illegal intent is present.

There also is a “value” criterion for determining whether an act of bribery constitutes the crime of bribery.4 Under the PRC Criminal Law, bribes given by an individual and bribes given by an entity are subject to different thresholds: RMB10,000 for an individual and RMB200,000 for an entity.

However, even if the value of the bribe offered by an entity is less than the above-mentioned figure but more than RMB100,000, such an act may also be considered a criminal offense if one of the following criteria is met:

  • The purpose of the bribe is to gain illegal benefit
  • Bribes are paid to three or more State functionaries
  • Bribes are paid to the leaders of the Chinese Communist Party (“CCP”), or government leaders, judicial officials or officials who execute the law
  • The act of bribery causes severe damage to national or social interests

For a criminal bribery offense perpetrated by an entity, a fine shall be imposed on the entity and the persons directly in charge. Persons directly responsible for the crime concerned face criminal sentences ranging from criminal detention to fixed-term imprisonment of up to five years.

Restrictions on Government Officials

As the majority of PRC government officials are also members of the CCP, they are subject to both PRC administrative regulations and CCP disciplinary rules, which impose strict restrictions on government officials with regard to receiving gifts or money. Restrictions on receiving meals and entertainment are less straightforward and often vary from office to office. For instance, CCP rules prohibit any party member from accepting “meals that might affect his impartial exercise of a public function.” This standard is vague and difficult to enforce in practice. With regard to entertainment, there is not a unified law in the PRC prohibiting government officials from accepting entertainment. However, there are rules issued by certain government departments prohibiting “lavish entertainment activities” organized by entities under their jurisdiction. Violators of these administrative and CCP rules may be dismissed from office and/or subject to other administrative and/or CCP disciplinary actions.

Compliance by Companies

Despite the stringent restrictions imposed on government officials, there is no specific regulation explicitly prohibiting the provision of gifts, meals, entertainment or other forms of hospitality to government officials. However, any “lavish hospitality” increases the risk of being held liable for bribery where elements of intent to bribe are present. Therefore, it would be advisable for any company operating in the PRC to provide limitations for specific forms of hospitality such as gifts, meals and entertainment.

A. Money

The acceptance by officials of direct monetary gifts, such as cash and marketable securities, regardless of their value, is strictly prohibited.5 An official who has accepted money should turn the funds into the government within a month. Although PRC laws do not explicitly prohibit ordinary people or entities from giving money to government officials (in the absence of an intent to bribe), in order to avoid the appearance of impropriety, no cash payments should be made to government officials.

B. Gifts

Administrative regulations provide that gifts with a value of more than RMB100 should be registered by the receiving official, and gifts valued at more than RMB200 should be surrendered to the government. Only gifts with a market value under RMB200 may be kept by the receiving official. An individual official should not, in any event, retain gifts in a single year totaling more than RMB600.6

In a country that has a long tradition of gift-giving, the administrative standard of RMB200 is viewed by many as puritanical and is often openly ignored. This is partly because of the chronic problem of lax and inconsistent law enforcement in China. Under China’s decentralized political structure, there is also variation among local governments’ law enforcement. There may be a point at which a PRC official would feel that a culturally acceptable gift has crossed the line and become a bribe. However, that point may vary from official to official, department to department, and locality to locality.

Although gifts to PRC officials valued at more than RMB200 should be handed over to the relevant Chinese government authorities, providers of such gifts generally are not deemed to be at fault. However, it is advisable to avoid giving PRC officials gifts, the value of which may be considered excessive. Promotional gifts of insignificant value and company souvenirs that are in line with prevailing commercial practices generally are permissible. Examples of generally acceptable promotional gifts include umbrellas, stationery and mugs. Customary gifts, such as mooncakes for the Mid-Autumn Festival, may also be acceptable.

C. Meals and Entertainment

It is common to take government officials out to dinner or lunch. Although we are not aware of PRC legislation on the provision of meals and entertainment to officials, in general, bona fide meals of a reasonable cost may be considered appropriate. The government’s practice with regard to the acceptance of entertainment invitations also may vary from locality to locality and department from department. For example, some government branches, such as the State Administration of Taxation, expressly prohibit their officials from accepting “lavish entertainment activities” provided by taxpayers (although it is not clear what entertainment activities will be considered “lavish”).7 Further, certain types of entertainment activities, such as tennis and golf, may be considered “rich people’s sports” in China and potentially viewed as “lavish.” In fact, some local governments, such as Guangdong and Qingpu District of Shanghai, have issued explicit rules prohibiting their officials from accepting golf invitations “extended by entities or individuals who have business relations” with such officials or “by taking advantage of their official positions.”

As what is considered reasonable may vary from time to time and in different localities, companies should establish policies on entertainment invitations to PRC officials. Further, it is essential to monitor developments in policy and rules on entertainment of government officials.


Commercial bribery is treated as a form of unfair competition in China, and is prohibited by the Anti-Unfair Competition Law and the Interim Rules on Prohibition of Commercial Bribery (the “Interim Rules”).8

Article 2 of the Interim Rules and Article 8 of the Anti-Unfair Competition Law define commercial bribery as an improper act of unfair competition where a business operator bribes its business counterpart or such counterpart’s staff, using money or property, or adopts “other means” to induce the purchase or sale of products or services. “Property” covers cash or material objects, including those that are disguised as fees for promotional advertisements, scientific research, services or consultancy, commissions, and reimbursements. The term “other means” includes other benefits such as subsidized travel or entertainment. According to Article 8 of the Interim Rules, the giving of cash or articles as gifts to an enterprise involved in a commercial transaction is deemed to be commercial bribery, unless the gift is categorized as a “minimal value promotional gift” and is given in accordance with common commercial practice. The Interim Rules expressly cover kickbacks, which include the giving of benefits based on a percentage of the commodity price, without any clear recording in the company accounts.

Violations may result in fines ranging between RMB10,000 to RMB200,000, confiscation of the illegal income derived from the illegal activity, and criminal sanctions where such bribery constitutes a criminal offense. Under the Criminal Law, the act of offering a commercial bribe is punishable by imprisonment of up to three years, or up to 10 years in serious cases. Parties who accept commercial bribes may be subject to imprisonment and confiscation of property.