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China amends Criminal Law to increase penalties for private-sector bribery

On December 26, 2020, China amended its Criminal Law to increase the penalties on “non-state functionaries” for taking or soliciting bribes.

Unlike the Foreign Corrupt Practices Act, which focuses primarily on whether a recipient of a corrupt payment is a government official, Chinese law distinguishes between “state functionaries” (i.e., those who perform “public duties”) and non-state functionaries. This distinction depends on the individual’s level and duty, rather than the employer, so mid-level or low-level employees of government agencies and state-owned enterprises are unlikely to be deemed as “state functionaries” under Chinese law. For instance, corrupt payments made to prescribing doctors are typically prosecuted under Chinese law as paying bribes to non-state functionaries. In contrast, corrupt payments to hospital administrators are charged as paying bribes to state functionaries.

Prior to the recent amendments to the Criminal Law, corrupt conduct (taking or soliciting bribes, embezzlement, and graft) by a non-state functionary led to lighter sentencing than state functionaries. The amendments largely eliminate that gap by subjecting state functionaries and non-state functionaries to comparable sentencing frameworks.

The recent amendments define a new sentencing level: cases where the involved amount is “especially huge” or where there are other “especially serious” circumstances. The penalty for these types of cases would be more than ten years in prison or life imprisonment, plus a fine. The punishments for the two pre-existing sentencing levels were also revised: cases involving a “relatively large” amount would lead to no more than three years in prison or criminal detention, plus a fine, and cases involving a “huge” amount or where there are “serious” circumstances would result in three to ten years in prison, plus a fine. 

The amendments do not spell out the monetary thresholds for “relatively large,” “huge,” and “especially huge.” The Supreme People’s Court and Supreme People’s Procuratorate will likely issue guidance on these details following the amendments’ enactment.  

(Click to enlarge)

After the recent amendments, the remaining major difference between the penalties for state and non-state functionaries taking/soliciting bribes is that state functionaries could face life imprisonment or the death penalty, plus confiscation of property if the involved amount is “especially huge,” and the national and public interest has been severely damaged.

The amendments also broadened the scope of prohibitions on producing or selling counterfeit drugs or those of inferior quality, created new crimes for mishandling human genetic resources and for implanting gene-edited or cloned embryos into humans or animals, and increased the scope and related penalties for trade secret protections.

For more details, see our longer analysis here.

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Helen Hwang, pictured above left, co-leads Covington & Burling’s Asia compliance and investigations practice. She is fluent in Mandarin and specializes in investigations and anti-corruption compliance, with a particular focus on China. Shuai Kong, above right, is an associate in Covington’s Shanghai office and specializes in China-related compliance and investigations. Eric Carlson, who co-leads Covington’s Asia compliance and investigations practice with Helen, also contributed to this post.

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