China eyes cross-border corruption law. Will it blunt ‘long arm’ of the West?
An attendant prepares tea for Chinese President Xi Jinping during a plenary session of China's National People's Congress in Beijing, March 9. AFP-Yonhap
Beijing to pass law aimed at preventing corruption by Chinese companies operating overseas after courts recover billions in illegal gains
China will enact a law to combat cross-border corruption this year, according to the top legislature’s work report released on Monday — a move aimed at preventing corruption by companies overseas, which some experts said could shield them from foreign “long-arm jurisdiction.”
The work report, submitted by the National People’s Congress (NPC) Standing Committee to the fourth session of the 14th NPC for deliberation, provided no details or specific timeline for the legislation. The law is expected to step up China’s anti-corruption work overseas, targeting fugitives and illicit assets abroad, as well as corruption involving overseas businesses.
It will be drafted by the Central Commission for Discipline Inspection, China’s highest political disciplinary and anti-corruption agency.
Chinese authorities first officially stated their goal of enacting the law in 2023, when it was listed in the NPC Standing Committee’s legislative plan as an item for which conditions were deemed “relatively mature.”
In 2024, the third plenary session of the Communist Party’s Central Committee also called for the legislation.
Last year, Chinese courts recovered and confiscated 18.14 billion yuan ($2.63 billion) in illegal gains through international efforts to hunt down corrupt officials who had fled overseas, according to the work report of the Supreme People’s Court delivered on Monday.
Song Wei, dean of the School of Marxism at the University of Science and Technology Beijing, said cross-border corruption had become more prominent in recent years and was far more damaging and complicated compared with domestic corruption.
In an article published in September in Chinese Cadres Tribune, a publication sponsored by the Central Party School, Song said cross-border corruption often involved diverse actors and types of illicit transactions, making detection, investigation and enforcement difficult. He added that differences in judicial systems across jurisdictions further complicated enforcement.
The law will primarily regulate corrupt conduct by Chinese companies and individuals in overseas investments or business operations, according to Chinese media reports.
In the article, Song argued that the law was needed for Chinese companies overseas, especially as Western countries sometimes treated them unfairly under the pretext of anti-corruption efforts.
“In recent years, cases of Western countries overusing ‘long-arm jurisdiction’ to curb foreign companies’ participation in global competition have increasingly emerged,” he noted, using Beijing’s term for foreign countries applying their own domestic laws internationally.
People cross the road in the Huaihai Road commercial district in Shanghai, March 6. AFP-Yonhap
“The complex and volatile global political and economic environment, coupled with the often unfair Western anti-corruption cooperation framework, has exposed Chinese companies to more visible risks and challenges in cross-border operations, placing higher demands on their internal corporate integrity and compliance systems.”
Song’s call echoes those by other Chinese experts, who said that lapses in compliance could expose international companies to the risk of Washington’s extraterritorial reach on anti-corruption grounds.
Expanding China’s toolbox in response to what it calls the overreach of “long-arm jurisdiction” by some Western countries has been an important agenda item at this year’s “two sessions,” the annual political meetings of the national legislature and political advisory body.
The law is expected to introduce preventive measures to curb cross-border corruption before it happens.
In another article from 2024, Song said China’s existing cross-border anti-corruption regulations emphasised punishment more than prevention.
He said this lack of targeted legal provisions could limit the effectiveness of both domestic governance and international anti-corruption collaboration.
Read the article at SCMP.