The Eleventh Amendment of the Criminal Law

On 26 December 2020, the Eleventh Amendment of the Criminal Law of the People’s Republic of China (the Amendment) was adopted at the 24th session of the 13th National People’s Congress. The Amendment will take effect from 1 March 2021. Since its comprehensive revision in 1997, the Criminal Law of the People’s Republic of China (the Criminal Law) has undergone a series of amendments and has been supplemented by various legal interpretations.

The Amendment reflects further adjustments that were made to the Criminal Law in areas including commercial briber, data protection and the management of medicine and food safety.

Over 40 articles of the Criminal Law were revised by the Amendment. We highlight the following changes that are of particular relevance to our clients.

Increased penalties for property-based crimes that occur within enterprises

The Amendment sought to strengthen the penalties imposed for the following offences:

• accepting bribes by non-state functionaries;
• embezzlement; and
• misappropriation of funds. Penalties in each of these offences were increased and adjusted – including a modification of the statutory penalty range under each sentencing bracket. Additionally, the amount of funds involved in the offence is now a factor to be considered when determining the level of penalty imposed.

The specific effects of the Amendment can be seen in the revisions made to the “Accepting Bribes by Non-state Functionaries” offences. We summarise these changes in the following sections.

1. Raising the penalty range

The current Criminal Law provides that:

• the base sentence for Accepting Bribes by Non-state Functionaries is less than 5 years of fixed-term imprisonment or custodial sentence; and
• the highest sentencing bracket carries a maximum sentence of 15 years of fixed-term imprisonment, regardless of, among other factors, the amount of bribes received.

Under the Amendment, the base sentence is reduced to less than 3 years of fixed-term imprisonment or custodial sentence, but the highest sentencing bracket carries a maximum sentence of 10 years to life imprisonment.

2. Addition and abolition of certain penalties

The current Criminal Law does not include fines as a form of penalty that can be imposed for Accepting Bribes by Non-state Functionaries. The Amendment addresses this by adding fines as a possible “concurrent” penalty, ie, when a sentence on personal liberties is ordered, it must be imposed along with a fine.

The Amendment also removes “confiscation of property” as a form of penalty that can be imposed.

3. Adjustments to the statute of limitations

The Amendment also revised the statute of limitations for Accepting Bribes by Non-state Functionaries. The statute of limitations is:

• 5 years if the act falls within the first sentencing bracket (ie, less than 3 years of fixed-term imprisonment or detention); and
• 10 years if the act falls within the second sentencing bracket (ie, 3-10 years of fixed-term imprisonment); and 20 years if the act falls within the third sentencing bracket (ie, 10 years or more (to a maximum of life) of fixed-term imprisonment).

If prosecution is deemed necessary after the 20 years has expired, it must be reported to the Supreme People's Procuratorate for approval.

Increased penalties for major accident crimes

The circumstances giving rise to a major accident crime, as specified under the second paragraph of Article 134 of the Criminal Law, has been revised by the Amendment to include knowledge of major hazards and refusal to remove such hazards, which gives rise to serious consequences.

In accordance with industry practice, a new provision was also added after Article 134 which provides the following three categories of production safety offences:

• the closure or destruction of production safety-related monitoring systems, alarms, protective or life-saving equipment and facilities, or the tampering with, concealment or destruction of product safety-related data and information;
• the refusal to cease production, construction and/or usage of certain equipment, facilities and/or premises, or refusal to take immediate corrective measures to eliminate danger, as and when required by law; and
• the carrying out of production safety-related matters without the requisite approval or permission, unauthorized mining, metal smelting or construction, and the production, operation, storage and other highly dangerous production operations of hazardous materials.

Amendments to penalty for food and drug crimes

Following the revision of the Drug Administration Law in 2019, under which the scope of counterfeit and substandard drugs was adjusted, the Amendment seeks to further regulate food and drug safety management. Specifically, the Amendment expands the number of situations which fall within the illegal production and sale of counterfeit and substandard drugs. This includes, among others, the situation when a drug use unit personnel provides counterfeit and substandard drugs to others for use with the knowledge that such drugs are counterfeit and substandard.

In light of the emergence of “underground drug workshops” in recent years, as well as cases such as the Changchun Changsheng vaccine incident, the Amendment has expanded the scope of specified acts that fall within the illegal drug management regulations. In addition, the Amendment has set corresponding penalties for the following acts, which are considered as serious acts that could endanger human health:

• the production and sale of drugs prohibited by the State Council drug supervision and management departments;
• the production or import of drugs without first obtaining drug-related approval documents, or sale of any drugs that fall within point (1) above (with the knowledge that such drugs are prohibited by the State Council drug supervision and management departments);
• the provision of false proof, data, information, samples or use of other deceptive means during a drug registration application; and
• the fabrication of production and inspection records.

Prior to the Amendment, the fine imposed by the Criminal Law on the production and sale of substandard drugs was “more than fifty percent but less than two times” the sales amount. The Amendment abolishes this proportional fine and instead imposes a general fine. The specific amount of fines is now subject to the determination by judicial authorities. This means that the fine amount may exceed the upper limit of the proportional fine, thereby increasing the overall level of punishment.

In addition to the above, the Amendment also enhanced the provisions related to crimes against trade secrets, crimes against financial order and crimes against public health and safety. We will further examine and elaborate on the impact of these revisions in a separate dedicated section. We will continue to monitor and publish timely updates on possible future judicial interpretations or regulations, and the practical impact of the Amendment after they come into effect.

Please feel free to reach out to May Lu for more information.