New anti-corruption law arms Beijing with expansive global enforcement powers

China’s top legislature passed on Friday a landmark law targeting cross-border corruption, equipping Beijing with expansive new tools to pursue illicit offshore assets while countering foreign attempts to investigate wrongdoing in China.

The Anti-Cross-Border Corruption Law was approved at the close of the 25th session of the 14th National People’s Congress Standing Committee (NPCSC) and took effect immediately, according to the state news agency Xinhua.

The statute establishes formal mechanisms for handling cross-border cases, international cooperation and asset recovery.

The draft of the law was submitted for its first deliberation at a session of NPCSC on August 25, and for a second deliberation earlier this month.

The legislation has been in the works since 2023, when the NPCSC listed it in its annual legislative plan. In July 2024, the Communist Party’s third plenum called for advancing national anti-corruption legislation and introducing a law to combat cross-border corruption.

The law provides a statutory backbone for Beijing’s long-standing pursuit of economic fugitives and illicit capital flight under campaigns such as Operation Fox Hunt and Operation Sky Net, which have frequently been hobbled by the lack of extradition treaties with key Western countries.

But it is also a defensive firewall against perceived foreign legal overreach.

While drawing structural inspiration from overseas precedents such as the US Foreign Corrupt Practices Act (FCPA) and the UK’s Bribery Act, the Chinese framework is broader and more institutionally integrated, covering outbound bribery, state-sector misconduct and the cross-border flight of illicit assets.

Crucially, it codifies measures to block unauthorised foreign investigations on Chinese soil and authorises retaliatory measures against overseas enforcement actions deemed to be pretexts for suppressing Chinese interests. There is no direct equivalent for these provisions under US or UK law.

Under the FCPA, having a robust corporate compliance programme may mitigate sentencing; while under the Bribery Act, “adequate procedures” also serve as a defence. But under China’s law, failure to establish a compliant framework would itself be a violation, regardless of whether any bribery occurred.

During its second reading earlier this week, lawmakers refined provisions authorising enforcement bodies to deploy digital tools in cross-border investigations. At the same time, the text added explicit confidentiality obligations requiring supervisory authorities to protect state secrets, trade secrets and personal information gathered during inquiries.

The law’s sweeping reach will face complex tests in global financial hubs that host regional headquarters for many multinationals and Chinese companies, as firms operating in these jurisdictions may be forced to balance Beijing’s demands for evidence and asset restraint against foreign privacy protections, local judicial due process and parallel enforcement risks.

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In an analysis published last month, law firm DLA Piper said the law would have implications for both foreign companies doing business in China and Chinese enterprises with overseas operations.

It noted that under Article 26, companies are barred from sharing evidence or aiding foreign regulators – such as the US Department of Justice or the UK’s Serious Fraud Office – without Beijing’s explicit approval, while Article 18 simultaneously imposes compulsory cooperation with Chinese investigators.

It pointed out that unlike Western frameworks such as the FCPA, where self-disclosure and assistance are voluntary and rewarded with leniency, the Chinese statute leaves little leeway for negotiation and makes obstruction or concealment an independently punishable offence.

Foreign executives and employees based in China may be prohibited from leaving the country once an investigation is initiated, a risk that companies are encouraged to consider in crisis management planning, it said.

The analysis said that the statute effectively closes enforcement loopholes for Chinese enterprises expanding globally, because it is a nationality-based jurisdiction that puts Chinese citizens and enterprises within scope regardless of where the conduct occurs. The law also extends Beijing’s reach to Chinese enterprises’ overseas subsidiaries, notwithstanding their separate legal personality under local law.