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Editor’s note: Article 8 of the ‘Two Highs’ Interpretation on Corruption Cases (II) has sparked controversy by aligning the monetary thresholds for official misconduct by personnel of private enterprises with those for state officials. Some scholars have argued that this provision allegedly exceeds the scope of judicial interpretation and violates the principle of legality in criminal law, suggesting that a review of its legality be conducted. This article aims to present a comparative analysis of the provisions, trace the evolution of the regulations, briefly analyse the underlying logic behind the controversy, distinguish between ‘legality’ and ‘reasonableness’, and highlight issues of inconsistency in the structure of the judicial interpretation. We believe that only by clarifying the rules and engaging in rational discussion can we foster a more predictable legal environment for the private sector.

01 What exactly does “Article 8” say? — From “discounts” to “no discounts”

To understand the controversy surrounding Article 8, we must first review the provisions of the 2016 “Interpretation (I)” issued by the “Two Highs”.

Article 11 of the “Interpretation (I)” explicitly states that for the offences of bribery and embezzlement by non-state personnel, the thresholds for “relatively large sums” and “huge sums” shall be applied at twice and five times the standards for the offences of bribery and embezzlement, respectively; for the offence of misappropriation of funds, the standard shall be twice that for the offence of misappropriation of public funds; and for the offence of bribing non-state personnel, the standard shall be twice that for the offence of bribery.

Put simply: whilst a public official accepting 10,000 yuan constitutes a crime, a private-sector employee must accept 20,000 or even 50,000 yuan for it to be considered a crime. The rationale is that corruption by public officials poses a greater harm, so the threshold should be lower.

Article 8 of the ‘Interpretation (II)’ abolished these multipliers, replacing them with direct reference – that is, a 1:1 alignment. In plain terms: it has shifted from a ‘50% discount’ to ‘no discount’.

An employee of a private enterprise who embezzles 250,000 yuan from their company would, under the old standards, fall short of the ‘substantial amount’ threshold (which required 1 million yuan) and might receive a suspended sentence; under the new standards, they would immediately fall into the ‘substantial amount’ category (200,000 yuan or more) and face a prison sentence of three years or more. It is precisely this stark disparity that has sparked the controversy.

02 The core of the criticism: Has the authority been overstepped?

Opponents argue that the Criminal Law has historically set different monetary thresholds for crimes committed by state officials and non-state officials. This reflects the legislature’s assessment of the social harm caused by these two types of conduct—corruption by public officials undermines public trust and is therefore more serious. By directly aligning the monetary thresholds, the judicial interpretation effectively negates the legislature’s judgement. This constitutes “judicial law-making” and violates the principle enshrined in the Legislation Law that “crimes and punishments may only be prescribed by law”.

This sounds quite reasonable. But the question is: has the judicial interpretation truly “overstepped its authority”?

Let us break this down into three more specific questions.

Question 1: Does the judicial interpretation have the authority to set monetary thresholds?

Of course it does. The Criminal Law merely states “relatively large sums” and “huge sums”; the specific amounts are determined by the interpretations of the “Two Highs” (the Supreme People’s Court and the Supreme People’s Procuratorate). This is a clear authorisation under the law, and there is no dispute regarding this.

Question 2: Does ‘referencing’ the monetary thresholds for public officials’ crimes when determining those for private enterprises constitute an overreach?

Note that the technique of ‘referencing’ was already employed in Interpretation (I) – which stipulated that the thresholds should be applied at two or five times the standard amounts. The act of referencing itself is not the issue; the issue lies solely in the fact that the reference ratio has changed from two times to one time.

This is akin to a teacher stipulating that “term marks shall be calculated as 60% of the final exam mark”, and later changing this to “100%”. The method of calculation has changed, but the teacher’s authority to apply such a calculation has never changed. The argument that “referencing at a 1:1 ratio constitutes an overreach, whereas referencing at a 2:1 ratio does not” is logically untenable.

Follow-up Question 3: Is there a contradiction between the same threshold for criminal liability and different maximum penalties?

No, it is not a contradiction. The threshold for criminal liability determines ‘what kind of conduct warrants prosecution’, whilst the maximum penalty determines ‘how severe the punishment can be in the most serious cases’. The two can be set entirely independently. The law has never stipulated that because the maximum penalty for Offence A is heavier than that for Offence B, the threshold for criminal liability for Offence A must be lower than that for Offence B. The so-called ‘necessity to maintain a difference’ is merely a subjective expectation of opponents, not a provision of the law.

Summary: From a legal technical perspective, Article 8 does not create a new offence, nor does it alter the statutory sentencing structure (the death penalty remains applicable only to the offences of embezzlement and bribery); it merely makes adjustments within the monetary thresholds authorised by law—which is, formally speaking, lawful.

03 Are the opponents wrong?

One cannot say they are ‘wrong’; rather, they have elevated a question of policy appropriateness to the level of legal validity.

Legality hinges on whether there is a violation of explicit legal provisions. Article 8 does not contravene any law. As for whether this adjustment is ‘good’, ‘reasonable’, or ‘too broad in scope’, these are matters of policy open to discussion. What opponents truly fear is that, with the lowering of the threshold for criminal liability, a large number of financial irregularities within private enterprises—such as small-scale kickbacks—will be subject to criminal prosecution, potentially ‘collateral damage’ to small and medium-sized enterprises. Alternatively, they may be expressing concern or sympathy regarding the original offences of individual private entrepreneurs and business personnel. This concern is valid, but it pertains to a question of ‘reasonableness’, not ‘legality’.

Presenting reasonable doubts as criticisms of legality actually undermines the argument’s persuasiveness.

04 Why was this interpretation issued? Let the data speak for itself

According to a report in *Southern Weekly*, corruption within private enterprises is no longer the exclusive preserve of senior executives. The newspaper cited relevant data indicating that corruption in private enterprises is showing a clear trend towards ‘grassroots-level’ involvement, with an increasing number of frontline staff and knowledge workers implicated in cases. There have even been extreme instances where corruption at the grassroots level involved sums as high as 140 million yuan. Positions such as procurement, sales and finance—where cash flows are frequent and oversight mechanisms are weak—have become hotspots for corruption.

Furthermore, according to the *Research Report on Corruption and Criminal Offences in Chinese Private Enterprises (2025)*, the offence of embezzlement accounts for as much as 51.58% of corruption charges in private enterprises; combined with the offences of bribery by non-state personnel and misappropriation of funds, these three categories account for over 70% of the total. Ordinary employees account for 32.3% of those implicated, whilst those with a college degree or higher accounted for nearly 53 per cent. The increasing involvement of knowledge-based employees and key operational staff indicates that corruption risks have shifted from management to ordinary staff positions. In recent years, some well-regulated enterprises have even established dedicated ‘disciplinary inspection commission’ posts.

Under the old standards, the 60,000 yuan threshold for criminal liability and the 1 million yuan threshold for ‘substantial amounts’ meant that a large number of acts involving the misappropriation of corporate assets could not be prosecuted. The report indicates that the rate of plea bargaining in such cases reached as high as 84.4 per cent, with over 80 per cent of defendants sentenced to less than five years’ imprisonment and the rate of suspended sentences approaching 50 per cent—weak enforcement and low costs of non-compliance objectively call for stronger judicial regulation.

In other words, the old standards were too lenient and could no longer effectively protect the assets of private enterprises. Aligning the monetary thresholds with those for state officials does not, in essence, constitute a ‘harsher’ punishment for private enterprise personnel. As for those who ask, ‘Why not simply amend the Criminal Law?’—the answer lies in the lengthy legislative cycle and high costs involved, whilst corruption within private enterprises cannot wait. Making adjustments through judicial interpretations within the scope of legal authorisation is a pragmatic approach.

05 A detail that should not be overlooked: the ‘discontinuity’ between Article 8 and the preceding seven articles

A close reading of the ‘Interpretation (II)’ reveals a ‘discontinuity’: the first seven articles all address typical public-office crimes such as bribery by or of organisations, and unexplained sources of substantial wealth. Article 8, however, suddenly shifts to embezzlement and misappropriation of funds by personnel of private enterprises—the offences, subjects and legal interests are entirely different, with no transitional link, resembling a ‘mishmash’.

However, this leap is not an innovation of Interpretation (II). If one consults the 2016 Interpretation (I), the first ten articles similarly address public office crimes, but Article 11 suddenly shifts focus to stipulate the monetary thresholds for crimes committed by private enterprises (to be enforced at 2 times or 5 times the amount). The previous interpretation had long adopted this approach, and the controversy was not as significant as it is today. Article 8 of Interpretation (II) is, in essence, an ‘upgraded version’ of Article 11 of Interpretation (I) — the multipliers have been changed from 2x and 5x to 1x, and the sense of abruptness in structure remains consistent. Therefore, whilst it is certainly reasonable to criticise Article 8 for being inconsistent with the preceding seven articles, one must not forget that the seeds of this ‘inconsistency’ were sown a decade ago.

Such systemic doubts do not affect its legality.

06 Conclusion: The Interpretation is lawful, but the controversy will not cease

To summarise the above analysis: Article 8 does not exceed its authority from a legal technical standpoint, nor does it violate the Legislation Law or the Criminal Law. The arguments put forward by opponents—such as the ‘legislative spirit’ and ‘differences in social harmfulness’—are largely value judgements rather than explicit legal prohibitions.

Of course, this does not mean there is no room for discussion regarding the new regulations. Following the significant lowering of the threshold for criminal liability, how can we prevent collateral damage to small and medium-sized enterprises? How can we avoid employees facing criminal prosecution for kickbacks amounting to a few thousand yuan? These issues require careful handling in judicial practice. However, these are questions of ‘how to implement’, not ‘whether it should be enacted’. As far as current legal practice is concerned, one need only bear three points in mind:

Judicial interpretations have the authority to set specific thresholds – this is a power granted by law.

Levelling the threshold for criminal liability does not equate to levelling sentencing – the crime of embezzlement still carries the death penalty, whereas crimes committed by private enterprises do not.

The core of the controversy is not illegality, but reasonableness – one may debate its merits, but there is no need to hastily label it ‘unconstitutional or an abuse of power’.

As for the ‘discontinuity’ between Article 8 and the preceding seven articles of the interpretation, this is a long-standing technical flaw in legislation; whilst it does not affect its validity, it serves as a reminder that greater attention must be paid to structural coherence when drafting judicial interpretations.

The healthy development of the private economy requires both a crackdown on internal corruption and a stable, predictable judicial environment. Article 8 represents a step towards strengthening protection; as for whether this step is just right, let us leave that to time and practice to test, especially as judicial authorities across the country are yet to issue specific guidelines on sentencing ranges. When it comes to regulating private enterprises, there is in fact a balancing act to be resolved, one that urgently requires academic scrutiny: exactly whom should be protected—the owners and investors, the corporate entity itself, or the employees, workers and external creditors? This question is perhaps more fundamental than the monetary thresholds.

Special Notice:

This article was originally written by a lawyer at JAVY Law Firm. Should you wish to reproduce or quote any part of this article, please cite the source.