Chinese courts target corruption in private sector

Chinese courts will step up efforts to ensure equal protection throughout the legal process in a bid to combat internal corruption in the private sector and protect entrepreneurs' legitimate rights, according to a senior official of China's top court.

Wang Chuang, chief judge of the Supreme People's Court's Second Civil Division, told a news conference on Thursday that during the first half of the year, Chinese courts concluded 4,842 cases involving bribery, embezzlement and misappropriation of funds by private sector employees, which represents an 11.6 percent increase from the previous year.

He stressed the importance of clean governance for the sustainable growth of private enterprises and highlighted the judiciary's commitment to fighting corruption and safeguarding business interests.

Wang said courts have also intensified efforts to punish crimes such as rumor-spreading, defamation and extortion targeting businesses, noting that protecting the reputation of private enterprises is essential. He said one individual surnamed Huang, for example, received a 10-year prison sentence for posting false information online and extorting 556,000 yuan ($78,645) from 21 companies by offering to delete the posts for a fee.

He also urged judges nationwide to correct miscarriages of justice promptly and avoid criminalizing commercial disputes to foster a healthier private economy. "The rule of law provides the best business environment. All market entities, whether State-owned or private, deserve equal legal protection," he said, adding that Chinese courts corrected 46 wrongful property rights cases in 2024, with 13 individuals acquitted on appeal.

In one disclosed case, a man surnamed Ye, the owner of a trading company in Sichuan province, successfully bid for a shopping mall but failed to complete the payment after making an initial deposit. Ye then leased the mall to two tenants, fabricating a receipt to falsely indicate that the outstanding balance had been settled, allowing him to collect rent.

A primary court convicted Ye of fraud and sentenced him to three years with a five-year suspended sentence, and an intermediate court upheld the ruling. However, upon retrial, the Sichuan High People's Court acquitted Ye, reclassifying the matter as a contractual economic dispute rather than a criminal offense, noting that the tenants incurred no losses and were able to use the mall as intended.

Wang said the original ruling needed to be corrected and urged judges to clearly distinguish between commercial disputes and contract fraud. He said the key is determining whether there was an intent to unlawfully obtain property, rather than labeling actions as contract fraud solely because someone fabricated facts or concealed information.

Li Shuguang, a law professor at China University of Political Science and Law, called for cleaner and more regulated enterprise management while praising judicial measures to protect the legitimate rights of private businesses.

"Some companies face issues such as asset embezzlement, failure to separate personal and corporate property, and trade secret leaks, which necessitate judicial intervention and improved internal governance," Li said. "When the judiciary combats corruption and creates a favorable business environment, businesses must also strive for continuous improvement," he added.

caoyin@chinadaily.com.cn