China’s anti-corruption law is going global. What does it mean for overseas firms?

China's new draft law targeting cross-border corruption aims to combat illicit financial flows and foreign interference, according to analysts. The legislation sets out measures to prevent extraterritorial investigations and retaliation against foreign anti-corruption enforcement, drawing a clear legal line against other jurisdictions while establishing its own system to police overseas assets.

The draft law, submitted to China's top legislature in late August, requires public feedback until September 26. During discussions, lawmakers emphasized that the measures fill a crucial gap in existing laws, which were scattered across different statutes. Wang Ke, a National People's Congress Standing Committee member, emphasized that the new draft integrates prevention, punishment, and international cooperation into a single framework.

The legislation adds to China's growing legal firewall against perceived Western legal overreach and intensifies Beijing's efforts to strengthen its "foreign-related rule of law." Law professors Ryan Mitchell and Wang Jiangyu from the Chinese University of Hong Kong noted that the rise of major Chinese firms globally is making cross-border corruption increasingly significant for Beijing, with international perceptions of fairness in Chinese competition and Belt and Road Initiative projects tied to these concerns.

While the draft law bears similarities to Western anti-corruption laws like the US Foreign Corrupt Practices Act and Britain's Bribery Act, it differs in its institutional and political integration. The Chinese bill covers a broader range of corruption, including those involving Chinese public officials and state entities, as well as overseas misconduct by Chinese public-sector actors and flight by suspected individuals.

China's decision to adopt a framework akin to the US act reflects a decade of frustration with international legal cooperation. The country had previously attempted to address cross-border corruption through bilateral extradition treaties but faced challenges enforcing them. The new law represents a state-led response to Western legal dominance and American long-arm jurisdiction, driven by a historical desire to resist such influence.