China Country Profile

Snapshot of the China Country Profile


China is considered the most attractive destination for foreign investments despite severe corruption. The transition process from planned economy to market economy not only led to unprecedented high economic growth rates, but also created opportunities for public officials and others to enrich themselves illegally. It is estimated that at least 3% of the annual GDP is lost to corruption. The Chinese government knows that corruption is endangering political stability and economic growth and has therefore been pursuing an anti-corruption campaign targeted at both the public and private sector to try to curb the widespread corruption. Companies considers corruption a major obstacle to doing business in China.

Positive developments in relation to corruption and investment:

  • China's anti-corruption campaign has led to the exposure of many corrupt business deals and is expected to help deter potential offenders from violating the law.
  • China's legal framework for curbing corruption is quite well-defined, and in combination with the strengthening of international anti-corruption cooperation there has been improvements.
  • China has recently initiated a process to enhance transparency in governance. One of the most important steps in this process is to make the decision to allow the public to access information concerning government decisions and decision-making.

Risks of corruption:

  • Many companies have run into difficulties with the authorities because of corrupt behaviour by their agents or business intermediaries. The activities of agents are difficult to control, therefore it is important to conduct a thorough vetting of them.
  • The construction sector is notoriously corrupt, and companies are urged to be extra careful in connection with competing for a public procurement contract as this is an area where companies generally run a high risk of encountering corruption.
  • Private ownership of land is not permitted, but the right to utilise a plot of land can be bought. In the awarding of land use right, many companies have be confronted with demands for bribes from public officials.
  • Although the anti-corruption campaign has been running with success, as long as the judicial system is flawed it will be difficult to make major changes. The court system offers many examples of both corruption and political interference in dispute settlement.


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