Illegal Fundraising and China's Criminal Law

• In Event: Reassessing Penal Severity, Capital Punishment and White-Collar Crime in China

Abstract

Illegal fundraising remains a significant financial activity for banks and other financial institutions in China. The Chinese government has legislated aggressively to crack down on this behavior. Article 192 of China’s Criminal Law clearly prohibits ‘unlawfully raises funds by means of fraud’, and punishes such behavior severely: In the ‘Wu Ying Case,’ Wu was sentenced to death by the Zhejiang Provincial High Court in December 2009 for fraud and illegal fundraising. According to articles 175 (1) and (2) of the criminal code, private financing from the general public and re-loaning credit funds from banks are considered crimes as well. This legal framework leaves China’s entrepreneurs uncertain about how to lawfully fundraise. In my paper I interpret and critique China’s criminalization of fundraising. I also compare China’s financial legal regime to that of the US.

Author

• Yuan Qiao, Peking University Law School