China is generally viewed as the most attractive investment destination in the world, despite the country's high levels of corruption. The transition process from planned to market economy not only led to unprecedented economic growth rates, but also created opportunities for public officials and others to enrich themselves illegally. The Chinese government acknowledges 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 persistent problem. Companies consider corruption as constituting a major obstacle to doing business in China.

Positive developments in relation to corruption and investment:

• China's ongoing anti-corruption campaign has led to the exposure of many corrupt business deals and is expected to help deter potential corruption offenders.
• China's legal framework for curbing corruption is quite well-defined and, in combination with its increasing international cooperation on anti-corruption, as well as its anti-corruption policies, there have been successful prosecutions and arrests in high profile corruption cases in recent years.
• China has recently initiated a process to enhance transparency in governance. One of the most important steps in this process still depends on the decision of whether or not to allow the public to access information concerning government policy and policy-making.
• Effective from 1 May 2011, the amended Criminal Law criminalises bribery of foreign government officials and officials of international public organisations. This illustrates that the Chinese government is making efforts in cracking down on corruption.
• Chinese authorities have begun to regulate gift cards since June 2011, as part of its anti-corruption efforts. The regulation aims to combat money laundering, illegal cash withdrawals, tax evasion and bribery.

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 thoroughly vet agents.
• The construction sector is notoriously corrupt, and companies are urged to be extra careful when competing for a public procurement contract, especially if this is done outside the realms of the Tangible Construction Markets (TCMs), which serve as one-stop shops set up by the government in an attempt to curb corruption in the construction tender process.
• Sectors that are heavily regulated by the government, such as banking, finance and construction, are the most susceptible to corruption.
• Although China's anti-corruption campaign has had its successes, as long as the judicial system is flawed, it will be difficult to realise major changes. There are many examples of corruption affecting the judicial system and political interference in connection with dispute settlement is not uncommon.