The Standing Committee of China’s National People’s Congress last week passed legislation criminalizing purchases of rare or endangered wild animals – and any derivative products of such animals – if a person “knows or should know” that the animal is protected as an endangered species under Chinese law. The new legislation also criminalizes purchases of wild animals if the buyer “knows or should know” that the animal was illegally hunted.

The aggressive element of China’s new legislation is the “knowing or should have known” standard to which businesses and individuals will be held when determining whether they are guilty of illegally trading in endangered animals or animal products.  An entity or individual cannot turn a blind eye to the circumstances of a sale, or institute a process under which they are purposefully kept unaware of how an animal product was acquired, as a means of avoiding “knowledge” and culpability for purchasing illegally traded animals. Under the new law, entities and individuals can be held criminally liable for business transactions if certain “red flags” – such as questionable prices or sales locations – should cause the individual to question the legality of a particular animal product transaction.

Penalties will depend on the severity of the crimes. Violations can result in prison sentences of up to ten years, along with fines.

China’s efforts to protect endangered animals come at a critical time when hunting certain of these animals has increased significantly. Many different kinds of endangered and illegally hunted animals are included in the scope of the new regulations, including pandas, golden monkeys, and pangolins. Animal rights groups will anxiously await China’s implementation of these important laws and their impact on protecting endangered animals.

We see this stepping up on the endangered species front as part and parcel of what is happening just about everywhere in China. China is becoming more legalistic in attacking “the old way of doing things.” We are seeing this on multiple fronts, including the following:

  • Taxes. Put simply, if you are not paying your China taxes (and this most definitely includes employee-employer benefits) your odds of being found out and penalized are far greater today than even two years ago.
  •  Visas. If you are not in China legally, your odds of being found out and penalized or deported are greater today than ever.
  • Operating without a business license or without the appropriate business license. China has consistently stepped up its efforts to rid itself of these sorts of companies. We have seen that effort go into overdrive in the last six months. On the flip-side, China also seems to be making at least some efforts at making WFOE formation easier.
  • Engaging in corruption. We have mentioned the word “corruption” in posts fourteen times so far in 2014 as compared with eleven times in 2013, and we have done so because its importance has escalated in that time, in large part because China itself has stepped up enforcement of its anti-corruption laws since Xi Jinping’s ascension. For more on this, check out Doing Business In China Without An Anti-Corruption Compliance Program? Are You Crazy?

China laws. They are not just for lawyers any more.

Note: I want to thank Grace Yang for the assistance she provided me on this post.

  • Rob Schackne

    Yes, I know, I know. But it seems that most of the animals here have already been eaten. Protection of the remaining few from depredation is good. Wonderful even. Are there still some foreign companies making computer cases from pangolin hide, slippers from pandas, and wallets from monkeys? Implementation alert. I once used a bit of my own hide to make a little life here. It wore out rather quickly. Then one day I had the rozzers hammering on my door and no exit out of the place. But I negotiated a deal. Which involved money (no surprise) and (no surprise either) I never did it that way again.

  • sfinder

    You should advise your readers that this is likely to be followed by a judicial interpretation by the Supreme People’s Court and Supreme People’s Procuratorate.

  • Robert Walsh

    In Burma we’re setting up plantations for Agar wood, which is controlled (in its wild form) under the CITES treaty. We are steering the various ministries to write a pathway for certification of plantation-grown material. Any idea if China does something similar?