China Issues New Provisions on Administrative Penalty Assessment
Published 5 November 2026
Sarah Xuan
On November 4, 2026, the State Administration for Market Regulation (SAMR) issued the Provisions on the Exercise of Discretion in Imposing Administrative Penalties in Market Regulation (the “Provisions”), which take effect on January 1, 2027. The Provisions apply to the exercise of discretion by market regulation authorities when imposing administrative penalties within the scope of their statutory responsibilities. The violations covered include trademark infringement under the Trademark Law, false publicity under the Anti-Unfair Competition Law, and violations of the Advertising Law, the Product Quality Law, the Food Safety Law, and other relevant laws. For example, after investigating and establishing trademark infringement, a market regulation authority’s decisions on whether to impose a penalty, which type of penalty to impose, and the amount of any fine all involve the exercise of discretion governed by the Provisions. Administrative penalties imposed by Customs authorities following the seizure of infringing goods are governed by the relevant provisions on Customs enforcement and are not affected by the Provisions.
The Provisions were formulated pursuant to the Administrative Penalties Law of the People’s Republic of China and other laws and administrative regulations. They elaborate on Articles 32 to 34 of the Administrative Penalties Law, which address lighter penalties, mitigated penalties, the non-imposition of penalties, and benchmarks for the exercise of discretion. Their purpose is to regulate the exercise of discretion by market regulation authorities in imposing administrative penalties, ensure that penalties are proportionate to violations, and protect the lawful rights and interests of natural persons, legal persons, and other organizations.
The following analysis examines three aspects of the Provisions: the formulation and application of benchmarks, the distinctions between penalty levels, and the determination of the circumstances relevant to the exercise of discretion in individual cases.
I. Authority to Formulate Benchmarks and Procedures for Their Application Article 5 of the Provisions specifies which authorities may formulate benchmarks. SAMR guides provincial market regulation authorities in establishing and refining benchmarks and may itself formulate benchmarks for specific matters subject to penalties. Provincial market regulation authorities are responsible for formulating benchmarks for their respective jurisdictions. Market regulation authorities of cities divided into districts are responsible for formulating benchmarks for matters for which local regulations and local government rules in their jurisdictions prescribe penalties. They may also formulate local benchmarks in accordance with laws, regulations, rules, and benchmarks established by higher-level authorities.
In addition to this allocation of authority, the Provisions lay down specific rules for drug regulation and antimonopoly enforcement. When formulating penalty benchmarks for drugs, medical devices, and cosmetics, provincial drug regulatory authorities must consider the effect of the violation on product safety, efficacy, and the ability to control product quality. SAMR’s specific provisions govern the exercise of discretion in imposing administrative penalties for antimonopoly violations. Matters not addressed in those specific provisions are to be handled by reference to the Provisions.
Benchmarks must be formulated in accordance with legally prescribed procedures and made public on the authority’s own initiative. They must specify the violations, the legal basis, the penalty levels, the conditions for applying each level, and the specific criteria. The matters that benchmarks may define in greater detail depend on the types and ranges of penalties prescribed by the applicable penalty provision. For example, where a penalty provision permits penalties to be imposed separately or in combination, the benchmarks may specify the conditions for each. Where a penalty provision prescribes different penalties according to the gravity of the violation, the benchmarks may specify the criteria for determining, for example, what constitutes “serious circumstances.”
The Provisions distinguish between revising a benchmark and adjusting its application in an individual case. Where the laws, regulations, or rules on which a benchmark is based are amended, or where objective circumstances change materially, market regulation authorities at or above the level of a city divided into districts must promptly revise the benchmark. In an individual case, if applying a benchmark might result in a manifestly inappropriate or manifestly unfair penalty, or if the objective circumstances governing its application have changed, the authority may adjust the application of the benchmark following collective deliberation and a decision by its officials in charge. The record of the deliberations must be placed on file. Where the ordinary procedure applies, the written penalty decision must state the basis, facts, and reasons for the exercise of discretion. Where a benchmark exists, the decision must also state how it was applied.
II. Penalty Levels and the Application of Lighter and Mitigated Penalties Article 11 of the Provisions establishes five levels for the exercise of discretion in imposing administrative penalties: no penalty, a mitigated penalty, a lighter penalty, a standard penalty, and a heavier penalty. A lighter penalty must remain within the statutory types and range of penalties. The enforcement authority may select less severe or fewer types of penalties or impose a penalty at the lower end of the applicable range. A mitigated penalty, by contrast, may involve imposing fewer types of penalties than the law would otherwise require or imposing a penalty below the statutory minimum. For fines subject to both a statutory minimum and a statutory maximum, a lighter penalty falls within the lowest 30% of the statutory range and a heavier penalty within the highest 30%, with the respective cutoffs included in both cases. A standard penalty falls within the intervening range. These percentages are calculated on the difference between the statutory maximum and minimum. For example, if the statutory fine ranges from RMB 10,000 to RMB 110,000, the maximum fine that may be imposed as a lighter penalty is RMB 40,000.
Article 32 of the Administrative Penalties Law addresses together the circumstances in which a lighter or mitigated penalty must be imposed. Articles 14 and 15 of the Provisions further distinguish the conditions for applying each. As a general rule, a party coerced by another person into committing a violation receives a mitigated penalty, while a party induced by another person’s deception to commit a violation receives a lighter penalty. Where a party subsequently takes remedial measures, a mitigated penalty applies if the party acts on its own initiative to eliminate the harmful consequences, and a lighter penalty applies if the party acts on its own initiative to reduce them. Accordingly, in assessing remedial measures such as product recalls or compensation for losses, the authority must consider whether the actual harm has been eliminated or to what extent it has been reduced. A party that acts on its own initiative to eliminate or reduce the harmful consequences after the investigation has concluded may still present evidence to that effect when making a statement, presenting a defense, or participating in a hearing.
Where circumstances warrant a lighter penalty but even a lighter penalty would be unduly severe, the authority may impose a mitigated penalty following collective deliberation and a decision by its officials in charge. Where a party qualifies for a lighter penalty solely because it actively cooperated with the investigation, a mitigated penalty may not be imposed on that ground. Conversely, where circumstances warrant a mitigated penalty but such a penalty would be unduly lenient, a lighter penalty applies.
III. Determining When a First Violation May Go Unpenalized and Weighing Multiple Circumstances Article 13 of the Provisions distinguishes between circumstances in which the authority must refrain from imposing a penalty and those in which it may do so. Where a violation is minor, is promptly corrected, and causes no harmful consequences, no penalty may be imposed, regardless of whether it is a first violation. Where a first violation has only minor harmful consequences and is promptly corrected, the enforcement authority may refrain from imposing a penalty. Accordingly, in determining whether to forgo a penalty for a first violation, the authority must also consider whether the harmful consequences were minor and whether the party promptly corrected the violation.
Under Article 23 of the Provisions, a “first violation” generally means the first time within a two-year period that the party has committed a violation of the same nature. The period is five years where a violation concerns the safety of citizens’ lives or health, or financial security, and has harmful consequences. The period is calculated from the date of the decision disposing of the previous violation to the date on which the current violation occurred. If, after questioning the party and checking both the National Enterprise Credit Information Publicity System and the enforcement case management system, the enforcement authority finds no violation of the same nature by the party within the applicable period, the violation is deemed a first violation.
The first step in determining whether two violations are of the same nature is to examine the legal provisions applied in dealing with each. Violations to which the same provision applies are of the same nature. Even where different provisions apply, the violations may be deemed to be of the same nature if the legally protected interests infringed and the patterns of conduct are substantially the same, and the respective legal bases stand in one of the following relationships: higher- and lower-ranking law, general and special law, or provisions governing an administrative violation and a corresponding criminal offense.
In addition to determining whether the violation is a first violation, it is necessary to distinguish between a minor violation and minor harmful consequences. Whether a violation is minor may be assessed by reference to factors such as the party’s degree of fault, the duration of the violation, the risk posed by the product, and the amount of money involved. Whether the harmful consequences are minor depends primarily on the extent and scope of the actual harm and the difficulty of eliminating it. A party that corrects a violation on its own initiative before the market regulation authority discovers it or orders its correction is regarded as having corrected it promptly. A party that promptly corrects a violation as required after it is pointed out may also be regarded as having done so. For example, records of a product’s removal from sale may establish when sales ceased, while records of product distribution, recalls, and compensation payments can help determine the scope of the harm and the effectiveness of the remedial measures.
Under Article 19 of the Provisions, where several circumstances bear on the exercise of discretion in the same case, the enforcement authority must weigh the actual effect of each. Where their effects are comparable, circumstances that weigh in the same direction may be given cumulative effect, while those that weigh in opposite directions may offset each other. Where their effects differ substantially, the authority must give primary weight to the circumstances with the greater effect while taking the others into account. For example, a heavier penalty must be imposed where a violation causes injury or death to another person. If the party subsequently acts on its own initiative to reduce the harmful consequences, the enforcement authority must determine the penalty level in light of both the harm already caused and the actual effectiveness of the remedial measures.
Conclusion The Provisions establish uniform criteria for determining penalties in similar cases while allowing authorities to adjust the application of benchmarks in individual cases. SAMR will guide local authorities in refining their benchmarks, advance the development of a benchmark database, explore the use of intelligent tools to assist in the exercise of discretion, and monitor the implementation of benchmarks through case file reviews.
The Provisions were formulated pursuant to the Administrative Penalties Law of the People’s Republic of China and other laws and administrative regulations. They elaborate on Articles 32 to 34 of the Administrative Penalties Law, which address lighter penalties, mitigated penalties, the non-imposition of penalties, and benchmarks for the exercise of discretion. Their purpose is to regulate the exercise of discretion by market regulation authorities in imposing administrative penalties, ensure that penalties are proportionate to violations, and protect the lawful rights and interests of natural persons, legal persons, and other organizations.
The following analysis examines three aspects of the Provisions: the formulation and application of benchmarks, the distinctions between penalty levels, and the determination of the circumstances relevant to the exercise of discretion in individual cases.
I. Authority to Formulate Benchmarks and Procedures for Their Application Article 5 of the Provisions specifies which authorities may formulate benchmarks. SAMR guides provincial market regulation authorities in establishing and refining benchmarks and may itself formulate benchmarks for specific matters subject to penalties. Provincial market regulation authorities are responsible for formulating benchmarks for their respective jurisdictions. Market regulation authorities of cities divided into districts are responsible for formulating benchmarks for matters for which local regulations and local government rules in their jurisdictions prescribe penalties. They may also formulate local benchmarks in accordance with laws, regulations, rules, and benchmarks established by higher-level authorities.
In addition to this allocation of authority, the Provisions lay down specific rules for drug regulation and antimonopoly enforcement. When formulating penalty benchmarks for drugs, medical devices, and cosmetics, provincial drug regulatory authorities must consider the effect of the violation on product safety, efficacy, and the ability to control product quality. SAMR’s specific provisions govern the exercise of discretion in imposing administrative penalties for antimonopoly violations. Matters not addressed in those specific provisions are to be handled by reference to the Provisions.
Benchmarks must be formulated in accordance with legally prescribed procedures and made public on the authority’s own initiative. They must specify the violations, the legal basis, the penalty levels, the conditions for applying each level, and the specific criteria. The matters that benchmarks may define in greater detail depend on the types and ranges of penalties prescribed by the applicable penalty provision. For example, where a penalty provision permits penalties to be imposed separately or in combination, the benchmarks may specify the conditions for each. Where a penalty provision prescribes different penalties according to the gravity of the violation, the benchmarks may specify the criteria for determining, for example, what constitutes “serious circumstances.”
The Provisions distinguish between revising a benchmark and adjusting its application in an individual case. Where the laws, regulations, or rules on which a benchmark is based are amended, or where objective circumstances change materially, market regulation authorities at or above the level of a city divided into districts must promptly revise the benchmark. In an individual case, if applying a benchmark might result in a manifestly inappropriate or manifestly unfair penalty, or if the objective circumstances governing its application have changed, the authority may adjust the application of the benchmark following collective deliberation and a decision by its officials in charge. The record of the deliberations must be placed on file. Where the ordinary procedure applies, the written penalty decision must state the basis, facts, and reasons for the exercise of discretion. Where a benchmark exists, the decision must also state how it was applied.
II. Penalty Levels and the Application of Lighter and Mitigated Penalties Article 11 of the Provisions establishes five levels for the exercise of discretion in imposing administrative penalties: no penalty, a mitigated penalty, a lighter penalty, a standard penalty, and a heavier penalty. A lighter penalty must remain within the statutory types and range of penalties. The enforcement authority may select less severe or fewer types of penalties or impose a penalty at the lower end of the applicable range. A mitigated penalty, by contrast, may involve imposing fewer types of penalties than the law would otherwise require or imposing a penalty below the statutory minimum. For fines subject to both a statutory minimum and a statutory maximum, a lighter penalty falls within the lowest 30% of the statutory range and a heavier penalty within the highest 30%, with the respective cutoffs included in both cases. A standard penalty falls within the intervening range. These percentages are calculated on the difference between the statutory maximum and minimum. For example, if the statutory fine ranges from RMB 10,000 to RMB 110,000, the maximum fine that may be imposed as a lighter penalty is RMB 40,000.
Article 32 of the Administrative Penalties Law addresses together the circumstances in which a lighter or mitigated penalty must be imposed. Articles 14 and 15 of the Provisions further distinguish the conditions for applying each. As a general rule, a party coerced by another person into committing a violation receives a mitigated penalty, while a party induced by another person’s deception to commit a violation receives a lighter penalty. Where a party subsequently takes remedial measures, a mitigated penalty applies if the party acts on its own initiative to eliminate the harmful consequences, and a lighter penalty applies if the party acts on its own initiative to reduce them. Accordingly, in assessing remedial measures such as product recalls or compensation for losses, the authority must consider whether the actual harm has been eliminated or to what extent it has been reduced. A party that acts on its own initiative to eliminate or reduce the harmful consequences after the investigation has concluded may still present evidence to that effect when making a statement, presenting a defense, or participating in a hearing.
Where circumstances warrant a lighter penalty but even a lighter penalty would be unduly severe, the authority may impose a mitigated penalty following collective deliberation and a decision by its officials in charge. Where a party qualifies for a lighter penalty solely because it actively cooperated with the investigation, a mitigated penalty may not be imposed on that ground. Conversely, where circumstances warrant a mitigated penalty but such a penalty would be unduly lenient, a lighter penalty applies.
III. Determining When a First Violation May Go Unpenalized and Weighing Multiple Circumstances Article 13 of the Provisions distinguishes between circumstances in which the authority must refrain from imposing a penalty and those in which it may do so. Where a violation is minor, is promptly corrected, and causes no harmful consequences, no penalty may be imposed, regardless of whether it is a first violation. Where a first violation has only minor harmful consequences and is promptly corrected, the enforcement authority may refrain from imposing a penalty. Accordingly, in determining whether to forgo a penalty for a first violation, the authority must also consider whether the harmful consequences were minor and whether the party promptly corrected the violation.
Under Article 23 of the Provisions, a “first violation” generally means the first time within a two-year period that the party has committed a violation of the same nature. The period is five years where a violation concerns the safety of citizens’ lives or health, or financial security, and has harmful consequences. The period is calculated from the date of the decision disposing of the previous violation to the date on which the current violation occurred. If, after questioning the party and checking both the National Enterprise Credit Information Publicity System and the enforcement case management system, the enforcement authority finds no violation of the same nature by the party within the applicable period, the violation is deemed a first violation.
The first step in determining whether two violations are of the same nature is to examine the legal provisions applied in dealing with each. Violations to which the same provision applies are of the same nature. Even where different provisions apply, the violations may be deemed to be of the same nature if the legally protected interests infringed and the patterns of conduct are substantially the same, and the respective legal bases stand in one of the following relationships: higher- and lower-ranking law, general and special law, or provisions governing an administrative violation and a corresponding criminal offense.
In addition to determining whether the violation is a first violation, it is necessary to distinguish between a minor violation and minor harmful consequences. Whether a violation is minor may be assessed by reference to factors such as the party’s degree of fault, the duration of the violation, the risk posed by the product, and the amount of money involved. Whether the harmful consequences are minor depends primarily on the extent and scope of the actual harm and the difficulty of eliminating it. A party that corrects a violation on its own initiative before the market regulation authority discovers it or orders its correction is regarded as having corrected it promptly. A party that promptly corrects a violation as required after it is pointed out may also be regarded as having done so. For example, records of a product’s removal from sale may establish when sales ceased, while records of product distribution, recalls, and compensation payments can help determine the scope of the harm and the effectiveness of the remedial measures.
Under Article 19 of the Provisions, where several circumstances bear on the exercise of discretion in the same case, the enforcement authority must weigh the actual effect of each. Where their effects are comparable, circumstances that weigh in the same direction may be given cumulative effect, while those that weigh in opposite directions may offset each other. Where their effects differ substantially, the authority must give primary weight to the circumstances with the greater effect while taking the others into account. For example, a heavier penalty must be imposed where a violation causes injury or death to another person. If the party subsequently acts on its own initiative to reduce the harmful consequences, the enforcement authority must determine the penalty level in light of both the harm already caused and the actual effectiveness of the remedial measures.
Conclusion The Provisions establish uniform criteria for determining penalties in similar cases while allowing authorities to adjust the application of benchmarks in individual cases. SAMR will guide local authorities in refining their benchmarks, advance the development of a benchmark database, explore the use of intelligent tools to assist in the exercise of discretion, and monitor the implementation of benchmarks through case file reviews.