In China, it’s not always easy to tell where private enterprise ends and the public sector begins. That can create problems for Western businesses operating under U.S. law.
First, corporations might do business with Chinese companies that have Communist Party or government officials sitting on their boards or acting in an executive capacity; that raises the specter of violating the Foreign Corrupt Practices Act, if U.S. prosecutors interpret some business payment as a bribe to Chinese officials. Then there’s the risk that a U.S. company accidentally ends up doing business with the Chinese military, which would mean non-compliance with the U.S. arms embargo against China.
