Not automatically. Running a business without the licence or approval it needs is first an administrative violation in China: the market supervision authority can order you to stop, confiscate the illegal gains and impose a fine. It becomes a crime — illegal business operation under Article 225 of the Criminal Law — only if your activity falls inside one of the categories that article lists, or that a judicial interpretation covers, and the amount thresholds are met.
When unlicensed trading becomes illegal business operation
Article 225 punishes anyone who, in violation of state regulations, does one of the following and thereby seriously disrupts market order: (1) deals, without approval, in goods that laws or administrative regulations reserve for monopoly or exclusive sale, or that are otherwise restricted for trading; (2) buys or sells import-export licences, certificates of origin and similar licences or approval documents; (3) runs securities, futures or insurance business without the approval of the competent department, or illegally provides payment and settlement services; or (4) engages in other illegal business operations that seriously disrupt market order.
The penalty is up to five years’ imprisonment or criminal detention, plus a fine of one to five times the illegal gains; where the circumstances are especially serious, five years or more, plus a fine of one to five times the gains or confiscation of property. Because item (4) is a catch-all, having no licence is not the test on its own — the prosecution must also show serious disruption of market order.
The numbers that decide whether you are prosecuted
The 2022 Prosecution Thresholds for Economic Crimes (II), Article 71, converts Article 225 into figures. Examples: unlicensed trading in tobacco products — illegal business volume of RMB 50,000, or illegal gains of RMB 20,000; unlicensed securities, futures or insurance business — volume of RMB 1 million, or gains of RMB 100,000; illegal payment and settlement services — volume of RMB 5 million, or gains of RMB 100,000; illegal foreign-exchange trading — volume of RMB 5 million, or gains of RMB 100,000.
For anything not specifically listed, item (12) is the fallback: an individual meets the threshold at an illegal business volume of RMB 50,000 or illegal gains of RMB 10,000; a company or other unit at RMB 500,000 or RMB 100,000. Amounts above a figure include the figure itself (Article 84), and conduct that falls short but reaches 80% of the figure can still qualify where the article’s aggravating conditions are present (Article 81).
What this means in practice
Three points matter for a business, especially a foreign-invested one. First, whether the product or activity is a restricted or licensed category at all — trading in ordinary goods without a licence is normally an administrative problem, not a criminal one. Second, keeping the licence current and matched to the scope of what you actually do; operating outside the registered scope on a restricted activity is where the risk concentrates. Third, the amounts: a regulator’s fine is not the end of the story, because once the figures above are crossed the file can be referred for criminal prosecution.
A quick scenario
Hypothetical illustration, not a reported case. A trading company sells tobacco products without a tobacco monopoly licence and books RMB 80,000 of turnover. That volume is above the RMB 50,000 tobacco threshold in Article 71(1), so the conduct shifts from an administrative violation into a potential illegal business operation case, with the company fined and the responsible managers personally exposed.
Common questions
Q: If I have no business licence at all, is that automatically a crime?
A: No. Unlicensed operation is normally handled as an administrative violation; it becomes a crime only if the activity fits Article 225 or a judicial interpretation and the thresholds are met.
Q: Which licences does Article 225 actually mention?
A: Trading in monopoly, exclusive-sale or restricted goods without approval, dealing in import-export licences and origin certificates, and unapproved securities, futures or insurance business or payment settlement services.
Q: What is the fallback threshold if my business is not on the list?
A: Under Article 71(12), an individual reaches it at RMB 50,000 of illegal business volume or RMB 10,000 of illegal gains; a company at RMB 500,000 or RMB 100,000.
Q: What is the maximum sentence?
A: Article 225 provides up to five years for serious circumstances and five years or more, with a fine of one to five times the gains or confiscation, where circumstances are especially serious.
Q: Does paying an administrative fine end the matter?
A: Not necessarily. If the volume and gains cross the thresholds in Article 71, the case can still be referred for criminal prosecution.
Wang Guan | Co-founder, Beijing Haolue Law Firm | +86 17813108512