Zhiheng Explanation | Obstacles and Skills of "Attempted" Defense in Illegal Business Cases- Zhiheng Law Firm

Author | Zhang Nannan Attorney Team

Introduction

ZHIHENG

As a quintessential economic crime, the crime of illegal business operations presents complex issues of legal application in judicial practice when determining its criminal form. Article 225 of the Criminal Law defines the elements of this offense by means of a blank criminal statute, while relevant judicial interpretations supplement it by listing specific types of conduct and establishing quantifiable criteria. This legislative approach gives rise to theoretical disagreements and practical obstacles in determining attempted offenses.

Starting from Article 23 of the Criminal Law, which governs attempted crimes, and in light of the constituent elements of the crime of illegal business operations, defense counsel must look beyond the formalistic appearance of business activities and conduct an in-depth analysis of the substantive requirements for the cessation of the crime.

A structural contradiction exists between the theoretical framework of attempted crime and the normative characteristics of the crime of illegal business operations, which constitutes the primary obstacle confronting defenses based on attempted commission.

Traditional criminal law theory grounds the criteria for identifying attempted crime on the distinction between the commencement of the execution of the act and the non-occurrence of the criminal result; however, the peculiarity of the crime of illegal business operation lies in the diversity of its objective conduct, which endows it with a dual nature—capable of being both a conduct-based offense and a result‑based offense. This has led to the erroneous perception in practice that the crime of illegal business operations does not have an attempted form; in fact, this incorrect understanding stems from two distinct starting points:

The first approach is based on the premise that an illegal business activity must meet the “serious circumstances” threshold to constitute a crime, and “serious circumstances” are typically assessed using quantifiable indicators such as the amount of business transactions or unlawful gains. This normative structure has led to a widespread tendency in judicial practice to conflate the elements of criminal liability with those of completion—namely, once a business activity meets the threshold of “serious circumstances,” it is directly deemed to have reached the completed stage, thereby overlooking the substantive relationship between the developmental stages of the actus reus and the resulting harm.

The second point of departure lies in the neglect of the object of the crime of illegal business operations—namely, “market order”—which is also the legally protected interest. Many practitioners in the legal field have shifted the “commencement” point of illegal business operations to the preparatory stage, equating preparatory acts such as production, procurement, storage, and client contact directly with the execution of the substantive conduct.

This line of reasoning stems from an expansive interpretation of the “business operation” element in the crime of illegal business operations, treating the entire process of a business activity as a single act of execution. For example, when a defense counsel argues that the defendant should be deemed to have committed an attempted offense because they were apprehended during the transportation or storage stage, judicial authorities often reject the possibility of an attempted offense on the grounds that “the business activity has already been carried out.” This line of reasoning effectively undermines the scope for recognizing criminal attempt.

Overcoming the aforementioned obstacles requires the development of a systematic defense strategy.

First, the determination of the precise moment when “the act has been initiated” should be precisely defined, and the normative content of Article 23 of the Criminal Law should be applied to deconstruct the stage-specific characteristics of business operations. For example, in cases involving illegal futures trading, where only activities such as the development of trading systems and the recruitment of members have been undertaken without the actual commencement of trading operations, it should be argued that this stage still falls within the preparatory phase.

At this stage, it is necessary to take into account the specific characteristics of the business model and substantiate the substantive starting point of the core illegal conduct, while strictly distinguishing between preparatory acts and acts of execution. Secondly, full use should be made of the dual nature of the monetary threshold: the conviction threshold stipulated in judicial interpretations should serve both as the entry point for criminal liability and as an evidentiary tool for establishing attempted offenses.

When the value of the seized items is close to, but does not yet meet, the threshold for completion of the offense, a professional appraisal method should be used to demonstrate the potential scale of the business operation that could have been achieved. At the same time, in conjunction with the defendant’s objective conduct, it should be argued that the defendant’s actions have clearly progressed beyond the preparatory stage but have not yet reached the stage of completion.

Secondly, at the level of proving the subjective elements, it is necessary to construct a “double negation” argumentative structure. It is necessary both to demonstrate that the perpetrator objectively failed to complete the core link of the business activity—namely, the sales stage that would have enabled products violating market order to enter the market—and to show that there was no subjective intent on their part to voluntarily abandon the crime.

For example, in cases involving the illegal operation of pharmaceuticals, if the drugs are seized before they have been repackaged and labeled, the objective fact that the crime was not completed should be established through evidence such as the condition of the physical evidence and transaction records, while also using indirect evidence such as communication records and financial transaction flows to corroborate the involuntary nature of the cessation.

This mode of argumentation requires dynamically linking objective conduct with subjective intent to form a complete chain of evidence.

Finally, with respect to provisions in judicial interpretations that clearly contravene the general principles of the Criminal Law, defense arguments should be advanced by applying the rules for resolving normative conflicts. In accordance with the principle of hierarchical validity in criminal law, when a judicial interpretation conflicts with the general provisions of the Criminal Law concerning the forms of crime, the provisions of the General Part of the Criminal Law shall prevail. This defense strategy is particularly crucial in cases of illegal business operations involving specialized fields, as it can effectively overcome the undue restrictions imposed by judicial interpretations on attempted offenses.

The ultimate goal of the attempted offense defense is to achieve greater precision in criminal law evaluation, which requires defense counsel to move beyond a formalistic comparison of the elements of the offense and instead gain a deeper understanding of the substantive nature of economic crimes. In the defense of cases involving illegal business operations, the theory of criminal forms should be integrated with considerations of criminal policy; it is necessary both to accurately apply the statutory requirements of Article 23 of the Criminal Law and to give full consideration to the complex characteristics of market economic activities.

Only by dynamically analyzing the developmental stages of business conduct and precisely delineating the substantive elements of the criminal offense can we effectively counter the tendency toward “overgeneralized completion” that exists in practice and truly enable the normative function of the attempted crime doctrine to be realized. This line of defense not only aligns with the substantive requirements of the principle of legality in criminal law, but also better promotes the value of penal restraint, thereby striking a reasonable balance between combating economic crime and safeguarding the vitality of market entities.

Author

Introduction

Zhang Nannan

Member of the Management Committee,

Director of the All-China Criminal Law Committee of Zhiheng

Deputy Director of the Commercial Crime Defense Law Professional Committee of the Shenzhen Lawyers Association

Member of the Committee on Defense of Official Crime, Guangdong Lawyers Association

Outstanding Female Lawyer of Shenzhen City

Attorney Zhang Nannan specializes in criminal defense, criminal compliance, and criminal risk prevention and control. She has led numerous cases resulting in decisions not to prosecute, withdrawal of cases at the public security stage, release on bail pending trial, and suspended sentences.

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