(Yicai) Jan. 14 -- Market regulators in Shanghai and the eastern provinces of Jiangsu, Zhejiang and Anhui have joined forces to more clearly define the regulations for lighter penalties and exemptions, reflecting the Yangtze River Delta region's commitment to fostering a more inclusive and rule-of-law-based business climate.

For the first time in the national market supervision system, these regulations, which will take effect on Feb. 1, clearly distinguish between the main factors determining "lighter" versus "reduced" penalties. The number of provisions has also been expanded to 26 from 19.

To promote high-quality integration across the Yangtze River Delta region, the market regulators in these regions first issued a joint version of the exemption and leniency regulations in 2023, establishing a unified standard for the region.

Since then, the Yangtze River Delta region has handled 18,200 cases of minor violations that were exempted from penalties, amounting to more than CNY500 million (USD71.6 million) in waived fines. In Zhejiang province, over 25,000 cases were either waived or given lighter penalties, involving more than CNY1.7 billion (USD240 million).

Compared with the first version, the new rules include four key revisions. They not only distinguish for the first time the main factors for lighter or reduced penalties but also place greater emphasis on a balanced approach of inclusiveness and prudence. Additionally, they refine the applicable scenarios for lighter penalties and improve the criteria for waiving penalties.

The new rules also place greater emphasis on combining penalties with education. They prioritize the use of softer measures such as persuasion, guidance and discussions to encourage businesses to operate in compliance with the law. At the same time, they support innovation and, for emerging industries and new business models such as artificial intelligence, they adopt the principle of inclusiveness and prudence to provide ample room for growth. In cases where intentional misconduct or gross negligence cause harm, leniency or waivers would be used cautiously.

The new regulations further clarify situations such as actively eliminating or reducing the harmful consequences of illegal behavior, voluntarily confessing to unlawful activities unknown to regulators, actively cooperating with authorities during investigations, voluntarily providing evidence, playing a secondary or supporting role in collective violations and facing genuine hardship due to disability or serious illness. These enhancements make the rules more practical and actionable.

The next step is for the four provincial-level regions to fully implement the new regulations, an official from the Zhejiang Provincial Market Supervision Administration said. They should publish typical cases to encourage a balanced approach to administrative law enforcement, ensuring that penalties are proportionate to the violations.

Editor: Kim Taylor