The State Compensation Law specifies two kinds of compensation: administrative and criminal.

Administrative Compensation

The state should assume the responsibility of compensation if government offices or their staff abuse their power and infringe upon the lawful rights and interests of citizens, legal persons or other organizations and have caused damages thereof. Administrative compensation is the primary component of state compensation.

1. Scope of Compensation

Articles 3 and 4 of the State Compensation Law specifies the scope of compensation:

• Unlawfully detain citizens or adopt unlawful administrative, forceful measures to restrict citizens' corporal freedom;
• Unlawfully incarcerate citizens or adopt other measures depriving citizens of their corporal freedom;
• Use violent means such as battering or induce others to use violent means such as battering that has caused physical injuries or death to citizens;
• Abuse weapons or police devices and have caused physical injuries or death to citizens;
• Other unlawful acts that have caused physical injuries or death to citizens;
• Abuse administrative penalties such as imposing fines, revoking licenses or permits, ordering suspension of business or confiscation of property;
• Abuse administrative measures such as sequestrating, detaining or freezing property;
• Abuse government regulations in expropriating property or levying fees;
• Other unlawful acts that have caused property damages to citizens.

Article 5 of the State Compensation Law also specifies a number of situations where the state does not assume the responsibility for compensation:

• Personal acts by government employees unrelated to the exercise of their duties;
• Damages caused by acts committed by citizens, legal persons or other organizations themselves; and
• Other situations as provided for in the law.

2. Compensation Body

The State Compensation Law provides for the following ways for defining responsibility of compensation:

• If damage is done by a government office or its staff, then the office should assume the responsibility for compensation;
• If damage is done by more than two government offices, then all the offices involved should jointly assume the responsibility for compensation;
• If damage is done by organizations under authorization of laws and regulations, then the authorized organizations should assume the responsibility for compensation;
• If damage is done by organizations or individuals authorized by government bodies in the exercise of authorized powers, then the authorizing bodies should assume the responsibility for compensation;
• If the government body responsible for compensation no longer exists, then its succeeding body should assume the responsibility for compensation; if no such succeeding body exists, then the administrative body that eliminates the body responsible for compensation should assume that responsibility;
• If damage is awarded by an administrative reconsideration body, then the original body that causes the damage should be held responsible for compensation; however, if the reconsideration decision has aggravated the damage done, then the reconsideration body should assume responsibility for compensation for the aggravated part.

Claimants of administrative compensation should first file their claim with the administrative body responsible for compensation; they may also raise their claim while applying for administrative reconsideration or filing an administrative suit. They should not directly file a suit without first going through the administrative body responsible for compensation.

Criminal Compensation

Criminal compensation applies when the judicial authorities wrongly detain or arrest citizens or wrongly adjudicate cases.

1. Scope of Compensation

Articles 15 and 16 of the State Compensation Law specifies the scope of criminal compensation as follows:

• Wrongly detain persons without incriminating facts or without facts proving that the persons are prime suspects;
• Wrongly arrest persons without incriminating facts;
• Persons who are pronounced innocent in a judicial review but who have already served their sentence as ruled in the original trial;
• Extort a confession through torture or cause physical injuries or death to citizens through battery by judicial personnel or others at their instigation;
• Abuse weapons or police devices and have caused physical injuries or death to citizens;
• Abuse administrative measures such as sequestrating, detaining, freezing or recovering property;
• Persons who are pronounced innocent in a judicial review but who have already paid the fine and whose property has already been confiscated as ruled in the original trial.

Article 18 of the State Compensation Law also specifies that the state shall not assume the liability for criminal compensation under any of the following circumstances:

• Persons who have been detained or penalized for purposeful perjury or forgery of other incriminating evidence;
• Persons who, under Articles 14 and 15 of the Criminal Law, should not assume criminal liability but who have been detained;
• Persons who, under Article 11 of the Criminal Procedure Law, should not be criminally prosecuted but who have been detained;
• Acts committed by individuals unrelated to the exercise of their duty as personnel of the state investigative, procuratorial, judicial or jail authorities;
• Injuries caused by citizens themselves through self-injury or deliberate self-hurt;
• Other situations as provided for in the law.

2. Compensation Body

The State Compensation Law provides for the following ways for defining responsibility of compensation:

• If damage is done to citizens, legal persons or other organizations by government offices or their staff when exercising investigative, procuratorial, judicial or jail management duties, then the offices should assume the responsibility for compensation;
• If citizens are wrongly detained without incriminating facts or without facts proving that they are prime suspects, then the body that made the detention decision should assume responsibility for compensation;
• If citizens are wrongly arrested without incriminating facts, then the body that made the arrest decision should assume responsibility for compensation;
• For persons who are pronounced innocent in a re-trial, the original court that gave the ruling already in effect should bear the responsibility for compensation; for persons who are pronounced innocent in the second instance, the court that gave the first-instance ruling and the body that made the arrest decision should jointly bear responsibility for compensation.

Claimants of criminal compensation should first file their claim with the body responsible for compensation; they may also apply to higher authorities for administrative reconsideration within 30 days of expiry of the term if compensation is rejected after expiry of the term, or if they object to the amount of compensation.

A compensation committee composed of three to seven judges should be set up in a court above the intermediate level.

Compensation-paying bodies, reconsideration bodies or courts shall charge no fees on compensation claimants.

State compensation is paid in monetary form. Whenever possible, recovery or reinstatement of property should be implemented. State compensation is calculated in the following ways:

• For citizens whose personal freedom has been infringed, the amount of daily compensation is calculated on the basis of average daily wage for workers in the preceding year;
• For citizens whose life and health rights have been infringed, the amount of compensation should be calculated in the following ways:

a) For those who sustained physical injuries, the compensatory body should pay their medical fees and loss of income caused by absence from work. Daily compensation for the loss of income is calculated on the basis of the average daily wage for workers in the preceding year, with the maximum being five times the average annual wage for workers in the preceding year;

b) For those who lost partial or full working capabilities, the compensatory body should pay their medical fee and a disability compensation, the amount of which depends on the degree of the disability. The maximum for partial disability should be 10 times the average annual wage for workers in the preceding year;

c) For those who lost all their working capabilities, the maximum should be 20 times and living expenses should be paid for their dependents who are unable to work;

d) For those who died, the compensatory body should pay death compensation and a funeral fee, with the maximum being 20 times the annual wage for workers in the preceding year. In addition, it should also pay living expenses for dependents of the victims.

3. Compensation for damages done to the property of citizens, legal persons or other organizations should be paid in the following ways:

• Return of property in the case of imposition of fines, recovery or confiscation of property, or expropriation of property or collection of fees in violation of regulations;
• Remove the sequestration, detention or freezing action on the property if it is wrongly sequestrated, detained or frozen; if property is damaged or lost, restore it to original shape if possible; if not, compensate for the damage;
• If the property due to be returned is damaged, restore it to its original shape if possible; if not, compensate for the damage;
• If the property due to be returned is lost, compensate for the loss;
• If the property is already auctioned off, pay the claimant the proceeds from the auction;
• If a business owner is wrongly revoked of his license or ordered to suspend his business, compensate for his current expenses incurred during the suspension of business;
• If other damages are done to an individual's property, compensate for the direct losses arising thereof.

Compensation expenditures should be budgeted for by governments at all levels.

Article 32 of the State Compensation Law provides for the validity of state compensation: "Claimants should file their appeal for state compensation within two years beginning from the date when the acts of government bodies and their staff in exercising their duties are established as unlawful, not including the days of detention."

Article 33 of the same law specifies how foreign-related state compensation is calculated: "This law applies to foreign individuals, enterprises and organizations within the territory of the People's Republic of China. Where the home country of the foreign individual, enterprise or organization does not protect or limits the rights to state compensation of individuals, enterprises or organizations of the People's Republic of China in that country, the People's Republic of China will reciprocate that policy toward individuals, enterprises or organizations of that country." This provision reflects both China's respect for the rights of foreign individuals, enterprises and organizations and its sovereignty and dignity.

Articles 14 and 24 of the State Compensation Law provides for the right of recovery for the state in administrative and criminal compensation: "Compensatory bodies, after paying for the damages or losses, will recover, in part or in full, the amount of compensation from the individuals or authorized organizations or individuals that are responsible, whether purposefully or otherwise, for the damage or loss." This includes the following situations: 1) Situations as defined in Clauses 4 and 5 in Article 15 of this law; 2) Persons who are pronounced innocent in a re-trial in accordance with the judicial review procedures, but for whom the original ruling of fines or confiscation of property has already been carried out.