


































Economics, Law and Policy 
ISSN 2576-2060 (Print) ISSN 2576-2052 (Online) 

Vol. 8, No. 2, 2025 

www.scholink.org/ojs/index.php/elp 

 
 

272 

Original Paper 

Research on the Application of the “No Penalty for First 

Violation” System in the Field of Market Regulation 

Yaping Zhang
1
 & Yu Chen

1
 

1
 School of Marine Law and Humanities, Dalian Ocean University, Dalian, China  

 

Received: November 25, 2025  Accepted: December 7, 2025   Online Published: December 9, 2025 

doi:10.22158/elp.v8n2p272        URL: http://dx.doi.org/10.22158/elp.v8n2p272 

 

Abstract  

As an important measure to practice the concept of inclusive and prudent supervision in the field of 

market regulation, the “no penalty for first violation” system is of great significance for optimizing the 

business environment and improving law enforcement efficiency. However, the system still faces 

numerous challenges in its specific application, which restrict the full play of its effectiveness. By 

adopting normative analysis and case analysis methods, this paper sorts out the normative system for 

the application of the “no penalty for first violation” system in market regulation, analyzes relevant 

cases from China Judgments Online, and focuses on exploring how to establish a standardized path for 

the application of this system in the field. The research finds that the application of the “no penalty for 

first violation” system in market regulation has such problems as differentiated application standards, 

rigid application of the “no penalty for first violation” list, and the absence of a supervision 

mechanism for administrative discretion. In response to the above issues, targeted legal suggestions 

are put forward, including clarifying the applicable elements of the “no penalty for first violation” 

system, establishing an escape mechanism for the system, and constructing an administrative discretion 

supervision mechanism. It is hoped that this research can provide theoretical reference for promoting 

the standardized and precise application of the “no penalty for first violation” system in market 

regulation and realizing the unification of legal effects and social effects. 

Keywords 

No penalty for first violation, Market regulation, Application of law 

 

1. Introduction 

As China enters a new stage of high-quality development, optimizing the business environment and 

continuously advancing the transformation of government functions have become key links in 

comprehensively deepening reform. As an important part of the government governance system, 



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market regulation’s law enforcement concepts and methods are directly related to safeguarding market 

order and stimulating market vitality. Against this backdrop, the “rigid” law enforcement model of 

imposing mandatory penalties for all administrative violations has increasingly revealed its limitations: 

on the one hand, it dampens the enthusiasm of start-up enterprises and individual industrial and 

commercial households; on the other hand, it consumes a large amount of valuable administrative 

resources, making it difficult to fully meet the in-depth requirements of the “streamline administration, 

delegate powers, improve regulation, and optimize services” reform. To seek an organic balance 

between “management” and “service,” and between “stringency” and “temperature,” the “no penalty 

for first violation” system has emerged as an innovative flexible law enforcement method, quickly 

evolving from local practice into an important national-level system. 

“No penalty for first violation” refers to a system where administrative organs may, in accordance with 

the law, decide not to impose administrative penalties on violations that are a first offense, cause minor 

harmful consequences, and are promptly corrected. The core value of this system lies in integrating 

punishment with education: through non-mandatory means such as persuasion, education, and 

warnings, it encourages market entities to recognize and voluntarily rectify their mistakes, thereby 

achieving the unification of legal effects and social effects. However, this system, which embodies the 

principle of law enforcement moderation and humanistic care, is facing a series of urgent legal 

application issues in the process of transforming from a policy concept to specific law enforcement 

practice. For instance, how to clarify the identification standards for the applicable elements of “no 

penalty for first violation”, how to address the limitations of the “no penalty for first violation” 

list-based model, and how to effectively supervise administrative discretion. The existence of these 

problems has led grassroots law enforcement personnel to frequently encounter dilemmas in practice, 

such as “daring not to use, not knowing how to use, and failing to use it well”. It may even give rise to 

risks such as selective law enforcement and unfair law enforcement, which to a certain extent 

undermines the credibility and effectiveness of the system. 

A search and analysis using “no penalty for first violation” as the keyword in the CNKI database shows 

that academic circles have conducted many useful discussions on the “no penalty for first violation” 

system. Existing research mainly focuses on the following aspects: first, the elaboration on the policy 

background and value of the “no penalty for first violation” system. Wang Chunye and Zeng Xingting 

argue that the introduction of the “no penalty for first violation” system reflects the humanistic law 

enforcement concept, promotes the return of value rationality, and balances the macro social legal 

interests (Wang, C. Y., & Zeng, X. T., 2022, pp. 120-127). Jiang Guohua and Ding Anran further point 

out that the “no penalty for first violation” system embodies the organic unity among three pairs of 

logics: administrative education and administrative punishment, consequentialism and rule-basedism, 

as well as substantive rule of law and formal rule of law (Jiang, G. H., & Ding, A. R., 2021, pp. 

143-153). Second, the interpretation of the relevant provisions in the Administrative Penalty Law. Xie 

Hongxing takes the non-penalty provisions in the Administrative Penalty Law as the research object, 



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and explores the scenarios and approaches for the direct application of these non-penalty provisions in 

combination with the principle of legality of punishment and the doctrine of prosecutorial discretion 

(Xie, H. X., 2025, pp.15-29). Third, the optimization and improvement of the “no penalty for first 

violation” system or list in a specific field. This mainly focuses on the fields of taxation and ecological 

environment. In the field of taxation, Zhang Wansu proposes that the legislative expression of the tax 

“no penalty for first violation” system should be reconstructed from four aspects: legislative philosophy, 

the boundaries of applicable elements, the resolution of normative conflicts, and the improvement of 

supporting systems (Zhang, W. S., 2024, pp. 116-129). Zhu Qiuxiang and Chen Xinyi take the tax “no 

penalty for first violation” list as the research object, clarify the standards for the applicable conditions 

and the boundaries of the scope of application of the list, so as to ensure the effective implementation 

of the list (Zhu, Q. X., & Chen, X. Y., 2022, pp. 109-121). In the field of ecological environment, Peng 

Zhongyao proposes constructing a hierarchical administrative penalty discretion system from three 

perspectives: circumstances, effects, and procedures (Peng, Z. Y., 2024, pp. 65-73). These 

achievements have laid a solid foundation for this paper. However, existing research also has 

shortcomings: discussions on operational aspects such as law enforcement procedures and supervision 

mechanisms are relatively scattered; comprehensive studies that conduct a linked analysis of 

substantive dilemmas, procedural deficiencies, and discretion control need to be strengthened. 

Therefore, this paper, titled “Research on the application of the ‘no penalty for first violation’ system in 

the field of market regulation,” explores how to establish a standardized path for the application of this 

system in market regulation, which holds significant theoretical value and practical significance. At the 

theoretical level, this paper aims to provide theoretical support for constructing a modern market 

regulatory system. Traditional administrative penalty theory focuses on deterrence and punishment, 

while the “no penalty for first violation” system highlights the function of education and the concept of 

restorative law enforcement. Exploring its institutional logic and normative basis helps enrich and 

develop administrative law theory, and provides theoretical support for building a more diverse and 

three-dimensional administrative law enforcement toolbox. At the practical level, this paper strives to 

offer feasible paths to address the current dilemmas in law enforcement. By adopting normative 

analysis and case analysis methods, it systematically sorts out relevant laws, regulations and typical 

cases, summarizes the substantive and procedural obstacles in the operation of the “no penalty for first 

violation” system, and puts forward targeted legal suggestions. It seeks to provide clear operational 

guidelines for frontline market regulation law enforcement personnel, improve the standardization and 

refinement of law enforcement, effectively protect the legitimate rights and interests of market entities, 

and thereby promote the integration of an efficient market and a capable government. 

 

 

 

 



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2. The Normative System for the Application of the “No Penalty for First Violation” System in 

the Field of Market Regulation 

2.1 Provisions of the Administrative Penalty Law 

Paragraph 1 of Article 33 of the Administrative Penalty Law revised in 2021 added provisions on the 

“no penalty for first violation” system: “Where a person commits a violation for the first time, the 

harmful consequences are minor, and the violation is promptly corrected, no administrative penalty 

may be imposed.” Literally, “no penalty for first violation” refers to the notion that a person who 

commits an illegal act for the first time will not be given an administrative penalty. However, this is a 

conceptual interpretation divorced from legal norms, and its actual meaning is not as such. Paragraph 1 

of Article 33 of the Administrative Penalty Law stipulates: “Where a person commits a violation for the 

first time, the harmful consequences are minor, and the violation is promptly corrected, no 

administrative penalty may be imposed.” This clarifies three applicable elements of “no penalty for 

first violation” in the form of legal provisions, namely: “first violation”, “minor harmful consequences”, 

and “prompt correction”. The conjunctions “and” and “and” are used in the provision to connect the 

three applicable elements, indicating that they are in a parallel relationship—failure to meet any one of 

these elements means the statutory requirements for “no penalty for first violation” cannot be satisfied. 

In addition, even if all three elements are met, the legal consequence is only that “no administrative 

penalty may be imposed”, which endows administrative organs with a certain degree of discretionary 

power. 

Regarding the three applicable elements of the “no penalty for first violation” system: First, the “first 

violation” element. There are three understandings regarding the definition of “first”: 1) From the 

perspective of the actual occurrence time of the illegal act, “first” refers to the administrative 

counterpart actually committing an illegal act for the first time; 2) From the perspective of the time of 

administrative subject’s intervention, “first” means the administrative counterpart is detected by the 

administrative organ to have committed an illegal act for the first time, but in fact, the counterpart has 

committed such an act before; 3) Meeting both of the above two dimensions—i.e., the administrative 

counterpart is discovered by the administrative organ to have committed an illegal act for the first time, 

and this act is also their first in fact. This is referred to as “dual first-time”. Second, the “minor harmful 

consequences” element. “Minor harmful consequences” consists of two parts: “harmful consequences” 

and “minor”. Firstly, “harmful consequences” refers to the damage caused by the administrative illegal 

act to the interests protected by law. The scope of harmful consequences shall be strictly defined based 

on legally protected interests—only when an interest is protected by law can “harmful consequences” 

in the sense of the Administrative Penalty Law arise (Zhang, J. S., 2011, pp. 10-24). Secondly, “minor”, 

as an adverb, is used to limit the degree of “harmful consequences”. From the perspective of legal and 

regulatory norms, the Administrative Penalty Law does not provide specific, clear and objective criteria 

for determining the “minor” degree of harmful consequences. Third, the “prompt correction” element. 

The understanding of “prompt correction” usually includes three scenarios: 1) The administrative 



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counterpart takes the initiative to correct the illegal act before the administrative organ discovers clues 

of the violation; 2) The counterpart voluntarily corrects the illegal act after the administrative organ 

discovers clues but before filing a case; 3) The counterpart corrects the act on the spot or within the 

time limit ordered by the administrative organ after the organ files the case and issues a correction 

instruction. 

2.2 The Provisions on the “No Penalty for First Violation” List Issued By the State Administration for 

Market Regulation 

All administrative authorities have formulated corresponding item lists and discretionary benchmarks 

based on the actual circumstances of their respective fields, so as to effectively promote the accurate 

textual implementation and refinement of the “no penalty for first violation” system in various specific 

areas. On January 7, 2025, the State Administration for Market Regulation issued the List of First 

Violations in Market Regulation Subject to No Penalty (I) and the List of Minor Administrative 

Violations in Market Regulation Subject to No Penalty (I). Among them, the List of First-Time 

Violations Subject to No Penalty specifies eight types of administrative violations in the field of food 

safety, along with their corresponding penalty bases and exemption conditions. Although the issuance 

of this list has met the urgent needs of grass-roots market supervision personnel, provided clear 

guidance for grass-roots law enforcement, and effectively restricted the scope of discretionary power, 

its coverage is relatively limited. The eight types of violations listed mainly focus on food operation 

licensing, labeling and marking, food production and other aspects. Other common food safety 

violations with minor harms, such as improper use of food additives and non-compliant food storage 

conditions, have not been clearly included. Furthermore, other market supervision areas besides food 

safety, such as advertising, product quality and price supervision, are not covered. This may lead to the 

persistent existence of problems like “disparate penalties for similar cases” and “excessive penalties for 

minor violations” in these other fields. 

2.3 The Provisions on the “No Penalty for First Violation” Lists of Various Provinces and Cities 

After searching the “no penalty for first violation” lists in the field of market regulation across various 

provinces and cities through Pkulaw, it was found that the provisions on “no penalty for first violation” 

vary from region to region. In terms of the nature of the lists, most of them are normative documents 

and local work documents. For example, the List of Administrative Violations Subject to No Penalty or 

Mitigated Penalty in Anhui Province’s Market Regulation Field, jointly issued by the Anhui Provincial 

Administration for Market Regulation and the Anhui Provincial Department of Justice, is a local 

normative document; the List of First-Time Violations Subject to No Penalty and Minor Violations 

Subject to Exemption from Penalty in Wuhan’s Market Regulation Field, issued by the Wuhan 

Administration for Market Regulation, is classified as a local work document. In terms of the fields and 

items covered by the lists, each province and prefecture-level city has its own focus. For instance, the 

List of First Violations Subject to No Penalty and Minor Violations Subject to Exemption from Penalty 

in Wuhan’s Market Regulation Field (in Effect) includes 106 items across nine fields, such as 



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advertising supervision, food safety supervision, and supervision of pharmaceuticals, medical devices, 

and cosmetics; the List of First Minor Administrative Violations Subject to Exemption from Penalty 

upon Commitment in Dalian’s Market Regulation Field covers 77 items in 13 fields, including 

registration and registration, price supervision, online transaction supervision, and consumer rights 

protection. Regarding the total number of items in the lists, some provinces and cities have formulated 

very detailed provisions with a large number of applicable items; others involve relatively few types of 

items. For example, the Inclusive Exemption from Penalty List (Trial Implementation) in Ya’an’s 

Market Regulation Field only includes 21 items applicable to “no penalty for first violation”. It can be 

seen that due to differences in their respective socioeconomic development levels, provinces and 

prefecture-level cities hold varying attitudes towards “no penalty for first violation”. 

 

3. The Litigation Status of the “No Penalty for First Violation” System in the Field of Market 

Regulation 

After analyzing the “no penalty for first violation” cases retrieved from China Judgments Online, it is 

found that the system has demonstrated several distinct characteristics in the practical application of 

administrative law, while also exposing problems that urgently need to be addressed. From the 

perspective of the focal points of disputes in the judicial documents, the main controversial issues 

include: 

First, whether the application of legal basis is correct, and whether the alleged administrative illegal act 

meets the applicable elements of “no penalty for first violation” as stipulated in Article 33 of the 

Administrative Penalty Law. In the case of “Xiapu County Administration for Market Regulation v. 

Han Mouxing Vegetable Stall in Songgang, Xiapu County”, the Xiapu County Administration for 

Market Regulation found through sampling inspection that the mung bean sprouts sold by the vegetable 

stall contained excessive additives, and therefore imposed a fine of 50,000 yuan on it in accordance 

with Article 124 of the Food Safety Law. After trial, the court held that although the vegetable stall 

failed to strictly fulfill the obligation of incoming inspection, it could clarify the procurement process. 

Combined with the trading habits of the farmers’ market, it could be determined that it had no 

subjective intent to violate the law. Objectively, the illegal act caused little disruption to the food safety 

market and did not result in actual adverse consequences. Therefore, the court ruled that the illegal act 

of the vegetable stall met the provisions of “no penalty for first violation” and could be exempted from 

punishment. However, the court regarded “no subjective intent” as a constituent element of “no penalty 

for first violation”. In fact, subjective fault is stipulated in Paragraph 2 of Article 33 of the 

Administrative Penalty Law, which is distinguishable from “no penalty for first violation” in the 

legislative system. It can be seen that the positioning of the element of “no subjective intent” is not 

clear. 

 

 



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Second, whether an alleged administrative illegal act not included in the list issued by the local market 

supervision authority may be exempted from punishment? In the case of “Anmin Grain, Oil and 

Condiment Store in Weihai Economic and Technological Development Zone v. Administrative 

Committee of Weihai Economic and Technological Development Zone and People’s Government of 

Shandong Province”, the plaintiff placed edible baking soda and five-spice beef sauce that had 

exceeded their shelf life in the goods consignment area, which was identified as an illegal act of selling 

food past its expiration date. The plaintiff claimed that its act should be applicable to the “no penalty 

for first violation” rule. However, the defendant argued that the act was not covered by the 2021 List of 

Items for Exemption from Administrative Penalties for Minor Illegal Acts and Mitigated 

Administrative Penalties for General Illegal Acts in Shandong Province, and thus the rule should not 

apply. After an in-depth review, the court pointed out that the application of the “no penalty for first 

violation” rule should not be determined merely based on the single factor of being a first-time 

violation. Instead, it is necessary to comprehensively and synthetically consider multiple factors, such 

as the nature of the act, the severity of the illegal circumstances, the degree of the party’s subjective 

fault, and the extent of social harm. It can be seen that during the law enforcement process, the 

defendant applied the list in a rigid and mechanical manner, failing to make flexible and comprehensive 

judgments in full combination with the actual situation. 

Third, whether the procedure of the administrative penalty is legitimate and proper. In the case of “A 

Certain Medical Technology Company in Gansu v. Market Supervision Administration of Chengguan 

District, Lanzhou City and People’s Government of Chengguan District, Lanzhou City”, the medical 

technology company filed an administrative lawsuit with the court because it refused to accept the 

penalty decision made by the Market Supervision Administration of Chengguan District and the 

administrative reconsideration decision issued by the People’s Government of Chengguan District. 

After hearing the case, the court found that the Market Supervision Administration of Chengguan 

District failed to submit evidence to prove that it had ordered the technology company to rectify its 

illegal act. This act constituted a procedural illegality, so the court revoked the administrative penalty 

in accordance with the law. This case exposes the problem of insufficient supervision over 

administrative discretion. 

 

4. Problems Existing in the Application of the “No Penalty for First Violation” System in the 

Field of Market Regulation 

4.1 The Application Standards of the “No Penalty for First Violation” System in the Field of Market 

Regulation Show Differentiation 

4.1.1 No Clear Temporal or Geographical Standards for “First Violation” 

“First violation” is a prerequisite for the application of the “no penalty for first violation” system, and 

there are significant differences in the provisions on “first violation” among various regions. 



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First, the provisions on the time cycle for “first violation”. Even within the same field of market 

regulation, the Rules for the Application of Exemption from Administrative Penalties and 

Administrative Compulsory Measures in Sichuan Province’s Market Regulation Field stipulates that 

“first violation” refers to the first violation of laws, regulations and rules in the field of market 

supervision within three years; however, Zhanjiang has set a different retrospective period for “first 

violation”. It stipulates that for general minor illegal acts, the retrospective period for “first violation” is 

limited to two years; for emerging business formats, multiple determinations as “first violation” are 

allowed under certain conditions. 

Second, the determination of the geographical scope for “first violation”. If a person has been 

exempted from punishment for a certain illegal act in one place and then travels to another place to 

commit the same type of illegal act again, whether the “no penalty for first violation” system can still 

be applied at this time. If it can be applied, given the relative independence of legislation and rules in 

different administrative regions, the person may, by virtue of differences in regional rules, obtain the 

treatment of exemption from administrative punishment multiple times in different regions. This will 

not only condone some people’s continuous commission of illegal acts, but also may lead to the abuse 

of the system, undermining the authority and fairness of market supervision. If the application of “no 

penalty for first violation” is strictly restricted, it is necessary to break through the boundaries of 

administrative regions, incorporate the person’s previous enjoyment of “no penalty for first violation” 

in other regions into the current law enforcement considerations, and establish a cross-regional 

information sharing mechanism. This will prevent them from evading punishment by switching regions, 

thereby ensuring that the original intention of the system design is realized. 

4.1.2 Lack of Objective Criteria for Judging Harmful Consequences 

Minor harmful consequences consists of two parts: harmful consequences and minor. In administrative 

law, consequence refers to the damage caused by illegal acts to the interests protected by law. 

Determining the degree of harmful consequences shall be based on the extent of damage to the interests 

targeted by the act of violating administrative obligations. However, in practice, the legal literacy of 

grass-roots law enforcement personnel varies, making it difficult for them to fully understand the legal 

interests protected by the law. The identification of harmful consequences is highly subjective; some 

law enforcement personnel even directly ignore this requirement and apply no penalty for first violation 

solely based on first violation and timely correction. Therefore, the identification of harmful 

consequences should be judged as much as possible based on objective criteria. 

4.1.3 Unclear Positioning of the “Non-Subjective Intent” Element 

In the process of administrative penalty, there has always been the question of whether subjective intent 

can be a constituent element of administrative penalty. In the practice of “no penalty for first violation”, 

there is also the issue of whether “non-subjective intent” can be a constituent element for exemption 

from administrative penalty. In the case of “Exemption from Administrative Penalty for a Catering 

Store in Jingdezhen High-tech Zone Engaging in Catering Business Without Obtaining an Operating 



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License”, law enforcement officers found during daily inspections that the catering store was operating 

without a valid operating license. After being educated by the law enforcement officers, the catering 

store promptly corrected its illegal act. Ultimately, the market supervision authority held that the 

catering store had committed a first violation, caused no serious consequences, and had not 

intentionally failed to apply for the operating license. Therefore, it met the conditions for “no penalty 

for first violation” and decided to exempt it from administrative penalty. In another case, “Exemption 

from Administrative Penalty for a Food Company in Xinyu City for Violating the Food Safety Law”, 

the market supervision authority conducted sampling inspections on the company. After receiving the 

unqualified food inspection results, it filed a case for investigation. During the investigation, the 

company actively cooperated, truthfully stated the illegal facts, and took the initiative to recall the 

illegal products, thereby mitigating the harmful consequences. The market supervision authority held 

that the party had committed a first violation, with minor harmful consequences and timely correction, 

and thus decided to exempt it from administrative penalty. 

4.2 Rigid Application of the “No Penalty for First Violation” List 

Although administrative discretion benchmarks have a positive effect in restricting the abuse of 

administrative discretion, they have an inherent rigidity problem (Wang, Q. B., 2023, pp. 18-33). It 

may occur that when law enforcement officers of market supervision authorities face an administrative 

illegal act, they compare it with the local market supervision exemption from administrative penalty list 

and find that the illegal act is not included in the list, thus excluding the application of the no penalty 

for first violation list. For example, in the case of Hainan Yibaolu Beverage Co., Ltd. suspected of 

using uninspected forklifts, Yibaolu Company was fined by the market supervision authority for failing 

to complete registration procedures for its forklifts. The company argued that it had actively cooperated 

with the investigation, rectified the violation promptly, and the use of the unqualified forklifts had not 

caused any adverse consequences, so it met the conditions for no penalty for first violation. However, 

Haikou Municipal Administration for Market Regulation refused to apply the system on the grounds 

that the party’s illegal act was not included in the List of First-time Minor Illegal Acts of Market 

Entities Exempted from Administrative Penalty in Hainan Province’s Market Supervision Field. 

Therefore, although on the basis of only principled provisions for no penalty for first violation, several 

exemption from administrative penalty lists have been formulated to make the original general and 

vague provisions operable, the risk of rigidity still exists. 

4.3 Lack of Supervision Mechanism for Administrative Discretion 

At present, the administrative supervision mechanism of the “no penalty for first violation” system in 

the field of market supervision has significant deficiencies, making it difficult to form effective 

constraints on administrative discretion. At the internal supervision level, the hierarchical supervision 

by higher authorities often becomes a mere formality, lacking in-depth exploration of the substantive 

rationality of discretionary decisions; meanwhile, the absence of a normalized unannounced inspection 

mechanism leaves grass-roots law enforcement without continuous and effective external constraints 



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when applying “no penalty for first violation”. In terms of external supervision, public supervision is 

restricted. Publicly available documents often use obscure professional terminology and are released 

through a single channel, resulting in a lack of necessary information basis for social supervision. The 

ineffective reporting and feedback mechanism has further dampened the public’s willingness to 

supervise. This dual weakening of internal and external supervision has led to a lack of rigid constraints 

on the exercise of discretionary power. It not only encourages unfair phenomena such as selective law 

enforcement and inconsistent judgments in similar cases, but also undermines the credibility and 

authority of administrative law enforcement. 

 

5. Legal Suggestions on the Application of the “No Penalty for First Violation” System in the 

Field of Market Regulation 

5.1 Clarify the Applicable Elements of the “No Penalty for First Violation” System in the Field of 

Market Regulation 

5.1.1 Clarify the Temporal and Geographical Standards for “First Violation” 

There are three understandings of “first violation”: factual first violation, first violation first discovered 

by the supervisory authority, and “dual first violation” which combines the first two understandings. In 

conjunction with the statute of limitations for prosecution stipulated in Article 36 of the Administrative 

Penalty Law, “first violation” shall refer to the first illegal act committed by a violator and discovered 

by the market supervision authority within a certain period. In terms of the time cycle, a model of 

“taking a fixed cycle as the mainstay and specific circumstances as exceptions” can be adopted. Firstly, 

clarify the valid time scope for “first violation”: set a unified review cycle of retroactively two years 

from the date when the party completes rectification. Only those with no records of the same type of 

violations in the recent two years shall be identified as “first violation”. This standard is consistent with 

the statute of limitations for prosecuting some illegal acts in the Administrative Penalty Law, and the 

time limit is appropriate—it can not only give first-time offenders a chance to reform, but also maintain 

deterrence against repeat offenders. Secondly, introduce a credit repair mechanism as an exception. For 

those who have illegal records but have fulfilled the penalty, corrected the act, and successfully 

repaired their credit, the date of completion of credit repair shall be taken as a new starting point to 

restart the review of “first violation” qualification. In terms of the geographical scope, it should be 

supported by a national unified database, and promote the unification within provinces and the 

coordinated development of regional provinces and cities in a hierarchical and gradual manner. 

Ultimately, the standard for “first violation” shall be “no records of the same type of illegal acts 

nationwide”, which completely eliminates the practice of evading legal liability by taking advantage of 

geographical information asymmetry. 

5.1.2 Refine the Objective Criteria for Judging Harmful Consequences 

The core focus of the criteria for determining minor harmful consequences lies in defining “minor”. 

However, the term “minor” is highly subjective and requires clearer, more accurate objective judgment 



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standards. Based on the provisions of local lists and specific practices, the consideration of “minor 

harmful consequences” includes three aspects: the amount of illegal gains, the duration of the illegal act, 

and procedural violations. Firstly, regarding the amount of illegal gains: due to inconsistent economic 

development levels across regions, the threshold for the amount of illegal gains can be set according to 

local actual conditions. When establishing monetary limits, local authorities may define a specific 

range by setting minimum and maximum thresholds for illegal gains. Secondly, in terms of the duration 

of the illegal act: the longer the illegal act persists, the greater the actor’s subjective malice and the 

resulting social harm. Provisions on the duration of illegal acts of the same nature should be unified, 

with gradients such as within one month, within six months, and so on. Finally, concerning procedural 

violations: administrative authorities may classify illegal acts committed due to procedural flaws by the 

violating entity as “minor”. This is particularly applicable in areas involving administrative licensing, 

where the counterpart is required to submit an application to the relevant administrative authority and 

obtain approval before engaging in the act. If the counterpart commits such an act for the first time 

without obtaining the required license due to procedural flaws and no harmful consequences are caused, 

the act may be deemed “minor”. 

5.1.3 Take “Non-Subjective Intent” As a Discretionary Factor 

Non-subjective intent means that the violating entity has no subjective intent to violate the law when 

committing the illegal act. Non-subjective intent should not be a constituent element of “no penalty for 

first violation”, but it can be taken as a factor for administrative authorities to consider when exercising 

discretion. The reasons are as follows: Firstly, the legal provisions of the Administrative Penalty Law 

on the “no penalty for first violation” system do not explicitly stipulate the condition of non-subjective 

intent; instead, they separately list a clause for “no penalty without subjective fault” to exempt from 

administrative penalty. Secondly, if non-subjective intent is regarded as a constituent element of “no 

penalty for first violation”, it would require the violating entity to have no subjective intent when 

committing the illegal act. On the basis of satisfying “first violation”, “minor harmful consequences”, 

and “timely correction”, the absence of subjective intent would also be required to qualify for 

exemption from penalty. This would essentially narrow the scope of application of “no penalty for first 

violation”, which is not conducive to implementing the principle of combining punishment with 

education. Finally, according to existing provisions, if non-subjective intent were a constituent element, 

the violating entity would bear the burden of proof. This would actually impose a certain burden on the 

counterpart and be inconsistent with the original philosophy of the “no penalty for first violation” 

system. Therefore, the positioning of non-subjective intent should be as a discretionary circumstance 

for “no penalty for first violation”. That is to say, even if the violating entity commits the illegal act 

with subjective intent, as long as the above three elements are met, it may be exempt from 

administrative penalty. Whether there is subjective intent is merely a factor for administrative 

authorities to consider when exercising administrative discretion. 

 



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5.2 Set up An Escape Mechanism for “No Penalty/for First Violation” 

The original purpose of formulating the list for “no penalty for first violation” is to prevent 

administrative organs from abusing their discretionary power. However, the list itself has an inherent 

flaw of limitation, which is likely to lead to rigid discretion by law enforcement officers and improper 

infringement upon the rights of administrative counterparts during its practical implementation. 

Therefore, in the implementation of this list, it is necessary to reasonably formulate deviation clauses 

and corresponding procedures, leaving sufficient discretionary space for law enforcement officers to 

handle cases flexibly when necessary. Deviation here refers to the act where, when confronted with 

special circumstances, administrative law enforcement organs, after considering the purposes of the 

rule of administrative law and legislative intent, determine that the existing administrative discretion 

standards are inappropriate for a specific case and thus exercise the power to deviate from such 

standards in accordance with the law (Zhou, Y. Y., 2009, pp. 12-16). 

Firstly, regarding the initiation procedure for deviation acts, administrative organs shall make such acts 

in accordance with the principle of “general compliance with discretionary standards and deviation 

only in individual cases”. In specific cases, they may conduct assessments based on the principle of 

proportionality, the principle of proportionality between punishment and offense, and the principle of 

equality. Deviation clauses may only be considered for application when the discretionary result 

determined in accordance with the discretionary standards is obviously inappropriate. Excessive abuse 

of deviation clauses will render the discretionary standards ineffective, leading administrative organs 

back to a state of disorder in determining the application of “no penalty for first violation”. Secondly, if 

discretionary standards are not applied in a specific case, administrative organs shall fully explain the 

reasons based on the specific circumstances of the case, taking into account relevant factors such as the 

regional economic and social development level and the subjective and objective conditions of the 

party concerned. Such a decision shall be made through collective discussion by the responsible 

persons of the administrative organ to ensure that the deviation act is within a reasonable scope. 

5.3 Construct an Administrative Discretion Supervision Mechanism 

Faced with the current predicament of the absence of a supervision mechanism for administrative 

discretion, it is imperative to construct a systematic and rigid restrictive system at the legal level. 

Firstly, the hierarchical supervision mechanism should be improved through legislation. Detailed 

implementation rules of the Administrative Penalty Law or departmental regulations shall explicitly 

require the establishment of a supervision model of “provincial-level filing and ministerial-level 

random inspection”. It shall be stipulated that cases of “no penalty for first violation” are subject to 

mandatory filing and regular special inspections, and an inter-regional mutual inspection mechanism 

shall be introduced to break down local protection barriers and ensure the independence and 

effectiveness of supervision. Secondly, the legal safeguards for external supervision must be 

strengthened. Legislation shall mandate the full disclosure of decisions on exemption from 

administrative penalty that do not involve state secrets or trade secrets, and require the preparation of 



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public versions in plain language to protect the public's right to know. Meanwhile, the legal authority of 

social supervisors shall be established by law, endowing them with procedural rights such as accessing 

case files and participating in acceptance inspections, and a legal protection and reward mechanism for 

whistleblowers shall be established. Only through such a legal system design combining internal and 

external supervision can administrative discretion be truly “locked in the cage of systems”, ensuring 

that the original legislative intent of “no penalty for first violation” is not rendered nugatory in law 

enforcement practice. 

 

6. Conclusion 

The “no penalty for first violation” system represents a profound transformation in the law enforcement 

philosophy of market regulation, and serves as a valuable practice in building a law-based government 

and a service-oriented government. Far from condoning illegal acts, it embodies a more refined and 

humanized allocation of administrative penalty resources within the framework of the rule of law. 

Currently, the various challenges encountered in the application of this system are an inevitable stage in 

the development of any emerging institution. Moving forward, we should continue to clarify its 

boundaries, optimize its procedures, and strengthen its supervision through sustained institutional 

innovation and strict legal regulation. By doing so, the “no penalty for first violation” system can strike 

an optimal balance between stimulating market vitality and safeguarding market order, ultimately 

becoming a solid legal guarantee for promoting the high-quality development of China’s market 

economy. 

 

Fund Project  

The 2020 Liaoning Provincial Social Science Planning Fund Project. Research on Forward-looking 

Policy Tools for Social Risk Early Warning of Artificial Intelligence Technology (Key Project, 

L20AGL016), Project Leader Chen Yu. 

 

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Wang, Q. B. (2023). Legal attribute and effectiveness analysis of administrative discretion benchmarks. 

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