This article examines foreign bribery in China since the early 2000s and the State’s legal and penal changes in response to this increasingly common form of transnational corruption. It argues that over the last fifteen years, Chinese authorities have shifted national anti-bribery policies from one of de facto corporate impunity to de jure zero tolerance. Multinational corporations engaging in foreign bribery in China today are no longer vulnerable only to the risk of investigation, prosecution, and punishment by foreign jurisdictions. Rather, foreign corporations are now faced with much tougher domestic law enforcement, which forms part of the State’s wider crackdown on corruption in China. However, as our case studies reveal, while the impact of zero tolerance strategies in curbing corporate offending is debatable, applying strategies of ‘harsh justice’ may ultimately be counterproductive to social stability and crime control. Although draconian, zero-tolerance strategies may appeal to politics of punitive populism, the authors contend that alternative strategies based on diversionary justice, such as deferred prosecution agreements and/or negotiated settlements, can more effectively realize the aims of prevention, restitution, rehabilitation, and reform. Drawing valuable lessons from the US and UK experiences, China has the potential to devise its own reconciliation scheme, tailored to local concerns and culture, and balancing legal accountability, cost-efficiency and social stability, especially in relation to the limiting potential adverse economic harms flowing from prosecuting multinational corporations for foreign bribery in China. Balancing the ‘payoffs’ and ‘pitfalls’ of negotiated justice, this article concludes that trialing diversionary measures is likely to appeal to affected stakeholders, including regulatory agencies, law enforcement and judicial authorities, corporate and business sectors, and the wider community, which are seeking to end to cultures of impunity for corporate corruption.