In Chinese civil law, good faith means that all parties in all transactions may only pursue their self-interest to the extent it does not harm others or society. Despite its centrality to jurisprudence, Chinese law does not specifically define good faith; rather, the notion of good faith is different from what the words imply as its true meaning is derived from Chinese cultural practices.

Jurists characterize good faith as a fundamental business ethics principle. Socialist values demand that all those who invest labor in a market economy are entitled to a living wage. In practice, the way income accrues in the market is principally through investing money for profit, offering skills and knowledge for hire, or exchanging labor for wages. To this extent, good faith means obtaining such income in a legitimate, legal manner.

China’s law prohibits profiting from actions that harm people or society as a whole. Its goal is to balance the interests of individuals and society and ensure that market transactions are ethical. Unlike common law systems, good faith is undefined in China’s regulation-based civil law system, making it a highly ambiguous concept and the most expansive of the general principles of Chinese civil law.

As a general provision, it exists to enable flexibility to the courts when ruling on novel fact patterns in a way that achieves fairness. The principle of good faith in Chinese law has its origins in the Roman Law principle of bona fides. However, this legal history should not imply that China lacked any concept of good faith prior to adopting the Roman principle. China has its own native parallel concept of good faith, which is used in its law and has expansive application.