China on Wednesday slapped one of the country's best-known comedy companies with a 14.7 million yuan (RM9.5 million) penalty, accusing it of "harming society" after a military joke made by one of its comedians drew strong public criticism.

The Beijing arm of China's Ministry of Culture and Tourism Bureau said it would fine Shanghai Xiaoguo Culture Media Co 13.35 million yuan and confiscate 1.35 million yuan in "illegal gains" from the firm.

It said this was after finding that a recent show by Li Haoshi, who performs under the name House, had breached rules.

The incident has strongly divided the Chinese public over what sort of jokes are inappropriate as performances such as stand-up comedy become increasingly popular.

It also highlighted the limits of appropriate content in China where authorities say it must promote core socialist values.

Li went viral on Chinese social media earlier this week after an audience member posted online a description of a joke he made at a live stand-up set in Beijing on May 13, describing it as demeaning to China's People's Liberation Army (PLA).

In the joke, Li recounted seeing two stray dogs he adopted chase a squirrel and said it reminded him of the phrase "have a good work style, be able to fight and win battles", a slogan Chinese President Xi Jinping used in 2013 to praise the PLA's work ethic.

"We will never allow any company or individual to use the Chinese capital as a stage to wantonly slander the glorious image of the PLA," the cultural bureau said, adding that Xiaoguo Culture would be barred from staging any future shows in Beijing.

In response to the fine, Xiaoguo Culture blamed the incident on "major loopholes in management" and said it had terminated Li's contract.

Reuters could not immediately reach Li for comment and Weibo appears to have banned him from posting to his account there.

Founded in Shanghai in 2015, Xiaoguo Culture's popularity has grown in sync with China's embrace of stand-up comedy and has been known for raising the profile of hundreds of local comedians.

The firm and its artists have fallen foul of authorities before. In July 2021, the company was fined 200,000 yuan (RM130,000) for publishing advertisements that featured a comedian endorsing a lingerie brand with comments said to objectify women.

- Reuters