The present study examines sociolinguistic features of a particular speech act, paying compliments, by comparing and contrasting native Chinese and native American speakers' performances. By focusing on a relatively understudied speaker group such as the Chinese, typically regarded as having rules of speaking and social norms very different from those of Westerners, this paper aims at illuminating the fact that, in cross-cultural communication, foreign language speakers have to pay close attention to sociolinguistic rules of the target language in addition to structure and discourse rules to meet the needs of linguistic accuracy and fluency. This is due to the fact that such rules play an indispensable role in appropriating the proper use of linguistic forms. The data for this study were collected using ethnographic observation pioneered in this field by Wolfson and Manes (1980). The analysis will first explore both the features of distribution of paying compliments, and the functions they may serve in spoken exchanges for native Chinese and American English speakers. To present a fuller picture of the socio-cultural features this speech act may represent in Chinese and American societies, the analysis will further focus on the issues of topics, the addresser-addressee relationship, and culture-specificity versus universality. (Contains 5 tables and 5 footnotes.)