China Reviews Landmark Financial Law and Procurement Reforms

In a significant legislative session on June 23, 2026, China’s top legislature — the Standing Committee of the 14th National People’s Congress (NPC) — received two major legislative proposals for their first reading: the Draft Financial Law of the People’s Republic of China and the Revised Draft of the Government Procurement Law. According to Xinhua News Agency, these submissions represent landmark steps in China’s ongoing efforts to strengthen financial regulation and improve government procurement procedures.

A Unified Financial Legal Framework

The Financial Law draft is positioned as the foundational “1” in what Chinese authorities describe as a “1+N+X” financial legal system. As reported by China News Service, the law serves as the overarching, comprehensive, and guiding legislation for China’s financial sector, with sector-specific laws (banking, insurance, securities) forming the “N” and other financial regulations forming the “X.”

Xinhua quoted officials stating that the Financial Law is “the foundational, comprehensive, and overarching law in China’s financial sector, positioned as the ‘1’ in the financial legal system, playing a guiding, leading, and standardizing role.” All “N” and “X” components must align with the basic provisions established by the “1,” ensuring a scientifically complete and unified financial legal system.

The draft contains 11 chapters and 95 articles, covering central bank system modernization, financial institution regulation, financial products and services, financial market systems, comprehensive financial supervision, risk disposal mechanisms, and legal responsibilities.

Strong Regulation and Risk Prevention

The Financial Law draft adheres to the themes of “strong regulation, risk prevention, and promoting high-quality development,” according to Xinhua. It focuses on coordinating development and security while addressing legal challenges constraining high-quality financial development.

The draft was first released for public consultation on March 20, 2026, by five government departments — the Ministry of Justice, People’s Bank of China, National Financial Regulatory Administration, China Securities Regulatory Commission, and State Administration of Foreign Exchange — with the public comment period closing on April 19, 2026.

Government Procurement Law Overhaul

Alongside the Financial Law, the revised draft of the Government Procurement Law was also submitted for first reading. As Xinhua reported, the revision contains 10 chapters and 104 articles and aims to adjust and optimize the legal scope, strengthen policy functions, enhance whole-process management, promote standardized and efficient trading rules, improve fair competition mechanisms, and strengthen power supervision and anti-corruption measures.

China News Service reported that the revision “adheres to Party leadership, problem-oriented approach, unity of rights and responsibilities, and steady progress, systematically improving government procurement systems and mechanisms to provide legal guarantees for unifying basic market institutional rules and building a national unified market.”

From Rule Patchwork to Unified Legislation

The simultaneous submission of these two legislative proposals signals an acceleration of China’s legislative agenda in economic and financial governance. The Financial Law, in particular, represents a paradigm shift from a fragmented “rule patchwork” approach to top-level unified legislation.

Previously, China’s financial regulatory system operated under a sectoral regulation model. However, with increasing mixed operations in the financial sector, shadow banking expansion, and faster cross-market risk transmission, the existing framework revealed fragmentation and high coordination costs.

Financial analysts on Xueqiu have noted that the law represents “an upgrade in financial governance logic, a front-loading of the risk prevention system, and alignment with international rules.” The analysis suggests the law attempts to find a new balance between risk prevention and development promotion while providing clearer boundaries for future financial innovation and regulation.

Implications and Next Steps

The submission for first reading marks the formal beginning of the legislative review process. The Financial Law will undergo multiple rounds of review and revision before final enactment, following China’s typical legislative procedure of two to three readings by the NPC Standing Committee.

Once enacted, the Financial Law will provide a unified legal foundation for China’s financial regulatory framework, reducing regulatory arbitrage and fragmentation. Financial institutions across banking, securities, and insurance sectors will need to align their operations with the new legal framework.

The Government Procurement Law revision, meanwhile, supports the broader policy goal of building a unified national market by standardizing procurement rules across regions — a key priority for Beijing as it seeks to reduce local protectionism and enhance market efficiency.

Major economies generally have overarching financial stability laws, and China’s move improves institutional transparency and international comparability. The coming months will reveal how the draft evolves through the legislative process and how market participants prepare for the new regulatory landscape.