China Submits Landmark Financial Law and Procurement Reform for Review

In a significant legislative double-header, China’s National People’s Congress (NPC) on June 23 submitted two major economic governance bills for first review: the Financial Law (Draft) — the country’s first-ever comprehensive foundational financial legislation — and the Government Procurement Law (Revision Draft), the first systematic overhaul of procurement rules since 2003. Together, the twin submissions signal Beijing’s intensifying push to modernize its financial and fiscal governance frameworks through codified, rule-of-law-based systems.

A Foundational ‘1’ in a ‘1+N+X’ Framework

The Financial Law draft, submitted to the 23rd session of the 14th NPC Standing Committee, is described by Xinhua News Agency as “the foundational, comprehensive, and overarching law governing China’s financial sector.” It is positioned as the “1” in a “1+N+X” financial legal system, where existing sectoral laws on banking, insurance, and securities form the “N,” and other financial regulations constitute the “X.” All components must align with the basic provisions established by the Financial Law.

The draft comprises 11 chapters and 95 articles, focusing on stronger regulation, risk prevention, and high-quality development. Key provisions include building a modern central banking system, regulating financial institutions across their full lifecycle, enhancing product and service standardization, and establishing comprehensive financial regulation with fallback mechanisms. The draft also explicitly prohibits any form of illegal financial activities and clarifies the division of responsibilities among regulatory bodies.

Capital Markets and the ‘Five Major Articles’

According to a detailed analysis by National Business Daily, the draft calls for building “a safe, standardized, transparent, open, vibrant, and resilient capital market” and supports medium- to long-term capital entering the market. It strengthens supervision of listed companies and improves delisting mechanisms. The draft also encourages the development of what it terms the “Five Major Articles” of finance: tech finance, green finance, inclusive finance, pension finance, and digital finance.

NPC Deputy Tian Xuan (田轩), Dean of Peking University’s Guanghua School of Management, told National Business Daily that the Financial Law “can systematically integrate financial regulatory rules, clarify the boundaries of rights and responsibilities, fill institutional gaps, and strengthen regulatory coordination and risk penetration capabilities.” He added that the draft “marks China’s financial rule-of-law construction entering a new stage of systematization and modernization.”

Why Now? The Drivers Behind the Financial Law

The Financial Law draft was first published for public comment on March 20, 2026, by the Ministry of Justice, People’s Bank of China, National Financial Regulatory Administration, China Securities Regulatory Commission, and State Administration of Foreign Exchange. The Ministry of Justice announced the 30-day public consultation period, which closed on April 19.

The legislation responds to several structural challenges: fragmented regulation across multiple agencies, rising financial risks from real estate and local government debt, rapid technological change outpacing existing legal frameworks, and the need for a unified approach following the 2023 financial regulatory restructuring that created the National Financial Regulatory Administration (NFRA).

Government Procurement Law: First Major Overhaul in 23 Years

Simultaneously, the Government Procurement Law revision draft was submitted for first review at the same NPC Standing Committee session. Originally enacted in 2002 and effective from January 1, 2003, this marks its first systematic revision in over two decades.

According to China News Service, the revision draft comprises 10 chapters and 104 articles. Hao Peng (郝鹏), Vice Chairman of the NPC Financial and Economic Affairs Committee, presented the revision explanation, stating that the draft “anchors on solving prominent problems in the government procurement field, striving to build a fair competition environment with equal rights, equal opportunities, fair procedures, and effective remedies, eliminating institutional space for rent-seeking.”

Key Reforms in Procurement

The revision introduces several transformative changes. It expands the law’s scope to cover small-value, decentralized procurement below threshold limits that was previously unregulated, subjecting it to simplified procedures. It establishes a procurement-needs-driven management mechanism with strengthened purchaser accountability, covering the full chain from budget and demand through procurement, contract performance, and acceptance inspection.

On fair competition, the draft prohibits differential or discriminatory treatment of suppliers and enhances transparency through full-process information disclosure. It introduces a “negative list” to simplify supplier qualification requirements and adds provisions to combat low-price disorderly competition. Legal Daily noted that the revision also strengthens supervision and legal liability for all parties — purchasers, procurement agencies, e-trading platform operators, evaluation experts, and suppliers — with increased penalty severity.

A dedicated chapter on “Government Procurement Digitalization” promotes full-process electronic trading, complete recording, and penetrating supervision to reduce human intervention. The revision also adds support for technological innovation and green, low-carbon circular development as new procurement policy objectives.

Analysis: A Coordinated Legislative Push

The simultaneous submission of these two major economic laws signals an intensified legislative agenda focused on economic governance. The Financial Law represents a paradigm shift from China’s previous approach of regulating finance through separate, sector-specific laws without a unified overarching framework. The “1+N+X” system will likely trigger a comprehensive review and revision of all existing financial sector laws to ensure alignment.

For the procurement law, the explicit focus on eliminating rent-seeking space aligns with China’s ongoing anti-corruption campaign. The scale of China’s government procurement market — now worth trillions of yuan annually — has made it a frequent area for corruption cases, and the digitalization chapter aims to reduce opportunities for human intervention and abuse.

What’s Next

Both drafts are now at the first review stage. Typically, Chinese legislation undergoes two or three readings before a final vote, meaning enactment could take several months to a year. Outstanding questions include how the Financial Law will interact with the Financial Stability Law (still in the legislative pipeline), what specific changes were made between the March 2026 public consultation draft and the version submitted for review, and how the new framework will address cross-border financial activities.

For financial institutions and government procurement participants, the message is clear: a new era of stronger regulation, digital compliance, and heightened accountability is approaching. The twin legislative moves represent China’s most ambitious attempt yet to build a modern, rule-of-law-based financial and fiscal governance system.