context: Law-based governance in the financial sector serves as a crucial safeguard for promoting high-quality financial development and ensuring national financial security. The 2025 National People's Congress Standing Committee work report has scheduled the Financial Law for deliberation in 2025, as the foundational law in the financial sector. The conditions for the codification of financial laws are not yet deemed mature.
The 20th CPC Central Committee Third Plenary Session explicitly proposed the formation of a Financial Law, marking the official initiation of this legislative project.
Xiao Jing 肖京 Chinese Academy of Social Sciences Institute of Law associate researcher notes that since the reform and opening up, the PRC's financial industry has experienced rapid development, and the legal framework governing the financial sector has been continuously strengthened.
Nevertheless, significant challenges persist, particularly with the proliferation of financial innovations driven by the digital economy and the accelerated advancement of financial technology. The main problems include
- numerous potential financial risks
- finance not effectively supporting the real economy
- financial disorder and corruption problems persist despite repeated prohibitions
- financial supervision and governance capabilities are weak
Regarding the current debate on whether the Financial Law should be positioned as the foundational law for the financial sector or the foundational law for financial supervision, Xiao favours the former. He believes that the problem of fragmentation of financial legislation is quite prominent currently, and objectively, a basic law covering the entire financial sector and governing all financial laws and regulations is needed.
Xiao also acknowledges the necessity of formulating a Financial Supervision Law and calls for the coordinated advancement of the legislative process for the Financial Supervision Law, the Financial Stability Law and others.
As for the legislative model, Xiao suggests balancing current practical needs with long-term development. He recommends drafting a standalone Financial Law as soon as possible to meet urgent practical demands, while at the same time continuously strengthening basic theoretical research with a view to realising the codification of financial laws when the conditions are ripe.