Stronger legal framework for financial sector in works

Editor's note: China's legislative agenda for 2026 includes drafting a financial law, which completed its public consultation process in April. Shanghai Securities News spoke to Dou Pengjuan, an associate professor at the Economic Law School in East China University of Political Science and Law, on the necessity for such a law amid the evolution of the country's financial legal system. Below are excerpts of the interview. The views don't necessarily represent those of China Daily.

The draft of China's first fundamental law governing the financial sector is expected to fill a long-standing gap in the country's financial legal framework.

However, several aspects still require further refinement to ensure that the law can fully achieve its intended objectives.

Key concepts such as financial activities, financial institutions and financial services require more precise definitions and the boundaries of regulatory authority need to be clarified. Mechanisms for restraining and overseeing regulatory power can be further strengthened. Fourth, the division of responsibilities and specific powers between central and local regulators requires greater clarity.

The status of financial consumer protection within the overall legal framework and the supporting mechanisms for its implementation also need improving. Some provisions on legal liability lack sufficiently clear penalties, which could affect the fairness and authority of enforcement.

Greater attention should be given to emerging financial business models, adaptation to artificial intelligence, ecological finance and consumer rights protection.

One notable trend is the extension of the financial rule of law to fully cover emerging financial business models. The traditional approach of allowing new sectors to develop before introducing regulations is gradually being replaced by a framework based on licensed operations, differentiated supervision and dynamic regulatory adjustment.

At the same time, clearer boundaries for new business models and stronger functional regulation and supervision will help develop a regulatory sandbox system with Chinese characteristics.

Another key trend is the adaptation of the financial rule of law to the AI age. As AI technologies become increasingly integrated into financial services, legal frameworks will need to address issues such as algorithm governance, data security and the allocation of liability.

A further development is the deeper integration of the financial rule of law with ecological and environmental protection. Legal mechanisms should be used to guide financial resources toward green and low-carbon sectors. This will require a unified system of green finance standards, along with the exploration of environmental, social and governance information disclosure requirements and regulatory frameworks for climate-related financial risks.

At the same time, consumer rights protection is moving toward a more integrated model that transcends traditional industry boundaries. Therefore, a unified approach to consumer protection has become increasingly necessary. Further integration of consumer protection agencies and financial dispute mediation centers would help create a one-stop mechanism for resolving financial disputes and provide more effective protection for the legitimate rights and interests of financial consumers.