In the closing days of 2025, China enacted a revised Foreign Trade Law, set to take effect on 1 March 2026, marking a significant policy shift with implications for global trade finance structures, risk management, and cross-border capital flows.

The overhaul updates a law originally enacted in 1994 and comes amid rising global economic uncertainties. Slowing trade growth projections and volatile commodity markets have pushed export and financing strategies to the fore of economic policymaking. The revised text provides the Chinese government with expanded legal tools to respond to trade disputes, counter external economic shocks and foster new trade corridors. It also introduces clearer frameworks for digital and green trade facilitation, as well as strengthened intellectual property protections geared toward bolstering exporters' competitiveness on the world stage.

For the global trade finance community, the revision matters for several reasons.

First, it reflects how China, the world's largest exporter, is seeking legal means to stabilise long supply chains and protect access to financing amid geopolitical headwinds. Greater clarity around export controls, dispute mechanisms and digital trade facilitation reduces uncertainty for banks and non-bank lenders underwriting Chinese supply chains and cross-border receivables.

Second, the law's emphasis on digital trade signals that China's policymakers are increasingly attuned to the rising importance of e-documentation, secure digital identity frameworks and potentially interoperable systems that link to international trade finance platforms. While not specifying technical standards, the law's encouragement of digitisation reinforces earlier inland initiatives to support electronic customs procedures and cross-border data flows, trends that trade finance providers have increasingly factored into risk models.

Moreover, the revision arrives amid a backdrop of intensifying global trade policy change. The European Union is implementing its Carbon Border Adjustment Mechanism (CBAM) at the start of 2026, imposing carbon-related costs on imported goods that directly affects financing costs for exporters in high-emission sectors.

Such regulatory shifts influence how banks structure trade credit, price risk and underwrite export finance in a world where environmental compliance and tariff policy are intertwined with capital costs.

Finally, the updated Chinese law may help mitigate some of the broader global uncertainties flagged by the UN Conference on Trade and Development, which highlights financial market volatility as a constraint on trade growth. By equipping state and private actors with robust legal tools, China aims to foster continuity in export-related finance, from supply-chain loans to import prepayments and structured receivables.

The revised Foreign Trade Law represents a strategic recalibration by one of the world's largest exporters. By sharpening legal clarity, embracing digital trade frameworks and fortifying mechanisms to withstand economic conflict, the legislation stands to influence the global trade finance ecosystem in 2026 and beyond, shaping how capital flows, risks are priced, and cross-border financing structures are constructed.

Further information: https://www.reuters.com/world/china/china-passes-revised-foreign-trade-law-bolster-trade-war-capabilities-2025-12-27/?utm_source=chatgpt.com

This article represents the views of the author and not necessarily those of ICC.