Published by ChinaMNC · Xishaqundao
China’s New Long-Term Energy Supply Contracts Rule: What Foreign Founders Need to Know
China will implement a new regulation for long-term energy supply contracts starting December 1, 2026. The rule unifies the framework for coal, electricity, and natural gas contracts, clarifying responsibilities and enforcement. Foreign founders operating energy-related businesses in China should understand these changes to ensure compliance and stable supply.
China’s New Long-Term Energy Supply Contracts Rule: What Foreign Founders Need to Know
Foreign founders with operations in China’s energy sector—or those whose businesses depend on stable energy supplies—should take note of a new regulation issued by the National Development and Reform Commission (NDRC). The Measures for the Administration of Medium- and Long-Term Contracts for Energy Supply Guarantee (Trial) (NDRC Order No. 50 of 2026) will take effect on December 1, 2026. The NDRC recently answered reporter questions to explain the policy’s background and key provisions.
Why the New Rule Matters
Energy security and reliability are critical to China’s economy and people’s livelihoods. The long-term contract system for energy supply has evolved over years of practice and is considered a foundational arrangement. It helps create stable, predictable supply-demand relationships and links production, supply, storage, and sales. During the “15th Five-Year Plan” period, China’s energy development faces overlapping risks, a push for low-carbon transition, technological breakthroughs, and institutional reforms. The Plan’s outline explicitly calls for improving the long-term contract system. The new Measures aim to better perform this foundational role, protect the rights of all parties, and ensure safe, stable, reliable, and efficient energy supply.
Guiding Principles Behind the Measures
The NDRC followed four main principles in drafting the Measures:
- Combining market mechanisms with the rule of law: The government will respect enterprises’ autonomy and guide supply and demand parties to negotiate contracts independently, while strengthening government roles in coordination, safeguarding people’s basic needs, and enforcing contracts.
- Prioritizing safety and people’s livelihoods: The Measures uphold the bottom line of national energy security, standardize signing and performance, and in principle give priority to meeting residential energy needs.
- Combining goal orientation with problem orientation: Mature practices and proven experiences are codified into rules, and problems in contract signing and performance are addressed with incentives and constraints.
- Combining systematic design with classified management: A unified institutional framework is maintained, while specific rules are tailored to the different supply-demand characteristics of coal, electricity, and natural gas.
Structure and Scope of the Measures
The Measures consist of six chapters and 45 articles, covering the signing, performance, and supervision of long-term contracts for coal, electricity, and natural gas. Chapter 1 sets out general provisions, including legislative purpose, contract categories, scope, principles, and division of responsibilities. Chapters 2 to 4 address the specific management of contracts for each energy type—coal, electricity, and natural gas—covering definitions, signing and performance, modification and adjustment, and service guarantees. Chapter 5 covers legal liability and supervision, specifying responsibilities for relevant departments, contract parties, and transmission guarantee enterprises, as well as dispute resolution and incentive mechanisms. Chapter 6 contains supplementary provisions on implementation timing and interpretation.
Key Provisions for Foreign-Founded Enterprises
The Measures bring all three types of energy supply contracts under a unified framework, enhancing institutionalization, legal compliance, and standardization. For foreign founders, the following points are particularly relevant:
- Clear rights and obligations: Energy enterprises have a social responsibility to ensure safe and stable supply. Supply and demand parties should negotiate or trade in a market-based manner and sign and perform contracts in accordance with laws and regulations. Transmission guarantee enterprises and government departments also have defined responsibilities, forming a chain of “enterprise primary responsibility, government supervision, and tiered accountability.”
- Standardized signing and performance: Based on overall supply-demand balance and people’s livelihood needs, the Measures regulate contract signing and performance by category to improve supply stability and reliability. During performance, contracts may be modified or adjusted by mutual agreement while ensuring safe and stable supply, balancing rigidity and flexibility.
- Improved supervision: The Measures clarify legal liabilities and accountability situations. Actions that seriously affect energy supply guarantee work will be held accountable according to laws and regulations. A policy incentive and constraint mechanism is also established to improve contract performance quality and efficiency.
What Foreign Founders Should Do
Foreign founders operating in China’s energy sector, or those with significant energy consumption, should review their existing and planned long-term energy supply contracts to ensure alignment with the new Measures. Key steps include:
- Understand the specific rules for the energy type relevant to your business (coal, electricity, or natural gas).
- Ensure contracts are signed and performed in a market-based manner with clear terms on rights, obligations, and adjustment mechanisms.
- Stay informed about local implementation and supervision, as the NDRC will guide local departments, energy enterprises, and trading centers to interpret and enforce the Measures.
- Monitor regulatory updates and participate in any awareness or training sessions organized by authorities.
The NDRC will promote the Measures, guide local authorities and enterprises, and monitor implementation to ensure the long-term contract system functions effectively and energy supply remains safe and stable. Foreign founders should treat this as part of their compliance and risk management strategy.
Call to action: For assistance with company registration and operations in China, foreign founders can contact ChinaMNC on WhatsApp / WeChat at +86 153 1898 8535.
This summary is based on information published by the relevant Chinese government website and is general information, not legal or tax advice.