Published by ChinaMNC · Zhongshaqundaodedaojiaojiqihaiyu
China’s New Rules on Long-Term Energy Supply Contracts: What Foreign Founders Need to Know
China’s National Development and Reform Commission (NDRC) has issued the Measures for the Administration of Medium- and Long-Term Contracts for Energy Supply Guarantee (Trial), effective December 1, 2026. The rules create a unified framework for coal, electricity, and natural gas contracts. Foreign founders operating energy-intensive businesses in China should understand how these changes may affect their supply stability and compliance obligations.
China’s New Rules on Long-Term Energy Supply Contracts: What Foreign Founders Need to Know
The National Development and Reform Commission (NDRC) has issued the Measures for the Administration of Medium- and Long-Term Contracts for Energy Supply Guarantee (Trial) (NDRC Order No. 50 of 2026), which will take effect on December 1, 2026. The Measures aim to safeguard energy security and ensure stable, reliable, and efficient energy supply. For foreign founders setting up or running a company in China—especially in manufacturing or other energy-intensive sectors—these rules may affect how you secure energy supplies and manage contractual relationships with energy providers.
Background and Significance
Energy security is a national priority in China. The medium- and long-term contract system for energy supply has evolved over years of practice as a foundational arrangement. It helps build stable and predictable supply-demand relationships and facilitates coordination across production, supply, storage, and sales. During the 15th Five-Year Plan period (2026–2030), China’s energy sector faces multiple challenges, including overlapping security risks, accelerated low-carbon transition, rapid innovation, deep institutional reforms, and shifting international cooperation. The Plan’s outline explicitly calls for improving the long-term contract system for energy supply. The NDRC developed the Measures to give full play to the foundational role of long-term contracts, protect the legitimate rights and interests of all parties, and ensure energy security.
Guiding Principles
The Measures are based on four principles:
- Combining market mechanisms with the rule of law: Respecting the principal role of enterprises and encouraging voluntary negotiation between supply and demand parties, while strengthening government responsibilities in coordination, safeguarding people’s livelihood, and supervising contract performance.
- Prioritizing safety and people’s livelihood: Safeguarding national energy security and, in principle, giving priority to energy needs for people’s livelihood when signing and performing contracts.
- Combining goal orientation with problem orientation: Codifying mature policies and effective practices, and setting rules to address problems in contract signing and performance.
- Combining systematic design with classified management: Maintaining a unified institutional framework while specifying detailed rules for different energy types—thermal coal, electricity, and natural gas—which have distinct supply and demand characteristics.
Key Provisions of the Measures
The Measures consist of six chapters and 45 articles, covering the signing, performance, and supervision of long-term contracts for thermal coal, electricity, and natural gas.
Chapter 1: General Provisions
This chapter sets out the legislative purpose and basis, contract classification, scope of application, working principles, and division of responsibilities.
Chapters 2–4: Specific Rules for Thermal Coal, Electricity, and Natural Gas
These chapters define concepts, contract signing and performance, modification and adjustment, and service guarantees. They regulate and specify requirements for the signing, performance, and modification of long-term contracts for each energy type.
Chapter 5: Legal Liability and Supervision
This chapter specifies the legal responsibilities of relevant departments, contract parties, and transmission service providers. It also sets out dispute resolution mechanisms and policy incentives and constraints for supervision.
Chapter 6: Supplementary Provisions
This chapter addresses implementation timing and interpretation of the document.
What the Measures Regulate
The Measures bring long-term contracts for thermal coal, electricity, and natural gas into a unified institutional framework, enhancing the institutionalization, legalization, and standardization of such contracts.
Clarifying Rights and Obligations
Energy enterprises bear social responsibility for ensuring safe and stable supply. Supply and demand parties should negotiate or trade in a market-oriented manner and sign and perform long-term contracts in accordance with laws and regulations. The Measures also clarify the responsibilities of transmission service providers and relevant government departments, forming a responsibility chain of “enterprises as the main responsible entities, government supervision, and tiered responsibility.”
Standardizing Contract Signing and Performance
Based on the actual needs of overall supply-demand balance and safeguarding people’s livelihood, the Measures regulate contract signing and performance by category to improve the stability and reliability of energy supply. During contract performance, under the premise of ensuring safe and stable supply, contracts may be modified or adjusted upon mutual agreement of both parties, balancing rigidity and flexibility.
Improving Supervision Mechanisms
The Measures specify legal liabilities and accountability circumstances for all parties. Those causing serious impact on energy supply guarantee work will be held accountable in accordance with relevant laws and regulations. The Measures also establish policy incentive and constraint mechanisms to improve the quality and efficiency of long-term contract performance.
Implementation and Next Steps
The Measures will take effect on December 1, 2026. The NDRC will work with relevant parties to promote awareness and implementation, guiding local departments, energy enterprises, and trading centers to accurately understand the requirements and strictly comply. The NDRC will also monitor implementation, strengthen supervision of contract signing and performance, address issues promptly, and ensure the full effectiveness of the long-term contract system for energy supply.
Practical Implications for Foreign Founders
If you are establishing or operating a company in China that relies on energy supplies—such as manufacturing, processing, or large-scale facilities—these Measures may affect your energy procurement strategies. The unified framework for thermal coal, electricity, and natural gas contracts aims to provide more stable and predictable supply relationships. Foreign-invested enterprises should ensure that their energy contracts comply with the new rules, particularly regarding market-based negotiation, contract performance, and potential adjustments. Understanding the priority given to people’s livelihood in energy allocation may also be relevant for operational planning. As the rules take effect in December 2026, now is a good time to review your energy supply arrangements and engage with local energy providers and authorities to align with the new requirements.
Call to Action: Foreign founders can contact ChinaMNC on WhatsApp / WeChat at +86 153 1898 8535 for help registering and operating a company in China.
This summary is based on information published by the relevant Chinese government website and is general information, not legal or tax advice.