As we previewed, on March 12, 2026, China’s National People’s Congress (NPC), approved a decision declaring that 35 instruments it adopted between 1982 and 2018 had lapsed, while confirming the continued validity of past actions taken under them.
The oldest among them, adopted together with China’s current Constitution on December 4, 1982, provided that certain provisions of the 1978 Constitution would continue to apply until the next NPC elected a new president, vice president, and NPC Standing Committee (NPCSC), which took place in June 1983. The newest instrument, adopted on March 17, 2018, prescribed voting rules for the 2018 state leadership transition at the first session of the 13th NPC.
The NPC’s decision endorsed the recommendations put forward by the NPCSC in a report on efforts to “clean up” national laws last year. This round of cleanup, the report reveals, focused on addressing the “validity” of instruments that “fail to adapt to new circumstances and needs and undermine the internal consistency and unity of the system of laws,” and therefore did not touch on laws that simply need amendment. Of the 139 obsolete instruments identified, the NPCSC declared 104 lapsed in December, leaving the remaining 35 for the NPC to address last week.
All but two of the 35 instruments lapsed because they governed specific historical events. Five concerned the functions or establishment of past NPC bodies, twenty set out ad hoc voting rules, and eight allocated seats in previous NPCs.
The other two pieces of legislation are said to “have played an important role” in China’s legal reform and socioeconomic development, but “no longer meet the needs of further comprehensively deepening reform,” so “must be discontinued.” They are the NPC’s 1985 Decision on Authorizing the State Council to Formulate Interim Provisions or Regulations Concerning Reform of the Economic System and Opening Up (1985 Decision) [关于授权国务院在经济体制改革和对外开放方面可以制定暂行的规定或者条例的决定] and the 1988 Law on Industrial Enterprises Owned by the Whole People (Enterprise Law) [全民所有制工业企业法]. Because their repeal technically effected substantive changes in the law, we take a closer look at each below.
1985 Decision Delegating Legislative Authority
The 1985 Decision, adopted on April 10, 1985, broadly authorized the State Council to issue “interim provisions or regulations” concerning “reform of the economic system and opening to the outside world.” The State Council must not contravene the “basic principles” of legislative enactments, but it otherwise had near carte blanche to issue economic regulations.
As a legislative official explained to NPC delegates, “the conditions were not yet ripe” for the national legislature to enact laws on “a considerable number of novel and complex” economic issues, but “the work at hand cannot wait.” Delegating the necessary legislative authority to the State Council, he continued, would not only meet immediate needs, but also “allow experience to be accumulated and prepare the ground for” eventual NPC legislation. The State Council subsequently relied on this authorization to issue dozens of—if not a hundred or more—economic regulations, covering matters ranging from taxes and pricing to banking regulation and the state budget, according to one authoritative source.
As these interim regulations were gradually replaced by statutes, the 1985 Decision remained relevant well into the 21st century because it continued to undergird, until recently, a broad swath of China’s tax regime. Except for the individual income tax, which was levied by statute from the very start, and the newest environmental protection tax enacted by the NPCSC in 2016, all existing taxes were originally the creatures of administrative regulations, either adopted or revised under the 1985 Decision.
At its 2013 Third Plenum, the Communist Party decided to “implement the principle of law-based taxation” [落实税收法定原则]—an initiative that eventually led to the 1985 Decision’s demise. That principle essentially requires that the core elements of a tax be determined by a (nominally) representative body like the NPC or the NPCSC, rather than by executive officials alone. In 2015, the NPC amended the Legislation Law [立法法] to embody this principle. Shortly thereafter, the Party announced a plan to put the principle into action, requiring as follows:
- No more tax regulations will be adopted. Any new tax will be levied by laws enacted by the NPCSC.
- Current tax regulations will be elevated into laws “at the appropriate time,” starting with the easier ones—those that “do not involve tax reform.”
- For taxes that are being reformed . . . , the regulations may be first revised by the State Council before being enacted as laws.
- After all tax regulations are either elevated into laws or abolished, the NPC will be asked to revoke the 1985 [Decision].
- The NPCSC aims to complete the whole process by 2020 . . . .
That timeline has, in retrospect, proven too ambitious. Four taxes remain governed solely by administrative regulations: the consumption tax and three real property–related taxes (building tax, urban land use tax, and land value-added tax). The consumption tax is expected to come before the legislature next, though it is unclear when (it is not listed in the NPCSC’s 2026 work report). Legislation on the other three has likely been put on hold pending the pilot of a real estate tax, which itself appears to have been delayed indefinitely.
The NPC nonetheless proceeded to repeal the 1985 Decision—a move that may have been premature. In its 2026 Government Work Report, the State Council pledged to “adjust and optimize the scope and rate of consumption tax” [调整优化消费税征税范围、税率]. Although its consumption tax regulations remain valid, it is doubtful whether the State Council can still exercise its self-bestowed authority under the regulations to modify tax rates. It seems to us that the State Council would need to accomplish those goals by asking the NPCSC to either elevate the regulations into law or issue a separate authorization.
1988 Enterprise Law
Enacted on April 13, 1988, after a prolonged legislative process, the Enterprise Law was the first statute to govern China’s state-owned enterprises (SOEs). It aimed to “completely reorganize the former state-planned enterprise system,” under which the State planned “every aspect” of SOE production, resulting in inefficiency and low productivity. The Enterprise Law was designed to improve performance by enshrining the then-novel principle of separating enterprise management from state ownership: it affirmed state ownership of enterprises, but devolved greater powers and responsibilities to enterprise managers, placing them in a “central position” within SOEs (while also assigning statutory functions to employees and supervisory governmental units).
Soon thereafter, China launched a program of “corporatizing” traditional SOEs—that is, converting them into one of the corporate forms under the Company Law [公司法], first enacted in 1993. This law provides for different corporate structures that typically include shareholders, a board of directors, and a board of supervisors, and contains special rules for wholly state-owned and state-controlled companies. Through corporatization, the State can raise capital for SOEs, expand its control in some sectors through leverage, and improve the management of state assets.
State media reported that the corporatization process was finally completed by the end of 2022, after three decades. The Enterprise Law has therefore become obsolete. The State Council had in fact telegraphed the Law’s eventual demise as early as 2015, and there have recently been calls for repeal from NPC delegates as well. The NPC’s action last week thus came as no surprise.
With contribution from Taige Hu