China AI Law Proposal - Mainland China AI Governance Tracker

Summary

Herbert Smith Freehills' comprehensive tracker provides expert legal analysis of China's groundbreaking AI law proposal introduced to the National People's Congress in June 2025. This isn't just another regulatory summary—it's a living resource that dissects what could become the world's second major AI governance framework after the EU AI Act. The tracker breaks down the proposed risk-based classification system, maps out compliance obligations across the AI value chain, and analyzes how this legislation could reshape global AI governance. For organizations with operations in China or those supplying AI technologies to Chinese markets, this resource is essential reading as the proposal moves through the legislative process.

What makes this different from other AI laws

Unlike the EU AI Act's prohibition-based approach, China's proposed framework emphasizes innovation enablement alongside regulatory oversight. The law introduces a unique three-tier risk classification system that distinguishes between "basic," "significant," and "high-risk" AI applications—with notably different criteria than EU classifications. The proposal also establishes mandatory ethics impact assessments for certain AI deployments and creates specialized governance bodies within existing regulatory structures. Perhaps most significantly, the law includes provisions for cross-border data governance that could affect international AI companies differently than domestic Chinese developers.

Timeline and legislative outlook

Current status: Under review by NPC Standing Committee following June 2025 introduction

Expected milestones:

• Second reading: Q4 2025 (anticipated)
• Public consultation period: Early 2026
• Final passage: Mid-2026 (estimated)
• Implementation: 12-18 months post-passage

The tracker provides regular updates as the proposal moves through China's legislative process, including amendments, committee feedback, and industry consultation responses. Herbert Smith Freehills also analyzes how geopolitical factors and international AI governance developments might influence the final legislation.

Compliance implications by industry

Financial services: Algorithmic trading and credit scoring systems face enhanced transparency requirements and mandatory algorithmic audits every 18 months.

Healthcare: AI diagnostic tools require pre-deployment safety assessments and ongoing performance monitoring, with specific provisions for medical AI data retention.

Autonomous vehicles: Three-phase testing framework with escalating requirements for urban deployment, including mandatory insurance provisions.

Social media and content platforms: Content recommendation algorithms must implement "explainability features" and allow users to access alternative algorithmic experiences.

Manufacturing and logistics: Industrial AI systems face lighter regulatory burdens but must comply with worker notification requirements when AI systems make employment-related decisions.

Who this resource is for

• Multinational corporations with existing or planned operations in China who need to assess compliance costs and timeline implications
• AI technology companies considering market entry strategies or evaluating export compliance requirements
• Legal practitioners advising clients on AI governance across multiple jurisdictions, particularly those comparing Chinese and EU approaches
• Policy researchers analyzing the global convergence or divergence of AI regulatory frameworks
• Investment professionals evaluating regulatory risk in Chinese AI companies or China-focused AI investments
• Government officials in other jurisdictions studying China's approach for their own AI policy development

Quick reference: Key compliance deadlines

Once enacted, organizations should prepare for these anticipated timelines:

• 6 months: Registration required for high-risk AI systems
• 12 months: Ethics impact assessments due for significant-risk applications
• 18 months: Full compliance required for all provisions
• 24 months: First mandatory algorithmic audits due

The tracker includes downloadable compliance checklists and regularly updated regulatory calendar to help organizations plan their implementation strategies.