China’s State Council Pushes Major Policy Overhaul on Water Networks and Cross-Border Trade in 2025

• National Water Network: Accelerate construction to ensure water security and optimize resource allocation.
• Cross-Border Trade: Enhance logistics, digital customs, and support for green/E-commerce models.
• Water Supply Safety: Ensure standardized urban-rural systems from source to tap.
• Pharmaceutical Regulation: Accelerate breakthrough therapies while strictly regulating quality.

Premier Li Qiang (Li Qiang 李强) just wrapped up a major State Council (Guowuyuan 国务院) executive meeting on December 31, 2025—and it’s packed with implications for anyone tracking China’s infrastructure and trade policy.

The agenda hit three major person points: scaling the National Water Network, rolling out new cross-border trade facilitation policies, and tightening regulations around water supply and pharmaceuticals.

Let’s break down what this means and why it matters.

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The National Water Network Push: A Play for Water Security and Economic Growth

Here’s the situation: China’s been quietly building out what they call the National Water Network for years now, and the momentum is picking up.

The meeting noted that various regions and departments have been implementing the “Outline of the National Water Network Construction Plan” with growing results.

Key developments so far:

• Main framework and arterial lines of the water network are gradually improving
• Construction of key drainage channels and vital storage nodes is accelerating
• Results are showing positive momentum across multiple regions

Why This Matters: The Three-Pronged Strategy

Building a national water network isn’t just about preventing floods (though that’s part of it).

The State Council outlined three strategic benefits:

1. Water Resource Optimization — Better allocation of water across regions
2. Disaster Mitigation — Enhanced flood prevention and disaster response capabilities
3. National Water Security — Ensuring long-term water availability for the country

But there’s an economic angle too.

Water network projects are massive demand drivers because they:

• Require extensive investment capital
• Span long industrial supply chains
• Create benefits in transportation, ecological protection, and tourism

How They’re Financing It: A Multi-Source Approach

The State Council isn’t trying to foot the entire bill themselves.

Instead, they’re pushing for innovative financing mechanisms that include:

• Government Investment as a lead vehicle
• Central Enterprises (Zhongyang Qiye 中央企业) participation — major state-backed corporations pulling capital in
• State-Owned Enterprises (Guoyou Qiye 国有企业) involvement — broader SOE ecosystem contributing
• Private Capital — actively attracting private investors to the table

The goal is clear: leverage government funds as a catalyst while bringing in private sector dollars to accelerate development.

Quality Control: From Approval to Acceptance

The meeting emphasized that rigorous quality supervision must happen throughout the entire project lifecycle.

This covers everything from initial project approval all the way through to final acceptance—a signal that they’re not cutting corners on infrastructure quality.

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Cross-Border Trade Facilitation: The New Competitive Edge

Here’s where it gets interesting for traders, logistics operators, and e-commerce companies.

The State Council is treating cross-border trade facilitation as a cornerstone for building what they’re calling a “world-class business environment.”

Translation: this is a priority competitive advantage for China’s position in global trade.

Three Key Areas of Focus

1. Logistics Infrastructure and Multimodal Transport

The meeting highlighted the need for efficient and smooth cross-border logistics by:

• Improving connections between different channels
• Optimizing transportation mode transitions
• Deepening collaboration between coastal, inland, and border regions

The idea here is straightforward: when goods move across borders faster and with fewer friction points, everyone wins.

2. New Business Models: Green Trade and Cross-Border E-Commerce

The State Council is actively encouraging the development of emerging business models, specifically:

• Green Trade — environmentally sustainable international commerce
• Cross-Border E-Commerce (Kuajing Dianshang 跨境电商) — online marketplaces operating across national borders

This isn’t random—it’s a recognition that these are the growth engines of modern trade.

3. Smart Customs and Digital Infrastructure

The meeting stressed raising the level of intelligent supervision by:

• Deepening “Smart Customs” initiatives — AI-driven customs processing
• Expanding “Smart Port” capabilities — digitized port operations
• Promoting cross-border interconnectivity of the International Trade “Single Window” (Guoji Maoyi “Danyi Chuangkou” 国际贸易”单一窗口”) — a unified digital entry point for trade documentation

The single window concept is particularly important: instead of filing paperwork with multiple agencies, traders deal with one integrated system.

Less friction = faster turnaround = competitive advantage.

Bonded Zones and Special Commodities

The State Council also signaled support for Comprehensive Bonded Zones (Zonghe Baoshuiqu 综合保税区) to conduct bonded testing services.

This allows goods to be tested and inspected in a customs-controlled environment before final import or export, reducing delays and compliance headaches.

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Water Supply Safety: Building Infrastructure from “Source to Tap”

Shifting gears to public welfare.

The State Council emphasized that the water supply industry is vital to the well-being of every household—and that policy needs to reflect that importance.

The Coordinated Development Approach

The meeting called for:

• Urban and Rural Coordination — equal attention to water systems in both areas
• Standardized System Coverage — everything from “source to tap” operates under consistent standards
• Multi-Source Water Supplementation — tailored to local conditions and needs
• Water Supply Network Renovation — increased support for upgrading aging infrastructure
• Terminal Facility Maintenance — regular upkeep to ensure water quality safety

The bottom line: water quality safety isn’t an afterthought—it’s a systematic priority.

Compliance and Emergency Preparedness

Water supply units are being held to strict accountability:

• Must strictly implement water supply regulations
• Must enhance emergency management capabilities
• Regular maintenance and quality monitoring are non-negotiable

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Pharmaceutical Regulation: Accelerating Breakthrough Therapies While Cracking Down on Bad Actors

On the medicine front, the State Council is revising drug administration laws with three main objectives.

The Policy Pillars

• Ensuring Public Safety — the foundational requirement
• Promoting Industry Development — creating conditions for pharmaceutical innovation to thrive
• Combating Illegal Activity — maintaining enforcement across the entire quality chain

Specific Focus Areas

The meeting identified key priorities:

• Drug Research and Registration Systems — improvements to how new drugs are studied and approved
• Breakthrough Therapy Acceleration — faster review and approval for innovative treatments
• High-Pressure Regulation — zero tolerance for violations throughout the entire quality chain

The approach here balances two competing pressures: moving faster on innovation while simultaneously cracking down on bad actors in the pharmaceutical space.

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What This Means for Investors, Founders, and Traders

If you’re tracking China’s economic policy, this State Council meeting signals some clear directional priorities:

• Infrastructure investment is accelerating — especially in water networks, which creates opportunities for construction, engineering, and materials companies
• Trade facilitation is a strategic focus — cross-border e-commerce, logistics, and customs tech are getting policy tailwinds
• Digital transformation in trade is happening — smart customs, smart ports, and single window systems create opportunities for fintech and logistics tech
• Public health and pharma regulation is tightening while also accelerating innovation — compliance is non-negotiable, but breakthrough therapies get fast-tracked

These aren’t random policy moves—they’re part of a coherent strategy to position China as a more efficient, innovative, and competitive economy heading into 2026 and beyond.

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References

• Li Qiang Presides Over State Council Executive Meeting – Xinhua News Agency (Xinhua She 新华社)
• State Council of the People’s Republic of China (Zhonghua Renmin Gongheguo Guowuyuan 中华人民共和国国务院)
• General Administration of Customs of the People’s Republic of China (Zhonghua Renmin Gongheguo Haiguan Zongshu 中华人民共和国海关总署)