China’s new traffic safety law set to clarify liability for fully automated cars

China is poised to introduce a new traffic safety law that will establish legal responsibility for car manufacturers when their fully automated vehicles are in use, propelling the industry closer to widespread commercialization. The Standing Committee of the National People’s Congress, China’s highest legislative body, is scheduled to review the amended Road Traffic Safety Law on Tuesday.

This update will be the first to include a specific chapter addressing autonomous vehicles and advanced driving systems, according to state-run news agency Xinhua.

Xinhua reported that the amendments will clearly define autonomous vehicles and driver-assistance functions, although the exact timing of a final decision on the revised laws remains undisclosed. Xinhua also clarified that self-driving systems deactivated during a journey would adhere to existing rules and regulations. Analysts noted that manufacturers could face penalties for accidents and traffic violations when autonomous systems are activated in vehicles legally classified as such.

Gao Shen, an independent analyst based in Shanghai, explained that with the new law, automotive companies will be held accountable for the vehicles' operations on the road, allowing them to develop and sell autonomous models to attract consumers. Once the amended law is enacted, dozens of new autonomous vehicles are expected to enter the market.

Next-generation technologies, including early-stage automated software, advanced in-car entertainment systems, and phone-linked features, are rapidly transforming the Chinese automotive and electric vehicle (EV) market, which is the world’s largest.

Even affordable electric vehicles priced at around 60,000 yuan (approximately US$8,926) now include basic automated features classified as level 2 or level 2+ autonomous driving technologies. These systems still require drivers to maintain control of the vehicle at all times, even when the functions are engaged. However, some manufacturers are offering financial liability guarantees.

In May, BYD, the world’s largest EV manufacturer, announced it would cover expenses from traffic accidents when its "God’s Eye" advanced driver-assistance system is active. BYD’s founder and chairman, Wang Chuanfu, disclosed the company's goal of achieving zero traffic accidents through its self-developed autonomous driving technology while creating affordable, mass-market vehicles.

He did not provide a timeline for implementing this policy. Regulatory approvals are also advancing. In December, the Ministry of Industry and Information Technology granted state-owned Changan Automobile and BAIC permission to develop level 3 vehicles on a trial basis. These systems are designed to navigate streets independently, though drivers would still need to remain vigilant and ready to intervene when necessary, as per criteria set by SAE International, a global standards organization.