Hackers who steal data or manipulate large number of computers may be jailed for up to seven years, according to a proposed amendment to the Chinese Criminal Law.
The penalties will also be applicable to those who offer software or tools for hacking to any intruder.
The existing law offers punishment only for intruding into networks of governments, national defence or leading science sectors; or altering the functions of personal computer systems.
However, the amended law will be the first legal tool to curb increasing data theft from civil-use computers in China.
According to Zhou Guangquan, a member of the NPC's law committee and a professor in criminal law at Tsinghua University, the proposed penalties also apply to Chinese hackers, who steal information from foreign computers.
The proposed draft states that either the crime or its consequence occurs in China, it shall be subject to Chinese law, reports the China Daily.
"Even if the crime has nothing to do with China, but the criminal is a Chinese citizen, it also falls under the law's jurisdiction," Zhou said.
Li Shishi, deputy director of the NPC law committee, said that the latest changes were made at the request of the Ministry of Public Security (MPS).
"The ministry said many unscrupulous people have been found hacking computers to steal account numbers and passwords, or to remotely control them," he said.
"These actions are a big threat to online security, and we consider it necessary to define them as crimes," he added.