This paper investigates how judicial independence reduces expropriation risk in government contracts. I exploit a staggered reform in China that curtailed local governments’ influence over court adjudication. Using a purpose-built dataset covering firm-government contract disputes in local courts, I first show that firms’ win rates against local governments increased following the reform, with the probability of firm bankruptcy after court rulings declining. I then document that firms with a greater share of government contracts tied to reformed jurisdictions experienced larger reductions in credit spreads. The effects are significant for private firms but absent for state-owned enterprises. These firms also improved receivables liquidity and obtained more debt financing. Stock prices reacted more positively to procurement award announcements after the reform. The findings suggest that judicial independence reduces financial frictions for private suppliers involved in the provision of public goods.