China's New Corporate Rescue Laws: Perspectives and Principles

Abstract

This article considers the new corporate insolvency legislation that came into force in China in June 2007. This law is part of a remarkable transformation in the Chinese economy in recent years. Significant numbers of ailing state owned enterprises have been reformed and subjected to hard budgetary constraints, while the private sector has grown dramatically. Market forces play a greater role, whereas the economy was previously tightly controlled by the state. These changes, together with pressures arising from external bodies such as the European Union, led to an urgent need for the adoption of the revised insolvency law, which has at its heart corporate rescue procedures. This article considers the content and background of this new law, and assesses the prospects for its operation. In particular, attention is paid to the level of scope for state interference in the operation of the law.