Economic and legal necessity of personal bankruptcy legislation in China

Abstract

AbstractWith more domestic pilot explorations launched in China, alternative debt adjustment regulations and bills relating to personal bankruptcy are thriving. This article aims to familiarize the readers with both the economic and legal necessity of a personal bankruptcy system as well as the feasibility of future legislation in China by examining publicized reports and present regulations. Past decades have witnessed the take‐off of China's economy along with prevailing trends in higher debt ratio, more credit loans, and pan‐commercialization. The proliferation of over‐indebtedness propels the need for personal bankruptcy regime. Given the status quo, some alternative legal methods are implemented. By deconstructing the existing regional regulations, this work identifies both progress and drawbacks of current debt adjustment rules from three angles: creditors' benefits, debtors' benefits, and social benefits. After identifying the need for personal bankruptcy legislation, this contribution focuses on the feasibility of a personal bankruptcy system in China. Several salient issues are discussed in three aspects, including political implications, cultural resistance, and social conditions. These unique factors should be considered in forthcoming legislation in China in order to secure a more suitable system.