After 10 years in the making China is to updat its bankruptcy legislation in June 2007.
This law change should help move the country closer to a market driven economy. But don’t expect any cheering from Chinese workers. Over the weekend Chinese lawmakers approved new rules that were 10 years in the making.
Essentially, in the past, when a company has gone bankrupt in China there has been immense pressure to ensure that workers have been looked after. In the proposed new bankruptcy law creditors will be compensated before employees. This is because lawmakers believe that banks can not price loans properly in the current climate, because they didn’t know what they will be able to recover via insolvency measures within the current legislation.
