A Bankrupt Policy?

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It seems to be a case of “two steps forward, one step back” in relation to the proposed bankruptcy law. China Law Blog notes:

    “Now it has become clear that China’s 2000+ SOEs will not come within the purview of the new laws until at least the end of 2008. This means that until such time as the SOEs are covered by the new bankruptcy laws, their employee wages and health benefits will have priority over any creditor claims…This is bad news and it indicates China’s reformers have lost out on these laws.”

There is no doubt that the move to introduce the bankruptcy law is a good thing (and that this latest news is a set-back), but it is not unusual for the Chinese government to issue plans, take stock of feedback, and then make changes before implementation. The difficulty here is in balancing the needs of workers with the needs of business, and there are no easy answers to be found in the midst of China’s complex economic and political mix.

At least there is a timetable in place. But we will have to wait and see what 2008 holds, and whether those remaining SOEs will have their houses in order in time for the reforms to push through successfully.

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2 Responses to “A Bankrupt Policy?”

  1. Archive » Shareholding Reform (Almost) Completed| China Business Blog Says:

    […] it will also be interesting to see what is done with those “special”, “strategic” companies that have been held back. See news source: China’s stock market enters new […]

  2. » Blog Archive » Bankruptcy Law - A follow up of frustration Says:

    […] e of reorganizing these SOEs and all their financial obligations? I saw with interest that Jeremy Gordon is essentially putting forward the same position, that the new law coupled with th […]

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