“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.
See news source:
Struggling China state companies win stay of execution 
Financial Times (Subscription)
More than 2,000 of China’s worst-performing state companies have won a stay of execution by being excluded from the country’s new bankruptcy law until the …