CHINA will soon issue a new bankruptcy law to give fresh impetus to enterprise reform, the national economic focus of the new year.
Spelling out clearly the conditions under which enterprises may be forced into bankruptcy, the law is being drawn up by the Finance and Economics Committee under the National People's Congress, the state legislature.
Xinhua (the New China News Agency) quotes official sources as saying that the law would come into effect early next year.
The current provisional bankruptcy regulations were enacted in December 1986. Since then, more than 2,000 firms have filed for bankruptcy nationwide.
The number is, however, a fraction of the total of money-losing enterprises. According to official estimates, about half of the mainland's 200,000 major state enterprises are in the red.
Political, social and economic reasons prevent them from being shut down.
'The current regulations are vague on many things. The new law will probably tackle the loopholes so that it is clear which firms can file for bankruptcy,' said Ma Guonan, a senior economist at Hong Kong-based Peregrine Brokerage.