[far-east] chinese bankruptcy change a cultural change

If anyone had any doubts about China’s commitment to empire building, they would be dispelled in the latest move to alter the bankruptcy law:1. to firmly establish the credit market by giving full access to foreign lenders2. to commit fully to admission to the moribund yet still intrinsically powerful WTO3. to change forever the work practices of the state owned enterprises.This new law is a major move. Effectively, creditors now have top priority in liquidation moves, as distinct from the old ‘state nanny’ which was committed to paying off the workers first and then the creditors.

The Industrial and Commercial Bank of China, Bank of China, China Construction Bank and the Agricultural Bank of China will naturally be boosted by the new law, foreign finance will also nod at the key move and the money will hopefully flow.Asia Times, itself quoting the China Banking Regulatory Commission, says the government has injected huge amounts of capital to help them lower their non-performing-loan (NPL) ratio by 4.2 percentage points by the end of 2005 to 8.6%.This, in turn, in a country where the masses follow major moves by the party leadership enthusiastically and wholesale, signals a cultural change no less significant than the cultural revolution.

It effectively alters the mindset and will be able to do so in a way in which, say, France cannot.Since the mid 90s, the government has been causing big and middle-sized SOEs under "severe difficulties" to close down and there are clear moves to streamline the economy more along western lines.The State Council has set aside 33.8 billion yuan to help certain SOEs settle with their laid-off workers, which could number up to 3.51 million and has given them until 2008 to get their act together but this is undoubtedly a transition period and any China watcher can see the writing on the wall.The people of China may be beginning to as well.