TAIPEI—Vice president of China's Supreme People's Court Xi Xiaoming said that more and more foreign capital is being withdrawn and many business owners who filed bankruptcy have fled from China to avoid debts. According to results from a survey, foreign capital related court cases increased 19.62 percent in February, compared to the same period last year.
Xi is quoted in Hong Kong’s "Wen Wei Po" stating that the conflicts and disputes caused by international and domestic macro-economic environmental changes have increased, and are clearly reflected in the judicial system.
Xi said the survey reveals the number of cases related to loans have increased dramatically. The portion of the cases involving intentional breach of contract increased as well. More fraudulent loan cases were reported.
Survey also shows cases related to foreign investment withdrawing capital and abandoning assets in China has spread across the country; the number of cases related to the problems of state owned enterprises reform increased; and the number of cases related to filing of bankruptcy by private enterprises significantly increased.
More than half of the private enterprise owners that filed bankruptcy chose to flee the country.
For example, in the case of a Korean-owned supermarket, the business suddenly closed on December 25, 2008 without any prior notification. The three Korean owners happened to disappear.
According to a staff of Chaoyang Court, where the Ximaide case trial was held on February 17, the court accepted 32 cases involving claim payments from the Korean supermarket. The plaintiffs are dozens of enterprises, workers and suppliers affected by the sudden closure. This incident is estimated to affect more than 200 people and possible losses exceeding one million yuan (US$146,374).
In terms of foreign investment, the major areas, such as the Pearl River Delta, Yangtze River Delta, Shandong Peninsula, experienced massive amounts of foreign capital withdrawal last year. Public information shows that among the foreign investments lost, many of them were South Korean enterprises, especially in the Shandong Peninsula. According to official statistics, the number of businesses withdrawing from the country have exceeded 200 in these past few years.
In the Guangdong region, statistics show that in the first 10 months of last year, there were more than 251 cases of group incidents involving more than 30 people over loss of wages due to the business owner fleeing. This is a 92 percent increase compared to the previous year. Such cases mainly happened in the export-oriented and labor-intensive processing and manufacturing plants in the Pearl River Delta region.
In Zhejiang Province, over 1,200 enterprises have declared bankruptcy. Approximately 30 percent of the business owners chose to flee the country, including most of the foreign invested enterprises.
For example, the president of one foreign express delivery company in Jiangsu Province disappeared along with the company’s money, which caused 38 people to become unemployed. Another instance occurred in southern Jiangsu Province when senior directors of four foreign enterprises suddenly disappeared at the same time. All production by these companies came to a halt. The contract dispute involved as much as 700 million yuan (US$ 102,438,147).
Read the Chinese article
