Establishment of the Personal Bankruptcy System in China

The Regulations of Shenzhen Special Economic Zone on Personal Bankruptcy, China's first-ever statute addressing personal bankruptcy, came into force in 2021, bringing the concept of personal bankruptcy system into public awareness for the first time. Under the current Chinese judicial framework, individuals bear unlimited liability for their debts, leaving debtors unable to anticipate risks in advance and sometimes powerless to meet their obligations afterward. In this context, a Personal Bankruptcy System can remedy deficiencies in the existing system. However, as an imported institution, it must be adapted to China's national conditions to ensure its steady, sustainable development and advance the rule of law. This paper reviews the origins and characteristics of personal bankruptcy, analyzes China's efforts to establish such a system, and offers prospects for its future evolution.