More than 460,000 Chinese firms closed permanently in the first quarter as the coronavirus pandemic pummeled the world’s second largest economy, with more than half of them having operated for under three years, corporate registration data shows.
“China has managed to get the Covid-19 outbreak largely under control and domestic supply disruptions have now mostly dissipated,” Yao Wei and Michelle Lam, economists from French bank Societe Generale, said in a recent note. Chinese business owners who can no longer afford to maintain operations face a number of hurdles before they can walk away from a company.
Given the costly nature of bankruptcy proceedings, particularly for small businesses struggling with cash flow or without sufficient assets, the number of bankruptcy filings this year would not be high, said Zhu Bao, a Beijing-based lawyer.
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