Building Bridges in China for a More Harmonious Society: Origins and Evolution of Personal Insolvency in Taiwan and Shenzhen

Abstract

A much-heralded new law in Shenzhen, China, is not nearly as new as it might appear, and this law’s past offers revealing and important lessons for its successful future. Effective in March 2021, the groundbreaking Shenzhen personal bankruptcy regulation is an impressive monument of Chinese legislation, but it is not the first Chinese personal insolvency law, as has commonly been announced. Rather, Shenzhen’s statute was founded on and still reveals vestiges of a predecessor law with a rich background of informative development. The origin law emerged 13 years earlier across the Strait in Taiwan. In fact, although it was originally based on this Taiwanese law, the Shenzhen successor has powerfully evolved to take into account lessons from earlier struggles in Taiwan and the rest of the world, as catalogued in a landmark report by the World Bank. The Shenzhen model embodies an especially elegant product of building on common experience toward common goals. This article charts the progression of policy choices and results in Taiwan, through the decades of trial-and-error analyzed in the World Bank report, and culminating in the state-of-the-art new Shenzhen regulation, which is poised for potential rollout to all of Mainland China.

Keywords: personal insolvency, consumer bankruptcy, credit card debt, consumer debt