China bankruptcy cases surge as economy slows

"It is linked to getting rid of zombie companies and making the economy more efficient," said Susan Finder, law scholar in residence at Peking University's Shenzhen Graduate School. "Provincial courts state this when they report the number of bankruptcy cases. The idea is to save the companies that can be saved and liquidate the ones that can't."

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But legal experts say most legal bankruptcies involve SMEs, where the social impact is limited, while party-controlled courts still face strong incentives to keep larger companies operating rather than rule them insolvent.