P.M. BRIEFING : 1st Chinese Factory Bankruptcy
China announced the first bankruptcy of a state-owned factory in 40 years of Communist rule today, but Western diplomats said sweeping closures in its debt-laden state sector were unlikely.
The official New China News Agency said the Nanchang Motorcycle Factory in East China’s Jiangxi province had accumulated debts and losses of $3.9 million against assets of only $1.2 million.
Long reviled as a capitalist evil, bankruptcy was first allowed by law in China in October, 1988. Since then, a few collectively owned enterprises have been declared insolvent and closed. The state sector, however, had escaped shutdowns despite huge losses that in the first 10 months of this year increased 135%. Latest figures show that large and medium-scale state firms lost $1.9 billion from January to June.
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