BizCLIR

Author (s):

FIAS

Date:

March 2007

Publication (if applicable):

N/A

Abstract (if Available):

Secured transactions laws enable businesses to use their assets as security to generate capital—from the farmer pledging his cows as collateral for a tractor loan, to the seller of goods orservices pledging the cash flow from its customer accounts as collateral for business expansion. In China, access to credit by businesses, particularly small and medium enterprises (SMEs), is severely limited as laws restrict many assets from being used as security. Examples of such assets include inventory, accounts receivable, and rural property. The result is more than 16 trillion RMB in dead capital—assets owned by private firms, SMEs and farmers that cannot be used to generate loans to fund business investment and growth.

URL:

Reforming Collateral Laws and Registries: International Best Practices and the Case of China