When a customer, business partner, or borrower in China fails to repay what they owe, the creditor must decide whether to write off the debt or pursue legal action. The Chinese legal system provides effective mechanisms for commercial debt recovery at every stage. Wuzhou contract lawyer Jie Zhou explains the key strategies for recovering commercial debts.

Pre-Litigation Recovery

Demand Letters

A professionally drafted demand letter from a licensed lawyer can be very effective. It should state the amount owed, the contractual basis, interest calculation, payment deadline, and consequences of non-payment.

Property Preservation

Under Articles 100-108 of the Civil Procedure Law, a creditor may apply to freeze the debtor's assets before obtaining a judgment. The court must rule within 48 hours in urgent cases.

Litigation Strategy

Interest Calculation

Interest must be calculated in segments: PBOC benchmark rate before August 19, 2019, and LPR thereafter. The post-judgment rate is twice the LPR.

Post-Judgment Enforcement

Court enforcement powers include freezing bank accounts, seizing assets, placing the debtor on the judgment defaulters list, and in willful cases, detention or criminal prosecution.

The most important principle in Chinese debt recovery is speed. The longer a debt remains unpaid, the more time the debtor has to conceal assets.