ON WEDNESDAY, the Supreme People's Court issued a guideline for its reform over the next five years, which includes the construction of a personal bankruptcy system. Xiaoxiang Morning Herald comments:

It is the first time that a personal bankruptcy system has appeared in the Supreme People's Court's to-do list.

The establishment of such a widely-anticipated system can help to effectively solve the difficulties in law enforcement by filling in the institutional gaps.

After a court fails to make a person pay his or her debt, the debtor will appear on the court's black list until all his or her debts are paid. Being on the list will incur restrictions such as being unable to take planes or high-speed trains, or apply for loans.

However, data of the Supreme People's Court show that 18 percent of those on the black list in civil and commercial cases are not intentionally repudiating their debts, because they simply have no money to repay their debts.

Apparently, the court's compulsory execution will make no exception of them, which damages the judicial system's fairness.

Allowing personal bankruptcy is undoubtedly an encouragement and tolerance for entrepreneurial innovation. The losers who took on debt in good faith will be able to start over with the help of the bankruptcy system.

The personal bankruptcy system can thus make entrepreneurs and individuals more assured of their basic legal rights and interests should they default on debt.

So the system, if well made and implemented, can make the business and innovation environment more inclusive and humane.

Moreover, the system entails a thorough and objective investigation into the financial conditions of the applicants, in case it becomes a shelter for those trying to avoid paying their debts.