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Cure for loan defaulters
2006-08-23
China Daily
Twenty people in Hangzhou, all defaulting businesspeople and professionals, were made famous recently in a way few of them would have preferred. Under the co-ordination of a court in the city, in East China's Zhejiang Province, local newspapers published their personal information after they all defied the court's rulings that they should pay their due debts despite having sufficient funds to fulfil their financial obligations.
It was not the first time defaulters in this country were given this kind of publicity some southern cities have already experimented with the practice. But the data disclosed by the Hangzhou court were more complete. It even included these people's photos, identity card numbers and addresses.
While revealing private information in this manner will certainly raise many eyebrows over possible infringement of privacy, the practice is in line with current laws, which stipulate that courts have the mandate to disclose such information when they feel the need to do so.
And these people deserve the treatment, which serves as an open business record for them. The publicity will impose moral pressure by disgracing them, and the record will have a good chance of deterring potential future violators.
Dishonesty has been a chronic disease that troubles business environments in different parts of the country, with debt defaulting as one of the main forms. During the past few years, the topic has emerged at every annual session of the National People's Congress, China's legislature.
But Chinese courts, at the moment, are still not equipped with effective enforcement tools to be able to force borrowers to pay their arrears. For one, in many cases, technical problems still prevent banks from co-operating with courts in enforcing the rulings.
The move by the Hangzhou court, and similar steps by other Chinese cities, worked well. Many defaulters were reported to have made payments to creditors soon after their misdeeds were made known to the general public.
However, this method should not be taken as a long-term cure to the problem. After all, the protection of the violators' privacy remains a legitimate concern.
When technical conditions permit which should not be far away such business disputes should be resolved by a court ruling and its enforcement. And related parties should accelerate their work in this direction.
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