The question foreign creditors ask is "can I sue in China?" — and the answer is almost always yes. The question that decides whether you see the money is different: will there be anything left to collect when you win? Two clocks are running. One is your three-year limitation period. The other, faster and more dangerous, is the debtor quietly moving assets while you send polite reminders. Everything below is ordered by which of those two clocks it protects.
- Identify the real debtor first. You need the exact Chinese registered name and Unified Social Credit Code — the English name on the invoice is often not a registered entity at all.
- The limitation period is three years from when you knew of the infringement and of the obligor (Civil Code Art. 188). It is interrupted by a demand, by the debtor's acknowledgment, or by suing (Art. 195).
- A demand letter from a licensed Chinese firm does real work — it interrupts limitation, creates a dated record, and reaches a debtor who has been ignoring foreign emails.
- Asset preservation is the leverage. Courts decide urgent applications within 48 hours; a pre-litigation freeze requires you to sue within 30 days; security is required, commonly via a preservation insurance policy rather than cash.
- Enforcement has its own clock: two years from the judgment's performance deadline to apply. Non-payers can be placed on the dishonest judgment debtor list, restricting flights, high-speed rail and credit.
- A shell company is not always the end. Unpaid subscribed capital can be pursued against shareholders — and under the 2024 Company Law subscribed capital must be paid up within five years of establishment.
1. Find out who you are actually suing
This sounds trivial and it is where a surprising number of claims stall. Chinese companies have one legally registered name — in Chinese characters — and a Unified Social Credit Code, an 18-character identifier that is unique to the entity. The English name printed on your invoice, contract or website has no legal status. It may be a translation, a trading style, a Hong Kong affiliate, or a name that belongs to nobody.
Before anything else, establish three things: the debtor's exact registered Chinese name and credit code; whether the entity that signed your contract is the entity that received your goods and the entity that holds the money (in group structures these are often three different companies); and what the public record already says about them — existing lawsuits, enforcement proceedings, and whether they are already on the dishonest-debtor list. A debtor with twelve unsatisfied judgments is a very different commercial proposition from one with none, and you want to know that before you spend anything.
The same exercise tells you something useful about the paperwork: if your contract bears only a signature and no company chop, expect an argument about whether the company is bound at all. In China the chop, not the signature, is what binds a company — see company chops: what they bind and who should hold them.
2. Stop the limitation clock — properly
The general limitation period is three years, running from the date you knew or should have known both that your right was infringed and who the obligor was (Civil Code Art. 188). Three years feels generous until you realise how much of it disappears into "they keep promising."
Limitation is interrupted, and starts again from zero, where the creditor demands performance, the debtor agrees to perform, or the creditor sues or applies for arbitration (Art. 195). Two practical consequences:
- An informal reminder may interrupt it, but you have to be able to prove it. An email into a shared mailbox that no one answers is weak evidence of a demand. A letter from a Chinese law firm, sent by a method that produces a delivery record, is strong evidence — which is a large part of why it is worth sending.
- A debtor's acknowledgment resets the clock in your favour. A signed reconciliation statement, a repayment plan, even a clear WeChat message admitting the balance, can restart three years. Chinese courts routinely accept WeChat records as evidence. Export those chat histories now, while the account still exists.
3. The demand letter does more than foreign creditors expect
Foreign companies tend to treat a lawyer's letter as a formality on the way to litigation. In China it is a substantive step. A letter issued by a licensed Chinese firm, on the firm's letterhead and under its chop, with the handling lawyer's name and practice certificate number, does four things at once: it interrupts limitation; it creates a dated, provable demand; it tells the debtor that the creditor now has Chinese counsel and knows where the assets are; and it puts a deadline on the table.
The change in tone is often abrupt. A debtor who spent four months not answering emails from a foreign supplier frequently answers within days once the letter arrives from a Beijing firm — because the calculation has changed from "a distant creditor who will give up" to "someone who is about to freeze my accounts."
4. Freeze the assets, or accept you may win nothing
This is the step that most determines the outcome, and the one foreign creditors most often skip. Asset preservation is an application to the court to freeze bank accounts, receivables, equity or property so they are still there when you have a judgment.
- It can be done before you sue. Where there is urgency, a court can order pre-litigation preservation and must decide within 48 hours. But you then have 30 days to commence proceedings or the freeze is lifted — so it is a decision to be made with the claim already drafted.
- Security is required. You must secure the debtor against the loss a wrongful freeze would cause. Cash security is capital-intensive; in practice this is now commonly handled through a preservation liability insurance policy, which changes the economics substantially for a foreign claimant.
- The court fee is capped. The preservation application fee is capped at RMB 5,000 however large the sum frozen — one of the better-value steps in the whole process.
The commercial effect is out of proportion to the legal one. A company that has ignored a creditor for six months tends to find the money within a fortnight of its operating account being frozen. The mechanics are set out in freezing a Chinese company's assets before you win.
5. Litigation or arbitration — you decided this when you signed
Which forum you are in was fixed by your contract, not by what would now be convenient. If there is a valid arbitration clause, that is where you go. If there is none, you generally sue in the Chinese court at the defendant's domicile or the place of contract performance.
One expectation to reset: foreign-related cases are not subject to the statutory trial time limits that apply to domestic cases, although in practice courts still generally aim to close a first-instance foreign-related case within about six months. Service on a foreign party, evidence executed abroad and translation all add time. Since 7 November 2023 China has been a party to the Apostille Convention, so documents from member states need a single apostille rather than the old consular legalisation — a genuine saving of weeks.
If instead you already hold a foreign award or judgment, the routes diverge sharply: arbitral awards enforce comparatively well under the New York Convention, foreign court judgments much less so. That is covered in enforcing foreign arbitration awards and court judgments in China, and the drafting that determines it in the China arbitration clause.
6. Enforcement: where cases quietly die, or finally pay
A judgment is not money. You must apply for enforcement, and you have two years from the last day for performance under the judgment to do it. Once you apply, the court can search and freeze the debtor's assets nationwide through its asset-control network — bank accounts, vehicles, real property, equity and, increasingly, payment-platform balances.
The pressure point that matters most is reputational and personal. A judgment debtor who can pay and does not can be placed on the list of dishonest judgment debtors, which restricts air and high-speed rail travel, borrowing, and certain corporate roles — and is publicly searchable. For a Chinese business owner, that is a meaningful sanction, and it is frequently what produces payment after litigation has failed to.
Where the debtor genuinely has nothing, enforcement may be concluded without recovery. That is not necessarily final: proceedings can be resumed if assets are later found, which is why continuing to monitor a debtor's public record has value even after a disappointing enforcement.
7. When the debtor turns out to be a shell
Discovering that the counterparty is an empty company with no assets is common and not always fatal. The most useful route is unpaid registered capital. Chinese companies subscribe a capital figure on registration; where the shareholders never actually paid it in, they can in defined circumstances be required to make up the shortfall to satisfy the company's debts — effectively adding them to the enforcement.
This route has become sharper. Under the 2024 Company Law, in force from 1 July 2024, shareholders must pay up subscribed capital within five years of establishment; the old open-ended subscription system is gone. A company incorporated with a headline capital figure it never intended to fund is now on a clock. Existing companies have until 30 June 2027 to bring their schedule inside five years — the mechanics are in registered capital in China: the five-year rule and the 30 June 2027 deadline. Other routes — challenging asset transfers to related parties, or pursuing a successor company operating from the same address with the same people — depend heavily on the facts, but the shell should never be assumed to be the end of the road.
8. What stops this happening on the next order
Most of the recoveries we see would have been easier, cheaper or unnecessary with three changes to the contract that cost nothing at signature:
- Get the chop, and check the registered name. A contract chopped by the entity whose Chinese name and credit code you have verified removes an entire category of argument.
- Write a dispute clause that actually works. Name the institution, the seat, the governing law and the language. A clause that is silent on language defaults to Chinese; a clause that names a non-existent institution can be void.
- Do not let exposure build. Staged payments, a meaningful deposit, and a hard credit limit per customer are worth more than any remedy available afterwards. The cheapest debt to recover is the one you never extended.
If you are already past that point, the practical starting sequence — and the honest test of whether a claim is worth bringing — is set out on our China debt recovery page.
Frequently asked questions
Generally three years from when you knew, or should have known, that your right was infringed and who the obligor was (Civil Code Art. 188). The period is interrupted and restarts where you demand payment, where the debtor acknowledges the debt, or where you commence proceedings or arbitration (Art. 195). Do not assume an unanswered email has interrupted it — you need to be able to prove the demand.
Yes. Where there is urgency a court can grant pre-litigation preservation and must decide within 48 hours. You must provide security — in practice often a preservation liability insurance policy rather than cash — and you must commence proceedings within 30 days, or the freeze is lifted. The court's preservation fee is capped at RMB 5,000.
Yes. Only the registered Chinese name and the 18-character Unified Social Credit Code identify a Chinese entity in law. An English trading name may correspond to no registered company, or to a different company from the one that holds the assets. Establishing the correct defendant is the first step in any recovery.
Yes, electronic data including WeChat and email exchanges is routinely accepted, and an admission of the debt in a chat message is often the strongest document in a file. Export and preserve the records early — before an account or device is lost.
Enforcement can be concluded without recovery, but that is not always final: proceedings can be resumed if assets are later discovered. Separately, where the shareholders subscribed registered capital they never paid in, they may in defined circumstances be required to make up the shortfall to satisfy the company's debts — a route made sharper by the 2024 Company Law's five-year payment deadline.
Usually not. Chinese lawyers act under a power of attorney and foreign clients are rarely required to attend. Documents executed abroad may need notarisation and an apostille; since 7 November 2023 China has been in the Apostille Convention, which replaced consular legalisation for documents from member states.
Sources
- DLA Piper Global Litigation Guide — China: pre-judgment attachments and freezing orders — the 48-hour decision window, security requirement and the 30-day rule after pre-litigation preservation.
- CMS Expert Guide — interim measures in China — where preservation may be applied for, and the urgency and security conditions.
- Covington — impacts of the amended Civil Procedure Law on foreign-related litigation in China — the 2023 amendment in force 1 January 2024.
- Internal: freezing a Chinese company's assets · what it costs to sue · enforcing foreign awards and judgments · China debt recovery.
This article is general information for foreign companies, not legal advice on any specific matter. Rules and practice change; please take advice on your facts.