Most foreign creditors who lose money in China do not lose the case. They win it, eighteen months later, against a company whose accounts are empty. Asset preservation — a court order freezing bank accounts, receivables, equity or property — is the step that prevents that, and it is the step foreign claimants most often skip. It is fast (an urgent application is decided within 48 hours), it is cheap (the court's fee is capped at RMB 5,000), and more often than not it ends the dispute rather than starting it.
- Three timings: before you file (pre-litigation), after you file (during proceedings), and in aid of arbitration.
- A pre-litigation freeze must be followed by proceedings within 30 days, or it is lifted. Do not apply until the claim is ready to file.
- Urgent applications are decided within 48 hours and, if granted, can be enforced immediately.
- Security is mandatory for a pre-litigation freeze — commonly satisfied by a preservation liability insurance policy rather than cash, which is what makes this practical for a foreign claimant.
- The court fee is capped at RMB 5,000 regardless of the amount frozen.
- You must identify the assets. The court freezes what you point it at — preservation rewards preparation, not urgency alone.
1. What preservation actually is
Preservation (财产保全) is an interim measure: the court attaches, seizes or freezes specific property of the respondent so that a later judgment or award can actually be satisfied. It does not decide the merits and it does not give you the money. It removes the debtor's ability to move the asset — and, in commercial terms, that is usually the whole ballgame.
What can be frozen is broad: bank accounts, receivables owed to the debtor by third parties, equity interests, vehicles, real property, and increasingly balances on payment platforms. Freezing receivables is often overlooked and can be the most effective route where a debtor's own bank balances are kept deliberately thin.
2. The three timings
| Route | When | Key conditions |
|---|---|---|
| Pre-litigation | Before proceedings are commenced | Must show urgency; security is required; you must then sue or commence arbitration within 30 days or the freeze is lifted |
| During proceedings | After filing, before judgment | Lower urgency threshold; the court may require security rather than always requiring it |
| In aid of arbitration | Where the dispute goes to arbitration | Applications are routed through the arbitration institution to the competent court |
The 30-day rule is the one that catches people. A pre-litigation freeze is not a way to apply pressure while you think about whether to sue — it is a sprint, and the claim needs to be drafted and ready before you apply. Miss the window and the freeze is discharged, the debtor is now on notice, and you may be exposed on the security.
3. Where you apply — and why it matters
A pre-litigation application can generally be made to the court where the property is located, where the respondent is domiciled, or which would have jurisdiction over the substantive case. That choice has practical consequences: the court where a debtor's main bank account sits may be quicker to act on it than a court in another province, and local familiarity with the asset can matter more than theoretical jurisdiction.
4. The 48 hours — and what has to be ready before the clock starts
Where the application is urgent, the court must rule within 48 hours, and a granted order can be enforced immediately. That speed is real, but it is only useful if the file is complete when you file. The court freezes what you identify; it does not go looking. In practice you need:
- The respondent's exact registered Chinese name and Unified Social Credit Code — an English trading name will not do.
- Specific asset details: bank and branch, account number where you have it, property or equity particulars, or the identity of third parties who owe the debtor money.
- Evidence establishing the claim and the urgency — most persuasively, evidence that assets are being moved: a recent change of legal representative, registered address or shareholders, transfers to related parties, or a new company with a near-identical name at the same address.
- The security in place, and the claim ready to file.
5. The security — the part that decides whether this is practical
Chinese courts require a pre-litigation applicant to provide security, protecting the respondent against the loss a wrongful freeze would cause. If you freeze assets and later lose, you can be liable for the damage caused.
Posting that security in cash is what historically put preservation out of reach for foreign claimants — tying up a large sum, cross-border, at the moment you are already out of pocket. The practical answer now is a preservation liability insurance policy: an insurer stands behind the applicant for a premium that is a small percentage of the amount preserved. That single change is what makes freezing a Chinese debtor's accounts a realistic option rather than a theoretical one, and it is worth asking any Chinese firm you instruct how they propose to handle it.
The court's own charge is trivial by comparison: the preservation application fee is calculated on the value preserved but capped at RMB 5,000 however large the freeze.
6. Why a frozen account settles cases
Preservation is usually discussed as a litigation safeguard. Commercially it is a negotiating instrument. A Chinese trading company's operating account is not a store of value — it is how payroll runs, how suppliers get paid, and how the next order gets financed. Freeze it, and a debtor who spent six months not replying to a foreign creditor's emails commonly finds the money within days.
That is why sequencing matters. A demand letter that arrives after the accounts are frozen is a different document from one that arrives before: it is no longer a request, it is a settlement discussion with the leverage already applied. It is also why tipping off the debtor — a warning email, a threatening call — before the application is ready can be an expensive courtesy.
7. The limits, stated plainly
- It is not a search. The court acts on assets you identify. If you cannot point to anything, preservation has nothing to bite on — which is why asset tracing comes first, not second.
- It is not free of risk. A wrongful freeze exposes you to liability for the respondent's loss. That is the point of the security, and it is a real consideration where the claim is arguable rather than clear.
- It does not create money. A debtor that is genuinely insolvent will not become solvent because you moved first — though you may still improve your position relative to other creditors.
- It is not a substitute for the claim. The 30-day rule exists precisely to stop preservation being used as standalone pressure.
Where preservation sits in the wider recovery sequence — and the steps to take in the first 72 hours before any of this — is set out in a Chinese customer won't pay and on our China debt recovery page. What the whole exercise costs is in how much does it cost to sue a Chinese company.
Frequently asked questions
Yes. Pre-litigation preservation is available where you can show urgency. The court must decide an urgent application within 48 hours and a granted order can be enforced immediately. You must provide security, and you must then commence proceedings or arbitration within 30 days or the freeze is lifted.
Security protecting the respondent against loss from a wrongful freeze. Cash is capital-intensive, so in practice this is commonly satisfied through a preservation liability insurance policy, whose premium is a small percentage of the amount preserved. Courts may require security for a freeze granted during proceedings as well, though the requirement is applied more flexibly at that stage.
Bank accounts, receivables owed to the debtor by third parties, equity interests, vehicles, real property and, increasingly, payment-platform balances. Freezing receivables is often the most effective route where a debtor deliberately keeps its own balances thin.
It helps considerably, but specific asset details of some kind are essential — the court freezes what you identify rather than searching for you. Bank and branch, property or equity particulars, or the identity of parties who owe the debtor money are all workable starting points, which is why asset tracing precedes the application.
The court's application fee is calculated on the value preserved but capped at RMB 5,000 however large the freeze. The meaningful cost is the security — the insurance premium, or the opportunity cost of cash — rather than the court fee.
You can be liable to the respondent for loss caused by a wrongful freeze, which is exactly what the security stands behind. That risk should be weighed honestly where liability is arguable rather than clear-cut, and it is a reason to take a view on the merits before applying, not after.
Sources
- DLA Piper Global Litigation Guide — China: pre-judgment attachments and freezing orders — the 48-hour decision, immediate enforceability, the security requirement, and the 30-day rule after a pre-litigation freeze.
- CMS Expert Guide — interim measures in China — where an application may be made, and the urgency and security conditions for pre-action preservation.
- Buren — preservation of property in civil litigation and arbitration in China — preservation in aid of arbitration and the categories of property that may be preserved.
- Internal: a Chinese customer won't pay · what it costs to sue · 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.