Debt Collection Agency in China - No Win, No Fee

Step 1 - How does amicable (pre-legal) debt collection work in China?

Pre-legal collection recovers an unpaid invoice without a full lawsuit, through reminders, a formal demand and negotiation. China has no statutory pre-action dunning regime, so the amicable phase is a commercial process aimed at full payment or a written acknowledgement of the debt. A written acknowledgement also restarts the three-year limitation period under Civil Code article 195, which is why it is worth securing even when payment is deferred.

Conduct rules in the amicable phase in China

There is no licensing regime for debt-collection agencies in mainland China and no single supervising regulator, which is why recovery is normally run by or with licensed lawyers. The conduct boundary is criminal rather than administrative: Criminal Law Amendment (XI), in force 1 March 2021, makes it an offence to collect unlawful debt by threats, stalking or harassment, with up to three years' imprisonment where the circumstances are serious. A demand-letter process run through a law firm keeps the pressure lawful and preserves the evidence you need if the claim escalates.

When to escalate to court in China

Escalate when the demand lapses, the debtor disputes without substance, or the limitation period approaches. For a clear, undisputed money claim, the order-for-payment procedure is usually the fastest first step.

Step 2 - How do you obtain an enforceable title in China?

To enforce a debt through the courts you need an enforceable outcome. China's fast route for clear claims is the order-for-payment procedure, with an ordinary action for disputed ones.

The order-for-payment procedure (zhifu ling)

The creditor applies to the basic people's court with jurisdiction, provided the money claim is clear, there is no other debt dispute between the parties, and the order can be served on the debtor. The court tells the creditor within five days whether it accepts the application; if it does and the rights and obligations are clear and lawful, it issues the order within fifteen days. The debtor then has fifteen days from receipt to pay or file a written objection. If the debtor does neither, the creditor may apply for enforcement. There is no monetary threshold for this route.

Ordinary and small-claims actions

A timely written objection voids the order and ends the procedure, and the creditor brings an ordinary action instead, heard at first instance with one right of appeal. A claim below 50% of the relevant province's average annual employee salary may instead use the Small Claim Procedure, formalised by the 24 December 2021 amendment to the Civil Procedure Law and in force since 1 January 2022; the threshold was raised from 30% to 50% of that salary, the parties may jointly opt in up to 200% of it, and the judgment is single-instance and final with no appeal. The Small Claim Procedure concludes within two months, extendable by one; the ordinary Summary Procedure, for simple facts and clear rights before a single judge, concludes within three months, extendable by one.

Determining the appropriate court in China

Jurisdiction generally follows the defendant's domicile or the place of performance, subject to any valid jurisdiction agreement. The claim must be brought within the three-year limitation period.

More on court proceedings in China

The two-instance system

China operates a two-instance system: a first-instance judgment can be appealed once to the next court up, and the second-instance judgment is final and enforceable. The Small Claim Procedure is the exception, since it is decided at a single, final instance.

Citing Civil Procedure Law article numbers

The Supreme People's Court's official English text of the Civil Procedure Law has not been updated past an earlier article-numbering scheme, and the consolidated current English text is not freely published. The procedures set out above are stable current law; where an exact current article number matters for a filing, confirm it with your local counsel rather than relying on an English translation online.

Step 3 - How does debt enforcement work in China?

Enforcement is carried out by the people's courts once you hold an enforceable outcome. The court applies the measures that match the debtor's known assets, and the creditor does not deal with private bailiffs.

Ways to enforce a claim in China

• Bank deposits: the court can inquire into, freeze and transfer the debtor's bank deposits, within the scope of the obligation.
• Income: the court can withhold or withdraw part of the debtor's income, leaving the necessary living expenses.
• Property: the court can seal up, distrain, freeze, auction or sell off the debtor's property, leaving the necessities of life.
• Statutory penalty interest: a debtor who has not paid by the deadline set in the judgment owes double interest on the delayed debt.
• Pressure tools: the courts run a public Dishonest Judgment Debtor list under Supreme People's Court provisions of 1 July 2013 (amended 2017), published through the China Enforcement Information Online portal. Listing carries travel and high-consumption restrictions and adverse credit reporting, and it is often what moves a solvent but unwilling debtor to pay.

The enforcement process in China

The creditor applies to the court with the enforceable outcome, the court investigates and attaches assets, and proceeds are applied to principal, interest and costs, with any surplus returned to the debtor. Because enforcement runs entirely through the court, asset tracing and the choice of measure are decisions the court takes on the creditor's application, so a well-evidenced application naming known bank relationships or assets moves faster.

Cross-border debt collection in China

A foreign court judgment is recognised and enforced in China on the basis of a treaty or the principle of reciprocity under the Civil Procedure Law, and the 2023 amendment, in force since 1 January 2024, substantially rewrote the foreign-related civil litigation chapter, including the jurisdiction and recognition rules for foreign judgments. China signed the Hague Choice of Court Agreements Convention (2005) on 12 September 2017 but has not ratified it, so it does not yet provide a route. Foreign arbitral awards are generally easier to enforce than foreign court judgments, because the New York Convention (1958) has been in force for China since 1987, subject to the standard reciprocity and commercial reservations. For a cross-border supply contract with a Chinese counterparty, a well-drafted arbitration clause is therefore often the stronger enforcement position.