Since 1949, the central government has paid off all creditors. The legal risk was either ignored or totally discounted. Under a communist system all property belongs to the state. It was probably assumed that the central government in Beijing would ultimately stand behind any mainland debt. In short, registration is to protect foreign creditors.
Unregistered debt is mostly unenforceable under Chinese law.
With no legal or financial limitations, by 1995, Gitic was able to enlarge its assets an estimated 100 times, while diversifying into a host of businesses, including securities brokerage, equipment leasing, silk textiles, leather and plastics, international trade, manufacturing projects, hotels and other real estate investments, as well as joint ventures with a number of prominent local companies. Although it not licensed as a commercial bank, it also took deposits from 25,000 local depositors. Again, under Chinese law, deposits that violate these regulations are void or illegal. The court permitted neither comments nor appeals. Restructuring was neither considered nor allowed.