China has introduced a new bankruptcy law that gives creditors precedence over workers when it comes to claiming the assets of failed companies.
Creditors will now be first in line to claim a bankrupt firm's assets
The law also means that, for the first time, private Chinese firms that have failed will be allowed to collapse.
Previously they existed in a legal limbo - their assets could not be released and their debts could not be struck from their creditors' books.
The change is seen as another step in China's move to a capitalist economy.
The new law further means that failed state enterprises can also now be officially liquidated for the first time.
Until now, studies estimate that there are about 30 million Chinese people listed on the employment rolls of public companies that are no longer operational.