Abstract: The bankruptcy system is currently the institutional guarantee for the legal and efficient exit of market entities in China. In order to improve China's bankruptcy judicial capabilities and optimize the business environment, we analyze the bankruptcy judicial capacity indexes data in Doing Business issued by the World Bank and clarify the deficiencies of China's bankruptcy system in comparison with other countries' bankruptcy systems. We find that it takes longer time and higher expenses for liquidation or resolving insolvency and the recovery rate is low. We propose that China take lessons from other countries and areas in legislation, legal procedures and practice by establishing personal bankruptcy law, simplifying bankruptcy procedures, and by establishing bankruptcy courts. And to improve the implementation of bankruptcy cases, we suggest granting the implementation courts the authorization to initiate bankruptcy procedures so as to lower the cost of judiciary bankruptcy.

Key words: business environment, bankruptcy system, personal bankruptcy, residual debt exemption, bankruptcy court