Lending between general legal persons is restricted. Why?

Can be simply understood as a legal provision. Paragraph 1 of Article 60 of China's Company Law stipulates that directors and managers shall not lend company funds to others. "If a director or manager lends the company's funds to others, he shall be ordered to return the company's funds, which shall be punished by the company and the income shall be owned by the company." It can be seen that China strictly controls the scale of credit, except for the lending between financial institutions and non-financial institutions, the lending between legal persons is prohibited by law.

2. As early as 1990 "Answers to Several Questions about Trial of Joint Venture Contract Disputes in the Supreme People's Court", the guarantee clause in the joint venture contract stipulated this prohibitive clause: an enterprise legal person or a public institution legal person, as a joint venture, invests in the joint venture, but does not participate in the joint venture, nor does it bear the risk responsibility of the joint venture. If the principal and interest are recovered on time regardless of profit and loss, or a fixed profit is collected on time, it is obviously a joint venture. In addition to returning the principal, the investor shall also receive the interest obtained or agreed upon by the investor, and impose a fine equivalent to the bank interest on the other party.

3. the Supreme People's Court1Reply on How People's Courts Identify Lenders of Inter-enterprise Lending Contracts on March 25th, 996 reiterated that the people's courts should charge the borrowers the agreed interest according to law for the lenders of inter-enterprise lending or investors in the name of joint venture. IV. The People's Bank of China issued the General Principles of Loans on June 28th 1996. Article 2 of the General Rules for Loans clearly stipulates: "The lender mentioned in these General Rules refers to a Chinese-funded financial institution established in China to engage in loan business according to law", and Article 21 stipulates: "The lender must be approved by the People's Bank of China to engage in loan business, hold the Legal Person License for Financial Institutions issued by the People's Bank of China, and be approved and registered by the administrative department for industry and commerce."