Article 527 of the Civil Code of China provides that for a party to contract:
A party obligated to perform the obligation first may suspend his performance if there is definite evidence proving that the other party falls under any of the following situations:
(1) its operating conditions are seriously deteriorated;
(2) it transfers property or withdraws capital to evade debts;
(3) the good will of its business has been lost; or
(4) there’s another circumstance under which it has lost or is losing its ability to perform the obligation.
A party that suspends the performance with no such definite evidence shall bear default liability.
