China orders 10 measures to curb large firms’ payment delays to SMEs
China's State Council issued a notice with 10 measures to tackle chronic payment delays harming small and medium-sized enterprises (SMEs). The rules mandate industry-specific payment terms, cap large firms' payment periods at 60 days, and curb abusive use of commercial bills and payment vouchers. State-owned enterprises are urgently revising contracts and increasing cash payments, with some facing funding gaps. The People's Bank of China and other regulators are enforcing stricter oversight, linking SME payment complaints to executive performance evaluations.
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China issues 10 measures to tackle payment delays hurting small firms
China's State Council has issued a notice to address the chronic problem of delayed payments to small and medium-sized enterprises (SMEs), which officials say harms their健康发展, market competition, and the national economic cycle. The notice, reported by the Economic Daily, outlines 10 specific measures across four areas: establishing industry payment rules, supervising large enterprises' payment behavior, regulating non-cash payment tools, and strengthening financial support. Vice Minister of Industry and Information Technology Ke Jixin stated that many industries lack payment rules, allowing large firms to exploit their market position by delaying acceptance or using commercial bills to extend payment periods. The notice requires industries to set clear payment terms, including a maximum 60-day payment period for large firms, and encourages leading enterprises to commit to cash payments within 60 days. People's Bank of China official Cao Yuanyuan noted that some large firms with ample cash assets still delay payments, worsening 'involution-style' competition. The central bank will strengthen information disclosure for bond-issuing firms and provide financing便利 for those reducing payment delays. State-owned Assets Supervision and Administration official Pei Renquan pledged that central state-owned enterprises will lead by not defaulting, paying more in cash, and breaking unreasonable industry practices.
China Issues 10 Measures to Tackle Payment Delays Affecting Small and Medium Enterprises
China's State Council has issued a notice to address the chronic problem of delayed payments to small and medium enterprises (SMEs). The notice, reported by Sina Finance, outlines four areas with 10 specific measures. It mandates industry-specific payment rules, including a maximum 60-day payment term for large enterprises. Vice Minister of Industry and Information Technology Ke Jixin stated that many industries lack payment rules, allowing large firms to exploit their market position to delay payments. The notice requires industries to define key payment elements such as the start date of the payment period, payment methods, inspection standards, and maximum payment terms. It encourages leading enterprises to voluntarily commit to paying SMEs within 60 days in cash. People's Bank of China official Cao Yuanyuan noted that some large firms with ample cash reserves still delay payments, harming the macroeconomy. The PBOC will strengthen information disclosure for bond-issuing firms and provide financing support for those reducing payment delays. State-owned Assets Supervision and Administration Commission official Pei Renquan said central state-owned enterprises will be urged to pay SMEs promptly and in cash, avoiding unreasonable industry practices.
Chinese State-Owned Enterprises Act to Reduce Payment Delays for Small Businesses
A Chinese state-owned enterprise (SOE) financial controller, Liu Jie, describes a late-night emergency meeting on September 14 to accelerate cash payments to small and medium-sized enterprise (SME) suppliers. The SOE's chairman ordered contract revisions to clarify payment terms and prioritized early payment for cash-strapped SMEs. This follows a State Council policy briefing where officials from multiple ministries announced stricter enforcement against payment delays. The People's Bank of China noted that large firms' use of accounts payable forces SMEs to borrow, distorting monetary policy. Liu's firm has already paid over 20 million yuan in cash but faces a 1.8 billion yuan payment obligation in the next month, with a potential 200 million yuan funding gap. The firm is curtailing the use of payment vouchers and commercial bills, which previously extended payment terms to 12 months and generated investment income. New rules require multi-department approval for vouchers, with a maximum 6-month term. The firm is seeking a 200 million yuan loan from banks, which are imposing conditions. Banks report increased loan requests from SOEs for SME payments, with credit and collateral requirements. The article highlights the tension between SOEs' profitability goals and the new regulatory push to reduce SME payment burdens.
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Chinese State-Owned Enterprises Scramble to Cut Payment Delays to Small Suppliers Under New Pressure
A Chinese state-owned manufacturing enterprise is urgently implementing measures to reduce payment delays to small and medium-sized enterprise (SME) suppliers, following a State Council policy briefing on September 14. The company's financial controller, Liu Jie, described a late-night meeting where the chairman ordered a revision of payment contracts to include clear terms and a push for early cash payments. The company has already paid over 20 million yuan in cash and is pooling idle funds from subsidiaries, but faces a 1.8 billion yuan payment obligation in the next month with a potential 200 million yuan funding gap. To raise cash, the firm is considering redeeming wealth management products and seeking a 200 million yuan bank loan. The crackdown is driven by new performance evaluations linking SME payment complaints to executive assessments. The article also details previous practices of using payment vouchers and commercial bills to delay payments, which generated investment income but are now being curtailed. People's Bank of China official Cao Yuanyuan criticized large firms for using such instruments to 'eat from both ends' by delaying payments and charging fees. The company has banned gray-area practices and tightened conditions for issuing payment vouchers.
Read sourceLocal Chinese state-owned enterprises accelerate efforts to reduce payment delays for SMEs
A detailed report reveals that local state-owned enterprises (SOEs) in China are intensifying efforts to reduce payment delays to small and medium-sized enterprises (SMEs), following new government pressure. The article profiles a financial controller at a large manufacturing SOE, who describes emergency meetings and new directives from the chairman to modify payment contracts, increase cash payments, and curb the use of payment vouchers and commercial bills that lengthen payment cycles. The SOE has already paid over 20 million yuan in cash to SME suppliers but faces a funding gap of about 200 million yuan over the next six months. The company is seeking bank loans for cash settlement, though banks are imposing stricter conditions. The report attributes the crackdown to new regulations from the People's Bank of China and other regulators, which aim to stop large firms from using payment vouchers to delay payments and extract fees from suppliers. The local State-owned Assets Supervision and Administration Commission (SASAC) has incorporated SME payment complaints into the performance evaluations of SOE executives. The article notes that such practices were previously common among local SOEs, which used the retained funds to invest in wealth management products for extra income.