China issues rules to ease payment delays for SMEs, urges big firms to pay within 60 days

Payment delays have long been a critical concern for small and medium-sized enterprises (SMEs), affecting their healthy development, the optimization of market competition, and the smooth circulation of the national economy. In response, the General Office of the State Council recently issued the Notice on Strengthening the Governance of Payment Delays for Small and Medium-Sized Enterprises (hereinafter referred to as the Notice).

The Notice adopts a problem-oriented approach, targeting the key bottlenecks that cause payment difficulties for SMEs. It proposes 10 specific measures across four areas, based on improving industry payment rules, strengthening oversight of large enterprises' payment behavior, regulating non-cash payment instruments, and enhancing fund transmission efficiency and financing support.

Establishing Clear Industry Payment Rules

Promoting timely payment within industries and ensuring smooth cash flow for enterprises are essential to enhancing the resilience and security of industrial and supply chains, as well as modernizing industry governance systems and capabilities. The Notice calls for the establishment of industry-specific payment rules, including defining reasonable payment periods, specifying four key payment elements, and guiding large enterprises to cap their maximum payment terms at 60 days.

Addressing Loopholes in Payment Practices

Ke Jixin, Vice Minister of Industry and Information Technology, noted that most industries have yet to issue specialized settlement and payment rules. Some large enterprises exploit this gap by abusing their dominant market position. They deliberately extend payment periods for upstream and downstream SMEs by obscuring the starting point of the payment period, delaying acceptance or settlement, and misusing commercial drafts and electronic accounts receivable vouchers.

"The Notice requires relevant industry authorities to develop and improve settlement and payment regulations for their sectors, clearly defining the starting point of the payment period, payment methods and procedures, standards and timelines for inspection and acceptance of goods and services (or project completion settlement), and maximum payment terms," Ke explained. These four elements are targeted and precise, filling the current gaps in settlement and payment management across industries. By standardizing these key elements and incorporating them into model contract texts, the Notice sets clear boundaries for large enterprises to pay on time and gives SMEs clarity on when and how they will receive payment. Through continuous institutional development and long-term mechanisms, the goal is to fundamentally address the issue of payment delays for SMEs.

Encouraging 60-Day Payment Commitment

The Notice actively encourages large enterprises to reduce their maximum payment period to SMEs to within 60 days. Ke Jixin emphasized that timely payment by leading enterprises will serve as a model for the entire industry chain. The Notice calls on relevant industry authorities to issue timely payment initiatives, guiding leading enterprises in each sector to take the lead in announcing and fulfilling a "60-day cash payment commitment." This includes payments made via bank transfers or other instant settlement methods within 60 days of the delivery of goods, services, or project completion. By encouraging leading enterprises to set an example, the aim is to foster a healthy ecosystem of timely payment across the entire industry.

Targeting Large Enterprises with High Payables and Ample Cash

The Notice highlights the need to focus on large enterprises with large accounts payable and ample cash assets. Cao Yuanyuan, Director of the Financial Market Department of the People's Bank of China (PBOC), explained that some large enterprises delay payments to suppliers to save financial costs and gain a competitive edge. This not only harms SME suppliers but also exacerbates "involution-style" competition and supply-demand imbalances at the macro level. Public financial data shows that some large enterprises have substantial accounts payable while holding ample cash assets, indicating they have the capacity to pay on time but choose not to.

The PBOC is closely monitoring the negative impact of large enterprises' payment delays on the macroeconomy, industrial ecosystems, and SME operations. It is actively advancing inclusive finance to alleviate liquidity pressures on SMEs. As of the end of June 2026, the balance of inclusive small and micro loans reached 38.5 trillion yuan, with an average annual growth rate of nearly 20% since 2020.

Cao Yuanyuan stated that the PBOC will actively cooperate with relevant departments to strengthen governance of large enterprises' payment issues. For enterprises issuing bonds in the interbank market, the PBOC will enhance disclosure of accounts payable information and continue to support enterprises in replacing accounts payable through loans and bond issuance. Enterprises that significantly reduce their payables and payment periods will receive financing facilitation in bond issuance. At the same time, the PBOC will further increase financing support for SMEs, launch special actions for financial support to private and inclusive small and micro enterprises, guide reasonable growth in loan scale, steadily improve loan quality, and maintain stable interest rates and customer base quality, thereby enhancing the quality and efficiency of inclusive financial services.

Central SOEs to Lead by Example

Pei Renquan, head of the Financial Supervision and Operation Evaluation Bureau of the State-owned Assets Supervision and Administration Commission (SASAC), stated that central state-owned enterprises (SOEs) will take action in three areas: refraining from defaulting on payments, reducing the use of drafts and increasing cash payments, and breaking unreasonable industry practices and conventions. The goal is to ensure that central SOEs "pay what is due and pay promptly" to SMEs.

(Reporters: Huang Xin, Zhang Youjia)