China Requires Central Enterprises to Take the Lead in Timely Payments to SMEs

Gasgoo Munich- On September 14, Pei Renquan, a senior official from the State-owned Assets Supervision and Administration Commission (SASAC), outlined new guidelines aimed at tackling payment delays for small and medium-sized enterprises (SMEs). Speaking at a State Council policy briefing, Pei laid out strict requirements designed to force central state-owned enterprises to settle their bills on time.

Image source: Huaban.com

Pei noted that the new rules specifically task central enterprises with leading by example. These firms are expected to actively secure funds to ensure payments are made promptly. Moving forward, cash payments to SMEs must be treated as a hard target. At the same time, state giants must maintain reasonable cash payment ratios for larger partners, helping spread better payment habits throughout the supply chain.

The document imposes strict controls on the use of financial instruments, explicitly banning the issuance of notes with maturities exceeding six months. Furthermore, SASAC is urging state firms to comply with industry regulations, prioritizing the inclusion of four key terms in contracts and actively embracing initiatives aimed at timely payment.

The policy aims to ease the repayment burden on SMEs and stabilize cash flow across the supply chain. Given that the automotive sector relies heavily on a vast network of smaller suppliers, the implementation of these rules should provide a much-needed boost to the liquidity of parts manufacturers.