For China’s private sector, Beijing’s long-sought decree seen as key to getting paid

Buyers will have 60 days to pay for cargo, projects or services after they are delivered, plus more supervision and a complaint platform

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Employees check woven plastic bags this month at a factory that produces plastic products for export in China’s Jiangsu province. Photo: AFP

Published: 4:59pm, 25 Mar 2025Updated: 3:50pm, 28 Mar 2025

Enough of China’s small enterprises have run up against insurmountable roadblocks in trying to collect payments for services rendered – including from state-owned firms and local governments – that Beijing has responded with legislation to help wipe out such arrears.

Premier Li Qiang has signed a State Council decree that regulates and guarantees payments owed to small and medium-sized enterprises (SMEs) – a concrete step toward Beijing’s vow to address what can be a crippling problem for the private sector.

Analysts say the regulation, unveiled in October and now due to take effect on June 1, may offer hope to a bigger swathe of SMEs in the private sector keen on collecting long-overdue payments, as Beijing tackles the issue to revitalise the sector generally considered the backbone of China’s economy.

The decree details the regulation on safeguarding payments to SMEs, including requirements for large enterprises to pay SMEs within 60 days of the delivery of cargo, projects or services.

Other updates are about more clear-cut responsibilities, more vigorous supervision, a complaint platform, and harsher punishments for non-compliance. Amendments were made to the decree in the five months between its introduction and Li’s signing.

Private SMEs are particularly vulnerable, compared with SOEs

Tang Dajie, China Enterprise Institute

Tang Dajie, a researcher with Beijing-based China Enterprise Institute think tank, said private SMEs are at a loss in the face of huge local government debts.