China's Ministry of Industry and Information Technology (MIIT) is leading a new push to curb the widespread practice of large companies delaying payments to small suppliers, a move that could reshape cash flow dynamics across industries including electric vehicles. The initiative, announced at a State Council policy briefing on September 14, calls on leading enterprises to honor a "60-day cash payment commitment" and sets new rules to tighten oversight of payment behavior, according to IThome.
New rules target payment delays
The State Council has issued a notice on strengthening governance of payment difficulties faced by small and medium-sized enterprises (SMEs). The document, approved at a State Council executive meeting, outlines 10 specific measures across four areas. Key provisions include establishing industry-specific payment rules, defining four essential payment elements (accounting period start point, payment method and process, acceptance standards and period, and maximum payment term), and requiring industry authorities to issue payment-promotion initiatives.
For large companies that deliberately extend payment periods, the notice calls for joint talks and corrective actions. It also strengthens anti-unfair-competition enforcement against firms abusing their market dominance, and improves disclosure requirements for listed companies and large enterprises regarding their accounts payable. State-owned enterprises are expected to set an example by paying promptly.
In a significant move, the notice restricts the use of non-cash payment instruments such as electronic vouchers, capping their maximum payment period at six months. It also requires stricter supervision of electronic voucher service platforms to ensure compliance.
Implications for the EV supply chain
MIIT Vice Minister Ke Jixin explained that many industries currently lack specific settlement rules, allowing large firms to exploit loopholes. They often blur the start of the payment period, delay acceptance or settlement, or misuse commercial bills and electronic vouchers to stretch payment terms, squeezing small suppliers' working capital.
The new policy aims to close these gaps by standardizing payment terms in model contracts, giving SMEs clarity on when and how they will be paid. The 60-day cash payment commitment, which includes bank transfers as an acceptable form of cash, is designed to have leading companies set an example for the entire industry.
For China's electric vehicle sector, where large automakers and battery suppliers dominate the supply chain, this policy could improve liquidity for smaller component makers and parts suppliers. Timely payments would help stabilize the supply chain and enhance its resilience, a goal the government has emphasized amid global trade tensions.
The notice also encourages large enterprises to use financing mechanisms to replace accounts payable with cash, ensuring that funds flow more directly to upstream SMEs. This could reduce the reliance on complex payment instruments that often disadvantage smaller firms.
