(Yicai) Sept. 8 -- China is pushing automakers to pay small and medium-sized enterprise suppliers within 60 days and use cash as it moves to rein in lengthy payment cycles across the industry.

The recent notice, jointly issued by the general offices of China’s Ministry of Industry and Information Technology and the State Administration for Market Regulation, sets out requirements covering payment terms, acceptance procedures, payment methods, and priority support for SMEs.

The new guidelines aim to curb excessively long payment periods in the auto industry, which regulators say put pressure on suppliers, particularly SMEs, and threaten supply chain stability. The average accounts-payable turnover period of 14 mainstream listed Chinese automakers reached about 187 days in the first half of this year, 23 days longer than at the end of 2025, according to news agency Cailian Press, citing Wind data.

The new rules build on a supplier payment initiative released by the China Association of Automobile Manufacturers in June last year and introduce more detailed requirements for automakers.

Priority Protection for SMEs

Automakers are encouraged to pay SME suppliers within 30 days and no later than 60 days, per the rules, and to make all payments to them in cash.

Excessively long supplier payment periods imposed by automakers are a typical manifestation of irrational competition, according to an official from the MIIT. They increase operating pressure on suppliers, especially SMEs, affect the stability of industrial and supply chains, and hinder the smooth circulation of the economy, so strong measures must be taken to address the issue, the official added.

Relevant authorities will commission third-party organizations to investigate and assess automakers' accounts-payable practices and publicly release the results. Companies with large accounts payable, those that deliberately extend payment periods, or those subject to numerous complaints will be summoned by the relevant authorities and urged to rectify the problems.

Faster Acceptance, Cash Payments

The guidelines also clarify when payment periods begin and set deadlines for accepting deliveries.

Payment periods should generally be calculated from the date when goods, projects, or services delivered by suppliers pass acceptance inspections. General production materials, including components, should be inspected and accepted within three working days, while components requiring vehicle installation and verification should be accepted within five working days.

Regarding payment methods, the guidelines encourage cash payments and prohibit automakers from forcing or indirectly requiring suppliers to accept non-cash payment methods, such as bank acceptance bills, commercial acceptance bills, or supply chain notes.

For continuous supplies delivered while prices are still under negotiation, automakers may make advance payments of at least 90 percent of the most recent contract price. For non-continuous supplies, they may make advance payments of at least 70 percent of the industry average price or the designated unit price, with the amount subsequently adjusted based on the final agreed price.

Editor: Emmi Laine