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

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 owned 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.

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.

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.