China Tightens SME Payment Rules as Local Debt Squeezes Supply Chains

Chinese regulators are escalating a crackdown on delayed payments to small and midsize enterprises (SMEs), exposing the sprawling impact of local government debt on the broader economy.

Starting July 1, the maturity for electronic IOUs will be capped at six months, people familiar with the matter told Caixin. The rule prohibits large corporations and government bodies from using these non-cash instruments to disguise payment delays.