China Cuts Digital IOU Balance 20% Amid Supply Chain Finance Crackdown

China has cut the outstanding balance of digital IOUs by 20% to 2.4 trillion yuan ($338 billion) within a year or so, a central banker said, as a regulatory campaign aimed at curbing delayed payments by large companies pushes noncompliant platforms out of the market.

The average payment term for the IOUs, officially known as electronic accounts receivable certificates, had shortened by 92 days by the end of July from the period before new rules took effect, Cao Yuanyuan, head of the financial market department at the People’s Bank of China (PBOC), said at a briefing Monday.