China: Fresh measures ensure timely payments to SMEs
  • 2020-08-31
  • Entrepreneurship Research Center on G20 Economies
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  • A new regulation on ensuring timely payments to small and medium-sized enterprises will go into effect on Sept 1st, which will create a fairer business environment and better safeguard the legal rights and interests of SMEs and private enterprises that are having a hard time due to the COVID-19 pandemic. The China’ s State Council on July 14th released the regulation on ensuring timely payments to SMEs.

    Generating about 70 percent of GDP and 80 percent of jobs, SMEs have emerged as important pillars that support both the economy and social stability, and ensuring payments to them has become an urgent issue.

    Noting SMEs play a crucial role in expanding employment and improving people’s livelihood, the regulation will ensure government departments, public institutions, and large enterprises pay SMEs on time and this will invigorate the liquidity of SMEs. It will also safeguard the legitimate rights and interests of SMEs, reduce their operational costs, and optimize the business environment.

    A mechanism will be established for the disclosure of information regarding overdue payments to SMEs within the prescribed time limit. Also, the system of complaint handling, punishment for acts of bad faith, as well as supervision and evaluation will be set up to protect the legitimate rights of SMEs.

    The regulation standardizes contract signing between the relevant signatories and SMEs, requiring them to pay for goods, projects, and services from SMEs on time. It also prohibits them from extending the payment period.

    Also, more efforts will be made to offer financial support to SMEs to sustain employment and adopt cutting-edge technologies to advance digital transformation, the authority said.





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