In China’s electrical car trade, suppliers have been silently struggling. An investigation by Financial Observer carried out in September of this 12 months examined monetary information from 14 automakers, discovering that their common accounts-payable and notes-payable turnover interval had risen from 164.4 days on the finish of 2025 to 187.5 days within the first half of 2026. Which means that automakers have been taking longer to pay their suppliers, who want the funds to pay employees and buy manufacturing inputs. This may occasionally trigger many suppliers to borrow cash to cowl their on a regular basis prices.
After 17 main car producers promised to restrict provider fee durations to 60 days final 12 months, Beijing launched new guidelines in September 2026 to control how automakers pay their suppliers. This can be working; in line with the China Affiliation of Vehicle Producers, the common fee interval was 54, about 10 days shorter than a 12 months earlier.
This does seemingly contradict the findings of the Financial Observer, but it surely must be identified that they use two totally different measures. The trade affiliation measured time from acceptance of an bill till fee, together with fee by sure financial institution payments, whereas the monetary assertion measure utilized by the journal makes use of accounts payable, together with acceptance payments, and price of products offered. It might overstate fee durations as a result of it contains acceptance payments whereas excluding the price of unsold merchandise. Nonetheless, it does level to the truth that suppliers could obtain a monetary instrument as an alternative of money, whereas delays in inspection or bill processing can additional prolong the wait.
The provider fee subject will not be restricted to the automotive sector. As Cao Yuanyuan, director normal of the Individuals’s Financial institution of China’s Monetary Market Division, acknowledged in a September 14 authorities briefing, massive corporations with substantial money reserve have delayed provider funds, forcing smaller suppliers to borrow to proceed working. This represents a switch of financing prices from bigger to smaller companies.
This highlights an inequality that always goes underneath the radar in China’s manufacturing sector. Massive companies can scale back their want for working capital by turning into extra environment friendly, but in addition by taking longer to pay their suppliers, shifting the monetary burden up the availability chain. In some circumstances, massive corporations have issued a digital promise to pay later, which the provider presents to a financial institution to acquire a mortgage. This observe has typically been abused by corporations seeking to postpone money funds whereas charging suppliers financing charges.
These excellent certificates reached 3 trillion yuan at their peak, however had fallen to 2.4 trillion yuan by July 2026, in line with the central financial institution. Common fee durations for the certificates had fallen to 92 days, which demonstrates progress however appreciable scale of such preparations.
For context, on the finish of September 2026, massive industrial companies held 29.77 trillion yuan in accounts receivable, a year-on-year enhance of 10 p.c. Their common assortment interval was about 72 days. This illustrates how a lot working capital is tied up in unpaid invoices in China’s manufacturing trade.
Why does this matter? True, longer fee durations require suppliers to borrow and pay financing prices, however suppliers additionally could must postpone progress and innovation. Suppliers might also be pressured to simply accept much less favorable contract phrases to maintain massive clients. That is detrimental to industries that depend on smaller producers specifically, since suspending provider funds reduces the capabilities of the provider pool.
Nonetheless, it appears that evidently Chinese language officers acknowledge these dangers. In accordance with the September automotive rules, most manufacturing supplies have to be inspected inside three working days and automakers could not drive suppliers to simply accept sure noncash fee devices. In addition they encourage companies to pay smaller suppliers inside 30 to 60 days. A State Council directive referred to as for even broader reforms, together with tighter oversight of digital certificates and higher scrutiny of huge corporations with substantial payables.
Regardless of this, enforcement of those measures stays difficult, as companies in extremely aggressive industries could try different methods to decrease their prices, corresponding to negotiating decrease costs from their suppliers. These actions would additionally constrain suppliers’ monetary well being and innovation.
For worldwide companies seeking to supply from China, these money move points could scale back provider flexibility, which may stop the abroad agency from responding to rising demand. A provider could have the capabilities required by a big multinational, however an absence of money could prohibit them from investing in enhancements or increasing capability to satisfy worldwide market demand. Shopping for companies subsequently have to assess the monetary well being of their suppliers, not simply their current capability and supply efficiency.
China’s aggressive place in international manufacturing disguises a stress beneath the floor: massive producers could acquire market share however probably on the expense of the very suppliers that maintain them in enterprise. Whether or not Beijing can guarantee provider safety whereas preserving the competitiveness of huge producers will take a look at the policymaking abilities of China’s technocrats.