Chinese Suppliers Stay Credit-Conscious Amid Financial Strain, Survey Reveals (International Edition)

As China’s economy continues to recover, companies are more hesitant to offer credit for sales because numerous unpaid invoices are still pending.

A recent survey reveals that Chinese suppliers are more hesitant about selling products on credit due to the ongoing economic recovery of their nation. To reduce instances of late payments, these companies are offering extended payment periods.

Coface, a worldwide trade credit insurance company, reported in their most recent China Corporate Payment Survey released on Tuesday that merely 65% out of 1,016 participants offered credit sales. This figure has dropped since last year’s 79%, as well as being lower than the pre-pandemic average rate of 74%.

"This decline reflected waning optimism about economic reopening, alongside rising concerns over the ongoing property market crisis According to the insurer, which carried out the survey in November and December of 2024, "sluggish domestic demand coupled with overcapacity in production."

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Ultra-long payment delays - lapses lasting 180 days or longer - have also proliferated, with nearly half of affected respondents reporting late payments worth 2 per cent or more of their annual turnover, a sharp increase from the 33 per cent of surveyed firms making similar disclosures in 2023.

"The firm noted in its survey report that this tendency pointed towards increased risks of non-payments," and further stated that according to their company’s observations, 80 percent of these delays eventually proved unrecoverable.

As they lengthen payback periods, however, fewer survey respondents reported delays. About 44 per cent of respondents reported overdue payments , decreasing from 62 percent in 2023.

However, the report’s authors pointed out that "a reduction in the occurrence of delayed payments might not directly indicate better cash flow situations for businesses."

Beijing has prioritized ensuring prompt payments to private companies due to the substantial increase in debts owed by state-owned entities and municipal authorities. This issue has escalated recently because of the economic deceleration following the pandemic and the extended slump in the property sector.

Last week, Premier Li Qiang signed a State Council decree taking effect on June 1 that regulates and guarantees payments owed to small and medium-sized enterprises, a concrete step toward addressing what for many in the private sector has been a crippling problem.

On March 28, Li also urged officials to accelerate and intensify efforts to make businesses whole.

Encouraged by governmental stimulus initiatives, many of those surveyed anticipated that late payment patterns would stay steady over the coming half-year, with a greater number foreseeing improvements rather than declines.

And 52 percent of the participants anticipated business activities To enhance in 2025, up from the 41 percent reported in 2024.

"Such optimism might be unfounded since the stimulus efforts have thus far been quite moderate, and the threat of tariffs continues to pose a significant risk to trading sectors," noted Tan Junyu, the North Asia economist at Coface. He further stated that his firm anticipates China’s GDP growth to reach 4.3 percent for the current year.

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The article initially appeared on the South China Morning Post (www.scmp.com), which is the premier source for news coverage of China and Asia.

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