What happened
On September 7, China's Ministry of Industry and Information Technology and the State Administration for Market Regulation jointly issued a notice to regulate payment terms between automakers and their suppliers, marking the first national-level document of its kind for the industry.
The notice sets five requirements, including clarifying that payment terms start after supplier delivery and acceptance, mandating acceptance within 3 working days for general parts and 5 working days for functional parts requiring vehicle testing, and encouraging cash payments while prohibiting forced acceptance of non-cash instruments like bank or commercial acceptance bills.
This follows a June 2025 commitment by 17 major automakers to keep payment terms within 60 days, which has already effectively shortened average payment periods over the past year.
Why it matters
The rules curb automakers' leverage to delay payments, improving cash flow for parts suppliers and fostering a healthier, more stable automotive supply chain.
By standardizing acceptance and payment practices, the policy aims to reduce financial strain on suppliers, potentially encouraging innovation and investment in the sector.
Key facts
The notice was jointly issued by the Ministry of Industry and Information Technology and the State Administration for Market Regulation on September 7.
It requires acceptance of production materials within 3 working days and functional parts within 5 working days.
In June 2025, 17 major automakers publicly committed to payment terms not exceeding 60 days.
What to watch next
Monitor how effectively automakers implement the new rules and whether supplier payment cycles continue to shorten across the industry.
Watch for potential ripple effects on supplier investment and production capacity as cash flow improves.