China Issues Auto Industry Payment Rules: 30-Day Target, 60-Day Cap

On September 7, 2026, the General Office of the Ministry of Industry and Information Technology and the General Office of the State Administration for Market Regulation jointly issued the Notice on Promoting Automakers to Standardize Supplier Payment and Optimize Payment Term Management. Dated September 2, 2026, this is the first payment-term management document targeting the industry. It requires automakers to standardize payments for purchased goods, projects, and services, safeguard suppliers' legitimate rights, and build fair, honest, and mutually beneficial vehicle-parts partnerships.

In June 2025, 17 major automakers publicly committed to payment terms not exceeding 60 days, and the China Association of Automobile Manufacturers issued an industry initiative on supplier payment practices. Over the past year, average payment terms among major automakers have shortened effectively, and the share of cash payments has risen significantly. However, payment processes involve multiple steps, and conditions vary across subsidiaries and branches. In practice, problems persist, including inconsistent starting-point calculations, unclear acceptance criteria, and prolonged acceptance periods that effectively extend payment terms.

The notice specifies that the payment term starts from the date the supplier delivers goods, projects, or services and passes acceptance. For continuous supplies delivered more than twice monthly, both parties may agree on a supply cycle, with centralized reconciliation after each cycle; the period from the midpoint of the supply cycle to payment completion must not exceed the payment-term cap. After receiving goods, automakers must complete acceptance of production materials such as general parts within 3 working days, and within 5 working days for parts requiring vehicle-installation verification; failure to accept within 3 working days is deemed acceptance.

On payment arrangements, automakers must specify payment deadlines in contracts. Those that have made payment-term commitments must not set contract terms exceeding the committed period; overdue payments must incur interest as legally required. Payment timing is based on the issuance date of cash or bank acceptance drafts. Automakers are encouraged to prioritize cash or bank acceptance drafts and must not force or indirectly force suppliers to accept commercial acceptance drafts, supply-chain bills, or other non-cash instruments. If such instruments are necessary, their proportion must be controlled and the discount cost-bearing method clearly defined.

For payments during price negotiations, the notice requires contractual arrangements. For continuous cooperation, interim payment may reference the most recent effective contract price, with a ratio generally not below 90%; for non-continuous cooperation, interim payment may reference the industry average price or at least 70% of the development order unit price, with final settlement adjusted accordingly. The notice also encourages automakers to pay small and medium suppliers within 30 days after goods pass acceptance, with a maximum of 60 days, and encourages full cash payment. If contracts do not specify payment methods, commercial drafts or electronic accounts-receivable certificates must not be used as substitutes.

The notice advocates long-term, stable cooperation between automakers and suppliers. Each contract should have a validity period of no less than one year, with fair and reasonable terms. Automakers must not demand price cuts that ignore cost floors or hidden quality and safety risks, nor suppress supply prices on the pretext of shortened payment terms.

For implementation, the notice adopts a combined approach of enterprise self-inspection reports, third-party evaluation and public disclosure, and government supervision. Automakers must submit semi-annual and annual payment reports to the Ministry of Industry and Information Technology by the end of July and January each year. The ministry will commission a third-party institution to conduct an annual evaluation and publicly release results. For automakers with large accounts payable, deliberate payment-term extensions, or frequent complaints from small and medium suppliers, the ministry and the market regulator will conduct joint talks and urge rectification, with serious penalties for legal violations.