China has set a deadline for local governments to settle the outstanding payments they owe to companies, calling it essential for improving the country’s business environment amid an economic slowdown.
All arrears less than 500,000 yuan (US$70,870) must be cleared by the end of the year, said Xiao Weiming, deputy secretary general of the National Development and Reform Commission, the country’s top economic planner.
“The biggest step in improving the business environment right now is clearing the outstanding debts owed by local governments,” he said at the 2025–2026 China Economic Annual Conference, held in Beijing on Saturday by the China Centre for International Economic Exchanges (CCIEE), a Beijing-based governmental think tank.
Local governments must repay what they owe, which Xiao described as “the most basic moral bottom line”, according to Jiefang Daily, the official newspaper of the Communist Party’s Shanghai branch.
Han Wenxiu, executive deputy director of the party’s economic affairs office, also stressed at the conference the need to prevent the practice of clearing old arrears only to accumulate new ones.
Their calls were echoed at the central economic work conference – an annual gathering of the Central Committee of the ruling Communist Party and the State Council, China’s cabinet. The conference, which concluded on Thursday, called for accelerating the settlement of outstanding payments to enterprises, according to a statement by state news agency Xinhua.
