Cabinet urges clearing of payments backlog

Government departments and State-owned enterprises should clear their arrears owed to private firms and small and medium-sized enterprises before the end of this year, an executive meeting of the State Council decided on Wednesday.

Clearing such arrears is an important decision made by the Communist Party of China Central Committee and the State Council as it concerns market and economic order, improvement of the business environment and the government’s credibility, said a statement released after the meeting chaired by Premier Li Keqiang.

Over the past year, government departments and local authorities have identified more than 890 billion yuan ($128 billion) in arrears owed to private companies and SMEs nationwide. By the end of last year, 75 percent of overdue payments had already been paid.

Efforts should be taken to ensure that undisputed arrears are cleared as much as possible by the end of this year and disputed arrears as soon as possible through mediation, consultation and judicial means. No new arrears should be incurred, the statement added.

The meeting decided that government departments at all levels should make concrete plans, down to each item and each category, to pay the undisputed arrears. Large State-owned enterprises must take measures to ensure their subsidiary companies complete payments.

It also urged efforts to implement a regulation on guaranteeing the payment of wages to rural migrant workers. The regulation will take effect on May 1.

In the future, sufficient capital should be set aside in all construction projects for the timely payment of rural migrant workers’ wages in accordance with their contracts. No government departments, State-owned companies or public institutions can, for whatever reason, default on the wages of rural migrant workers, the statement said.

Irregularities such as implementing projects outside the budget plan, starting construction before getting approval, or asking construction entities to make advance payments, will be seriously dealt with, it added.