Over the past three months, governments at all levels and large State-owned enterprises have paid private enterprises more than 160 billion yuan ($24 billion) in postponed payments, with migrant workers the first to receive delayed wages, high-ranking officials said on Feb 25.
The economy is confronted with multiple challenges, including downward pressure on growth, but people will gain confidence when delayed payments arrive, Xin Guobin, vice-minister of industry and information technology, told a policy briefing hosted by the State Council Information Office on Feb 25.
Delayed payments by governments or SOEs to private, small enterprises had negative impacts on cash flows and operations, Xin said. Clearance of such payments demonstrates the central government’s support for the development of the private sector and its intent to create a good business environment, he said.
SOEs, which are directly owned and managed by the central government, have nearly 7 million contracts with private enterprises worth more than 10 trillion yuan, said Wu Hongbing, director of the financial supervision department of the State-owned Assets Supervision and Administration Commission of the State Council. Among them, 111 billion yuan in payments was found overdue, he said.
Each year, central SOEs pay about 250 billion yuan for migrant worker wages, Wu said, adding that the 820 million yuan in delayed wages for migrant workers was all paid before the Spring Festival.
The payments bring stability and play a positive role in ensuring steady economic growth this year, Xin said. In addition, it’s a significant measure in building a clean relationship between the government and the business community that will help improve the social credit system and ensure the legitimate rights of private enterprises, he said.
The briefing on Feb 25 followed up on a decision at a State Council executive meeting presided over by Premier Li Keqiang on Jan 30 that required all governmental organs and large SOEs to pay at least half the delayed payments to private businesses by the end of this year.
Xin said private companies have grown to be an indispensable part of China’s social and economic landscape over the past 40 years of reform and opening-up. They are also vital sources of innovation, employment, technology and tax revenues, and make significant contributions by transferring surplus labor from rural areas and exploring the international market, he said.