Former Chinese Premier Zhu Rongji has passed away, reigniting discussions about the issue of triangular debt that he once took steps to address. Some Chinese officials believe that the current accounts receivable of enterprises exceeding 28 trillion yuan is nearly 100 times larger than during Zhu Rongji’s era, which has had a significant impact on the Chinese economy.
According to the latest data from the National Bureau of Statistics of China, as of the end of June, the total accounts receivable of large-scale industrial enterprises reached 28.60 trillion yuan, an 8.1% increase year-on-year. The average collection period for accounts receivable was 71.7 days, an increase of 0.8 days. Finished goods inventory amounted to 7.11 trillion yuan, up 9.5%, with a turnover period of 21.1 days, an increase of 0.4 days compared to the previous year.
By official definition, large-scale industrial enterprises are industrial legal entities with an annual main business income of 20 million yuan or more, excluding small and medium-sized enterprises. Accounts receivable refer to the funds that enterprises should collect from their customers for selling goods, providing labor, or services but have not yet been received.
When accounts receivable are significantly outstanding and mutually overdue on a large scale for an extended period, it results in triangular debt.
After Zhu Rongji was transferred from Shanghai to Beijing in 1991 and became the Vice Premier in charge of the economy, he began the task of clearing up the triangular debt. At that time, the accumulated triangular debts owed between various enterprises exceeded 300 billion yuan, with 80% of it being the debts owed by over 800 large state-owned enterprises nationwide. Zhu Rongji proposed a series of solutions such as structural adjustments, cutting off the sources, and systematic debt collection.
However, Yao Jingyuan, former Chief Economist of the National Bureau of Statistics of China, pointed out that the current outstanding accounts receivable of Chinese enterprises are nearly 100 times the scale when Zhu Rongji dealt with triangular debts. This raises the question of whether “can businesses still operate under such circumstances?”
During an interview program hosted by Wang Boming, Editor-in-chief of the “Finance” magazine, Yao Jingyuan explained, “What is accounts receivable? It means the enterprises have sold their goods, but have not received the payment.” He mentioned that over the past decade, the collection period for accounts receivable in Chinese enterprises has increased from about 50 days to 72 days. In addition, there are around 6 trillion yuan worth of finished goods piled up in warehouses.
The National Bureau of Statistics of China announced a 4.7% economic growth rate for the first half of 2026. However, many people believe that the actual economic growth rate should be lower than this figure. Yao Jingyuan argued that the current “temperature difference” in the Chinese economy arises from the statistical neglect of accounts receivable and inventory. The official calculation of GDP is based on production value, where goods produced are accounted for regardless of whether the payments are received, leading to a discrepancy between statistical data and real experiences.
Political observer Xia Yan previously wrote that China’s tax system has predetermined the economic structure of society. China is not a consumption-oriented society guided by demand; instead, it is a production-oriented society led by supply. For example, value-added tax is levied at various stages from raw materials to final products. Therefore, the Chinese government collects taxes in advance from these goods. Consequently, sales of goods are not crucial for the Chinese government; the focus lies on the supply side to increase fiscal revenue.
Regarding the current issue of overdue accounts receivable, the Beijing Dacheng Enterprise Research Institute, focusing on the development of China’s private economy, released a survey report on July 27. The report indicated that in a mid-year survey of 79 private entrepreneurs, nearly 60% of them reported significant problems with overdue accounts, with continuous erosion of enterprise profits by accounts receivable, leading some enterprises to face difficulties. Some enterprises mentioned issues with public projects under local governments, such as lengthy acceptance periods, complex processes, instances of discounted payments, and price reduction pressures during acceptance. Many entrepreneurs pointed out that current policies only tackle existing old debts, lacking mechanisms to regulate new debts, thereby causing repeated problems of overdue payments between the government and enterprises, as well as among enterprises.
Furthermore, some enterprises highlighted that certain local government administrative approaches were straightforward and rough, presenting enterprises with limited options for clearing debts, either accepting discounted settlements or using property to offset debts. In some cases, enterprises were forced to accept idle real estate assets at significantly higher than market prices to offset debts, with the difference classified as taxable income, resulting in a dual burden of payment for debts that are not recouped.