Xinjiang Fruit Industry Group Co., Ltd

Supply Chain Finance‌ refers to an innovative financial model that leverages the transactional relationships between upstream and downstream enterprises in a supply chain. With the participation of financial institutions or third-party platforms, it provides financing, payment, settlement, risk management, and other financial services to supply chain participants.

With sustained national policy support, supply chain finance has become a critical financial tool to invigorate small and medium-sized enterprises (SMEs) and serve the high-quality development of the real economy. In 2023, both central and local governments prioritized the development of supply chain finance, frequently issuing supportive policies and guidance to foster a new ecosystem for its innovation. These policies aim to lower entry barriers, enhance accessibility, encourage financial institutions and third-party platforms to innovate supply chain financial products and services, and strengthen risk prevention and regulatory oversight.

Supply chain finance in China spans multiple industries, including manufacturing, trade, e-commerce, agriculture, healthcare, and education. The unique demands and characteristics of these sectors have spurred diverse solutions and models, such as supply chain finance integrated with industrial internet platforms, cross-border e-commerce supply chain finance, and agricultural e-commerce supply chain finance. These applications harness the advantages of supply chain finance to provide convenient, efficient, and low-cost financial services, driving industry development and modernization.

Below is a summary of key national-level supply chain finance policies in 2023 (apologies for any omissions) for industry professionals’ reference:

January 2023‌

January 3‌: The Ministry of Industry and Information Technology (MIIT) and five other departments released the Guidance on Promoting the Development of the Energy Electronics Industry, proposing increased policy support, accelerated cultivation of specialized "little giant" enterprises, and encouragement for banks to innovate financial products to aid the sector.

January 6‌: The Ministry of Commerce and the People’s Bank of China (PBOC) issued a notice to expand cross-border RMB usage, urging banks to meet trade financing needs via letters of credit, forfaiting, factoring, and other tools. It emphasized the role of core supply chain enterprises in promoting RMB internationalization.

January 6‌: The CBIRC (China Banking and Insurance Regulatory Commission) solicited public feedback on draft regulations for fixed-asset loans, working capital loans, and personal loans. Revisions simplified on-site inspections for SMEs obtaining loans via supply chain finance.

February 2023‌

February 10‌: At the PBOC’s financial markets work conference, priorities included standardizing the bill market and revising the Bill Law.

February 20‌: The CBIRC issued guidelines to support Shandong’s green transition, advocating supply chain finance innovations using inventory, accounts receivable, and intellectual property as collateral.

February 23‌: The Qianhai Financial 30 Measures were announced, promoting cross-border supply chain finance, factoring for international trade, and integration with Hong Kong’s financial systems.

March 2023‌

March 10‌: The China Construction Accounting Society released the Application Guidelines for Construction Supply Chain Finance, standardizing principles like transaction authenticity, asset liquidity, and risk management.

April 2023‌

April 6‌: The CBIRC urged large banks to leverage supply chain finance to support rural revitalization, expanding credit to agricultural SMEs and recognizing agricultural insurance policies as collateral.

April 17‌: The State-owned Assets Supervision and Administration Commission (SASAC) tightened oversight on "speculative trade" and financing-related fraud by central enterprises.

April 27‌: The CBIRC emphasized enhancing SME financial services through supply chain finance, focusing on manufacturing upgrades and green transformation.

June–August 2023‌

June 16‌: Five departments, including the PBOC, issued guidelines to support agricultural supply chains, encouraging core enterprises to use "white lists," accounts receivable confirmation, and joint funds to enhance credit access.

July‌: The State Council promoted the replication of pilot reforms, including movable asset pledge financing, to ease SME financing challenges.

August 1‌: Five departments launched the "One Chain, One Policy, One Batch" SME Financing Promotion Action, urging banks to support upstream and downstream SMEs via accounts receivable, bills, and prepayment financing.

August 29‌: The Metaverse Industry Innovation Development Three-Year Action Plan proposed exploring supply chain finance applications using IoT and blockchain for dynamic data monitoring.

October 2023‌

October 10‌: The Supreme People’s Court issued guidelines to optimize the legal environment for private enterprises, supporting flexible collateral arrangements and validating non-trapled guarantees like factoring and warehouse receipts.

October 11‌: The State Council’s Implementation Opinions on Advancing Inclusive Finance emphasized standardizing supply chain finance tools and promoting agricultural supply chain finance.

October 13‌: SASAC’s Notice on Regulating Central Enterprises’ Trade Practices (Document No. 74) strictly banned "fake trade" practices, including circular trading and non-compliant revenue recognition.

October 31‌: The Central Financial Work Conference highlighted "building a strong financial nation," prioritizing tech finance, green finance, and digital finance.

November–December 2023‌

November 6‌: SASAC reiterated that central enterprises’ financial activities must align with their core businesses to serve the real economy.

December 11‌: The State Council’s Measures to Accelerate Integrated Domestic and International Trade called for leveraging supply chain finance and cross-border e-commerce to boost industrial clusters.

December 31‌: The National Data Administration’s Three-Year Action Plan for "Data Elements ×" (2024–2026) proposed data-driven innovations in supply chain finance for sectors like agriculture and logistics.

November 13‌：The Ministry of Industry and Information Technology (MIIT) released the Guidance on Improving the Public Service System for Small and Medium-Sized Enterprises (SMEs), emphasizing:Chain Integration and Innovation‌: Organize activities to connect large enterprises with SMEs, helping SMEs integrate into large enterprises’ supply chains, promote resource sharing and collaborative problem-solving among upstream and downstream partners, and enhance industrial chain resilience and security.

Financial and Intellectual Support‌: Facilitate industry-finance matchmaking to broaden SMEs’ financing channels and reduce costs. Strengthen academia-industry collaboration to drive talent development, patent commercialization, and joint innovation.

November 23‌：The State Council approved the Work Plan to Support Beijing in Deepening the Comprehensive National Demonstration Zone for Expanding Opening-Up in Services, proposing:Optimize financial products and services for innovative SMEs, focusing on R&D, technology acquisition, and mergers and acquisitions. Develop specialized credit, guarantee, and supply chain finance solutions.

Relax collateral requirements for loans to companies listed on the Beijing Stock Exchange (BSE).

Encourage venture capital and private equity institutions to establish funds dedicated to supply chain finance.

November 27‌：The People’s Bank of China (PBOC) and seven other departments issued the Notice on Strengthening Financial Support to Boost the Growth of the Private Economy, highlighting:

"Decentralized Supply Chain" Model‌: Banks should rely on transaction data, logistics, and information flows (instead of core enterprises’ credit) to assess risks and provide financing to SMEs, such as order-based loans and warehouse receipt pledges.

Enhance the ‌Accounts Receivable Financing Service Platform‌ to streamline SME financing.

Promote standardized development of supply chain bills, implement the "One Chain, One Policy, One Batch" SME financing initiative, and tighten credit constraints for firms with overdue bills.

Note‌: The "decentralized supply chain" model emphasizes ‌data-driven credit evaluation‌ using technologies like big data, AI, blockchain, and IoT to replace traditional reliance on core enterprises’ creditworthiness.

November 29：The Ministry of Commerce announced the ‌third batch of national demonstration cities and enterprises for supply chain innovation and application‌, including 8 cities (Langfang, Hohhot, Jiaxing, Hebi, Yichang, Xiangtan, Liuzhou, Luzhou) and 50 companies.

December 11‌：The General Office of the State Council issued the Measures to Accelerate Integrated Development of Domestic and International Trade, urging:

Build cross-border industrial clusters and promote the ‌"cross-border e-commerce + industrial belt"‌ model to help traditional industries expand globally.

Leverage national credit and industry-finance platforms to strengthen supply chain finance support, using receivables, inventory, orders, and insurance policies as collateral.

December 19‌：The Ministry of Finance and three other departments released the Notice on Strictly Implementing Accounting Standards for 2023 Annual Reports, emphasizing:

Clarify revenue recognition rules (‌"gross vs. net method"‌).

Audit firms must scrutinize high-risk areas like mergers, revenue recognition, and financing-related trade, especially in real estate, healthcare, and sectors prone to fraudulent practices.

December 20‌：Twelve departments, including the Ministry of Commerce, issued the Guidance on Accelerating Digital Empowerment of Life Services, proposing:

Use digital technologies (e.g., AI, blockchain) to optimize credit processes and enhance supply chain finance accessibility for SMEs in lifestyle services.

Expand inclusive financing for micro-businesses and individual entrepreneurs.

December 31‌：The National Data Administration and 16 other departments launched the Three-Year Action Plan for "Data Elements ×" (2024–2026), focusing on 12 sectors, including:

Data × Smart Agriculture‌: Integrate production, sales, and processing data to provide one-stop procurement and supply chain finance services.

Data × Trade and Logistics‌: Encourage cross-border e-commerce and logistics firms to merge transaction, logistics, and payment data to strengthen global supply chain financing capabilities.

Future Outlook‌

The 2023 policies underscore China’s commitment to integrating digital technologies with supply chain finance, decentralizing credit systems, and enhancing risk management. In 2024, the sector will likely prioritize ‌revenue expansion‌ while deepening upstream and downstream integration. Challenges include adapting to regulatory changes, improving data security, and fostering innovation. Stakeholders must strengthen risk controls and leverage emerging technologies to seize opportunities in a rapidly evolving landscape.