Chen Yuan never expected that at the moment when the elevator door closed, the set of logic he accidentally heard would become the industry dilemma he repeatedly fought against and the most difficult to solve in the following three years.

Chen Yuan works for an infrastructure company that is deeply involved in a large number of PPP (government social capital cooperation) projects. After 2020, his core job is no longer engineering construction or project operation, but collecting payments - asking local governments for money.

The incident happened on a night in 2024 at a county hotel in a central province. The next day, Chen Yuan will represent the company and negotiate with the local government to settle a long overdue payment for the existing PPP project. Provincial financial leaders arrived at the local area one day in advance to preside over this coordination meeting.

After checking in, Chen Yuan walked into the elevator and coincidentally ran into several leaders who had just finished their dinner party.

The strength of the enterprise is stronger now than before, "said a leader in the elevator." It doesn't matter if the payment is delayed. "" How to delay it specifically? "Asked another person. Completion acceptance can be postponed; settlement can be postponed after acceptance; payment can be postponed after settlement is completed

The elevator arrived at the floor where Chen Yuan was staying, and he walked out of the elevator, firmly recording this conversation. Afterwards, he repeatedly shared this experience with his peers in the industry.

In his view, this is almost a set of "standard operating manuals" for local governments to withhold project payments.

Having been busy with collection affairs for years, Chen Yuan has gradually transformed from the previous party owner who was "choked" by local governments to a sharer of collection methodology. He began teaching and serving as a consultant for listed companies, sharing his practical experience in negotiating payment terms with local governments with peer companies that were also struggling with repayment difficulties.

Three Questions

Chen Yuan broke down the matter of asking the local government for money into three issues: preconditions, government capacity, and government willingness. We have been solving these three problems from beginning to end, "he said," but at different stages, the focus is different

The so-called preconditions refer to the payment triggering conditions agreed upon in the PPP project contract - completion of completion acceptance, approval of project settlement, and achievement of performance assessment standards during the operation period. Only when all these conditions are met, the government has an obligation to initiate feasibility payments. But in practical operation, these conditions often involve multiple sub items, complicated procedures, and if any link gets stuck, the entire payment cannot be initiated. As for government capacity, it depends on whether there is money; The government's willingness is whether it is willing to pay or cooperate in advancing the procedures.

Around 2020, when Chen Yuangang intervened in the collection work, his main focus was on the preconditions, and at that time, it was not so difficult to obtain accounts from the government.

At that time, the epidemic had just emerged and its impact on the economy had not yet fully manifested. Local finances were still in the growth channel. Everyone is quite optimistic about growth, "Chen Yuan recalled," because land income is still relatively good, and local governments will not consider making things difficult for you because they don't have enough money

More importantly, the tenure cycle of local leaders. Chen Yuan analyzed that the leaders of the PPP project were mostly still in office when it was launched, and the project construction period was generally two to three years. When the project is completed, the current officials will be able to reap the political dividends and assessment points brought by the project. At this time, the attention to the project is high and the attitude towards the enterprise is relatively tolerant. From their hearts, they also feel that after the project is completed and accepted, they should pay the company

Even if the completion and acceptance procedures have not been completed, the government is willing to negotiate and can use the contract price or tracking audit price as the payment base, and refund the excess or make up for the shortfall after the subsequent settlement is completed. Even if the project is put into use before completion and acceptance, and is directly regarded as entering the operation period, the government still recognizes it.

But after 2024, everything changed and demanding accounts from local governments became a highly challenging technical task.

Chen Yuan found that some projects have been in operation for four or five years, but local governments still refuse to pay on the grounds of "not conducting performance evaluations during the operation period".

Around 2019, many local governments and social capital signed supplementary agreements that required annual feasibility payments to be linked to government performance evaluation results. This also leads to some companies not receiving a penny but still needing to continue fulfilling their operational and maintenance obligations, such as mowing lawns, maintaining parks, and cleaning road surfaces. Without sufficient funds, the scene became overgrown with weeds. Once the assessment criteria are not met, the local government will deduct tens of millions of dollars from the availability payment. Because local governments don't have the money, they have to go through these procedures to get a card, "Chen Yuan said.

See the move, dismantle the move

At first, Chen Yuan also considered finding connections and channels to ask the local government for money, but after struggling, he found that the efficiency was too low.

When all the relationships that can be found are useless, Chen Yuan's most common method is to file a complaint. It is also the first step in what he believes to be "asking for money with money".

This doesn't sound very clever, but Chen Yuan later concluded that the success rate of this move exceeded 60% between 2021 and 2023. The logic is simple: the higher-level government has assessment requirements for complaints from lower levels, and letters and visits are one of the pain points for local governments to assess. Delaying payments to private enterprises will be labeled as "damaging the business environment," and no one is willing to bear the responsibility.

During this period, the government has introduced relevant policies to ensure the development of the private economy. For example, the "Regulations on Ensuring Payment for Small and Medium sized Enterprises" issued in 2020, the "Notice on Implementing Recent Measures to Promote the Development of Private Economy by the National Development and Reform Commission and Other Departments" issued in 2023, and the "Opinions of the Central Committee of the Communist Party of China and the State Council on Promoting the Development and Growth of Private Economy" (hereinafter referred to as the "Opinions"). The Opinion clearly states that government agencies, public institutions, and large enterprises shall not refuse or delay payment to small and medium-sized enterprises and individual businesses on the grounds of internal personnel changes, fulfillment of internal payment processes, or waiting for completion acceptance approval, final accounting audits, etc. in the absence of contractual provisions. Establish a system for regular disclosure, advisory guidance, and proactive enforcement of overdue debts. Most things are raised high and gently lowered, "Chen Yuan said." We use a systematic approach to initiate their accountability process

The content and process of the complaint have also been carefully designed. Some PPP projects use central government funds or special bonds during the construction process. If local governments misappropriate these funds, when inspection teams come to inspect, companies will show this card hoping to bring the government back to the negotiating table. If the negotiation is not good, then go and solve your own violations

In a certain negotiation, Chen Yuan's team was well prepared and not only completed the debt negotiation, but also confirmed a considerable amount of liquidated damages at once.

But this move is not omnipotent. Chen Yuan believes that it solves the problem of willingness, not the problem of ability. It doesn't help at all with the financial increase of local governments, "Chen Yuan admitted. When local governments have no money at all, whether it's the complaint process or the supervision process, it's idle. Ultimately, if the government doesn't have money, no one can take it.

This is also the reason why the effectiveness of this move will sharply decline after 2023. Some local governments are even struggling to afford food, and no matter how much pressure companies put on them, they cannot afford to do so.

Chen Yuan had to find a new path.

Change

When the complaint failed, Chen Yuan began to help the local government "find money".

This sounds a bit absurd: social capital comes to ask for money, but instead helps local governments that owe money to find it? But in Chen Yuan's view, this is the key to breaking through the dilemma - if the government is not unwilling to pay, or if there is really no money, then help local governments find money.

His first direction is the urban investment company. In several provinces in central China, Chen Yuan's team will assist local government urban investment companies in seeking financing. As long as the credit rating of the urban investment company is good (such as AA+), the local general public budget revenue can reach about 2 billion yuan, and there are no financial lawsuits on Tianyancha, this urban investment company can still do financing.

There are also rules about who to take to find money. The best financial institution to bring is "incremental". If you bring some investors from Shanghai, Beijing or Shenzhen to do financing leasing or factoring business, because local financial institutions have not been involved before, they will recognize that this is the incremental funds you bring. On the basis of incremental funds, leave some for the urban investment company, and the rest will flow back to the finance department. Urban investment companies can also purchase financial assets to return the raised funds to the government.

In Chen Yuan's opinion, this operation is not without risks, and it is necessary to check whether it involves implicit debt. Therefore, in practical operation, it is necessary to follow the compliance procedures through technical means.

Chen Yuan has also been exposed to some debt repayment methods of other local governments: some companies have taken over the state-owned equity of a listed company held by the local government to offset debts; Some places also use assets such as wind power indicators and land resources as collateral for debt. There are many ways and methods to use property as collateral for debt, "Chen Yuan said.

Share experience with peers

With the continuous accumulation of practical experience, Chen Yuan began to systematically output the methodology of PPP project payment collection.

A listed company has put into operation a PPP project in a central region, but has not received any payment after several years of operation. The local government is delaying the settlement process while continuously suspending performance evaluations, completely blocking the payment channel. Long term zero payment by enterprises makes it difficult to cover even basic operation and maintenance costs.

The company had no choice but to file a lawsuit, but lost the first instance. The reason for the judgment of the local grassroots court is that the project did not meet the payment conditions because there was no performance evaluation during the operation period, and the annual payable amount could not be determined. But not conducting performance evaluations during the operation period is also the result of the government delaying payments - this constitutes a vicious cycle.

The chairman of the company found Chen Yuan. Chen Yuan calculated two accounts for him.

The first one is that if they continue to sue and lose, the government will launch a "malicious assessment" against the company. Because the company has not received a penny, on-site maintenance is difficult to guarantee, and the assessment will definitely not meet the standards. And the assessment results are linked to 30% of the annual availability payment of nearly 100 million yuan. Once the amount is lowered, the deduction alone may reach tens of millions of yuan.

The second point is that if we win, the situation will be even worse. After the local government terminates the PPP contract, according to the requirements of the listed company's financial report provision, a total of 800 million to 1 billion yuan of equity needs to be recovered within three years, with an annual provision of 300 million yuan for bad debts. The loan contracts of banks relying on PPP status may also be terminated, and loans of nearly 600 million yuan will be required to mature early, and the parent company will also bear the guarantee responsibility. What is the significance of winning? "Chen Yuan asked," If you lose, you may be taken advantage of; We won the battle, but with the combination of bad debts and bank withdrawals, the local government still cannot get the money. This is an 'impossible triangle': preconditions, ability, and willingness are intertwined and almost unsolvable.

The plan proposed by Chen Yuan is for the three parties: enterprises, government, and banks, to negotiate and maintain a "minimum energy consumption" operation.

His core design is that the bank agrees to extend the term, only paying interest in the next few years, or adding up or symbolically paying a little principal each year. The enterprise will restructure all overdue debts, including those that have already expired and those that have not. In the financial statements, the measurement method of these debts has changed, and there is no longer a problem of bad debt provision.

For enterprises, bank principal and interest can be maintained, reputation will not go bankrupt, bad debts will not appear on financial statements, and investment returns can be sustainably drawn. For the government, if local governments can actively coordinate and take multiple measures to reduce the annual payment pressure from 100 million yuan to over 10 million yuan in interest, there is still room for repayment of these funds. For banks, loans do not enter a risk state and can continue to receive interest.

Actually, it's a result where all three parties have to compromise, "Chen Yuan said. Enterprises have given up their persistence in recovering principal, government leaders have gained peace during their tenure, and banks have maintained asset quality. All issues - settlement, completion acceptance, performance evaluation - are pushed to the future, handed over to the national debt policy, or left to time and inflation to solve.

However, whether this plan can be implemented or not is still unknown. Chen Yuan learned that the three parties have started negotiations, but the entire process involves government efficiency, bank willingness, and the level of execution personnel, and the cycle is long. Moreover, negotiation itself is also a discipline. If we start asking for money and submit this plan, the government may wonder if the interest can also be repaid by social capital, "Chen Yuan said." How to initiate negotiations, whether they talk to social capital or social capital talks to them, who has the initiative, these are all very important

Starting from 2022, Chen Yuan began to systematically output payment collection system methods. Due to his team's years of collection work and accumulation of a large number of samples, this scarce practical ability has also become a target for many listed companies to compete for.

The person in charge of a listed company invited Chen Yuan to give a special lecture on multiple PPP projects under the company, and systematically organize the practical work of payment collection.

After listening to the sharing, the management of the company was quite shocked: what seemed to be just a collection of money involved a lot of professional logic and game skills behind it. But they prefer to dig Chen Yuan directly into the company. Every step of PPP project operation will have a significant impact on huge investments, and companies are not willing to entrust decision-making for large-scale PPP projects to external consultants, especially in the delicate and risky game between local governments.

Chen Yuan currently serves as a formal consultant for two companies and maintains informal business communication with three other companies. He is well aware of the boundaries of this payment collection technique: while networking is essential for work, there is almost no logic of mutual achievement when it comes to demanding project funds.

If local government officials are smart, they will give money if they have money, and give attitude if they don't have money, "Chen Yuan said." When it comes to asking for money, it can now be said to be a state close to a 'prisoner's game'

A local official once exclaimed to our negotiation team at the negotiation site, "Look at their company, they are so focused and professional even in handling complaints. Five or six higher-level departments have dispatched and supervised us, making us so embarrassed. If we had the same enthusiasm in our work, the county economy would have been thriving long ago, so how could we lack money

Later, Chen Yuan summarized, "You can't ask for money while kneeling down. Even if you kneel down, you won't get it. Winning respect is the operation of high status

He also clearly saw the end of this industry. With the issuance of the handling documents for existing PPP projects, PPP has become a stock business in China, and "it actually has no future". The experience accumulated by Chen Yuan may have a value of three, five, or even eight years, but for the future, 'this thing must have no development prospects'.

However, he still has confidence in this. Chen Yuan could feel the local government's willingness to repay the money, and at the same time, the government's policy support for the development of the private economy was increasing. The "Law of the People's Republic of China on the Promotion of the Private Economy" passed in 2025 proposes that state organs, institutions, and state-owned enterprises shall timely pay accounts to private economic organizations in accordance with the law or contractual agreements, and shall not refuse or delay payment to private economic organizations on the grounds of personnel changes, performance of internal payment processes, or waiting for completion acceptance approval, final accounting audits, etc. in the absence of contractual provisions; Unless otherwise provided by laws and administrative regulations, it is not mandatory to require audit results as the basis for settlement.

Because of this, he intensified his communication with various enterprises and quickly promoted our experiences, including the losses we suffered, to them.

Last month, Chen Yuan spent four to five hours eating a meal with the bosses of a listed company, and as they ate, the other party would bring out all the projects. Chen Yuan analyzed one by one, and after finishing the analysis, the other party would really feel enlightened.

Because no one is researching this technology, "Chen Yuan said, often thinking of the conversation in the elevator:" Completion acceptance can be postponed, settlement can be postponed after acceptance is completed, and payment can be postponed after settlement is completed

(At the request of the interviewee, Chen Yuan is a pseudonym)

(Author Du Tao)