WFY’26: China’s factoring market reaches €712bn as digital finance reshapes the sector

China’s factoring market continued its transition towards maturity in 2025, with total volume growing by around 5% to €712bn, broadly in line with the country’s GDP growth. In this country report, Chris Wohlert, Head of Strategic Growth, Supply Chain Finance at Wells Fargo Bank, N.A., and Yingqi Fan, Executive Director, Channel Finance at Wells Fargo CDF Commercial Factoring (China) Company Limited, examine how tighter regulation, cross-border factoring initiatives and new technology are reshaping the world’s largest factoring market.

The article included in the World Factoring Yearbook 2026 (WFY’26) explores a market where domestic factoring now accounts for the overwhelming majority of activity, while artificial intelligence, trade credit insurance and digital supply chain finance platforms are expanding the industry’s capabilities. It also considers the regulatory clean-up of commercial factoring companies, persistent SME funding challenges and efforts to develop international factoring despite foreign-currency restrictions.

Below is an excerpt from their article.

China’s factoring market has continued its transition into relatively maturity, with growth roughly tracking China’s GDP growth at 5 per cent to EUR 712bn, according to FCI. This maturing is evident across various facets of the factoring industry – from continued enhancement of regulatory oversight, cross-border factoring pilots, expanded use of credit insurance, development of specialised arbitration and mediation forums and continued evolution of judicial interpretations, with a focus on the intersection of finance and logistics, to support enterprises as China continues to navigate its economy through both domestic and global challenges. Advanced technology continues to lead the way forward – with expanding application of artificial intelligence supporting automation in credit decisioning, digitalisation, risk control and tokenisation.

The lukewarm but mixed macro-economic environment was also reflected in enterprise business activities. According to the National Bureau of Statistics, by the end of December of 2025, trade accounts receivable grew to RMB 27,430m, an increase of 4.7 per cent compared to 2024. In the meantime, the average account receivable (AR) turnover in 2024 was 67.9 days, an increase of 3.6 days over 2024. Notably, amongst all firms, gross revenue continued to expand by 1.1 per cent while overall profits increased by 0.6 per cent. According to the Atradius 2025 Payment Practices Barometer, Chinese firms continue to extend terms through accounts receivable, with the average term at 51 days – but are increasingly focused on preventing long-overdue B2B payments from turning into uncollectable receivables, currently around 4 per cent based on the survey. Firms have strengthened their strategic credit risk management practices, starting to shift away from in-house management to a combined approach with internal and outsourced risk management. Of particular note, invoice financing is reported as the main source of financing used by the companies surveyed over the previous twelve months.

In response to SME financing challenges, the People’s Bank of China, together with the National Financial Regulatory Administration drafted a guideline to standardise supply chain finance. While digital innovation has improved SME financing access, the lack of regulatory clarity has allowed some core enterprises to impose high fees, enable excessive credit expansion, and limit information transparency. The guideline aims to establish oversight, strengthen the financial sector’s role in the real economy, and better address SME financing needs.