On April 24, the State Taxation Administration disclosed the situation regarding the rectification of economic invoicing, focusing on issues such as circular invoicing, mutual invoicing, and behaviors including non-substantive transfer of goods ownership, frequent buying and selling of warehouse receipts, and transactions that involve invoices and accounting but not actual goods.
This round of economic rectification through voting has had a significant impact on many state-owned trading companies, especially those involved in bulk commodity trading. Once the invoice quota is compressed, even if contracts have been signed, they are useless if invoices cannot be issued, making it difficult for businesses to operate normally.
Many state-owned trading companies are now in a state of anxiety. Revenue targets are still in place, but invoice quotas have been slashed, making it impossible to complete transactions, which in turn means revenue targets cannot be met.
However, upon further consideration, I think this may not be entirely bad for many state-owned trading companies, and could even be a good thing.
Why?
Some businesses were never meant to be done and aren't worth taking such huge risks for. In the past, companies themselves didn't dare to stop, but now the tax authorities are helping you stop. Previously, if you said you should do less, the group might think you're incapable or lacking a sense of responsibility; now it's not just your company that's being restricted, and if revenue targets aren't met, at least there's an objective reason that can be explained to superiors.
To put it bluntly, this round of economic rectification has not only compressed revenue, but also blocked some potentially problematic businesses from the outset. By doing fewer deals, the company has also avoided shouldering unnecessary expenses and accumulating fewer accounts receivable.
From this perspective, state-owned trading companies should really thank the tax authorities.
Invoice Crackdown Hits Commodity Trade First
The first to feel the pressure from this round of invoice-based economic rectification is the wholesale industry, particularly the trade of bulk commodities such as coal, metals, and minerals. Data released by the State Taxation Administration shows that in the first quarter of this year, the six industries with the most concentrated cases of irregular investment attraction saw a 4.4% year-on-year decline in invoice amounts; among them, the wholesale industry declined by 2.5%, the coal and coal products wholesale industry declined by 7.1%, and the metal and metal ore wholesale industry declined by 5.7%. These numbers indicate that the tax authorities' governance of invoice-based economy has directly impacted the business scale of bulk trade enterprises.
These businesses overlap significantly with the commodity trading activities of some state-owned enterprise trading companies. In this round of invoice quota compression, large commodity traders are the most affected.
Why are commodity traders the most affected? This has to do with how commodity traders make their money.
Large trading companies and manufacturing enterprises are different. Manufacturing enterprises have mines and factories that process raw materials into products, primarily earning money through production and processing.
Major traders' profit-making methods are far more complex, with some earning money from fluctuations in commodity prices, others exploiting price differences across different markets, regions, and time periods, some profiting from foreign exchange through import and export arrangements, and others appearing to engage in trade on the surface but actually aiming to finance themselves or provide financing to upstream and downstream partners, earning money through fund occupation and account period arrangements.
This profit model does not depend on production or processing, which is why many bulk commodity traders do not own mines, factories, or warehouses. They rely mainly on upstream and downstream resources, capital, and trading organization capabilities to coordinate procurement, sales, logistics, funds, and cargo rights. Goods can be shipped directly from upstream to downstream, picked up by downstream buyers at warehouses, or transferred in place within the same warehouse without any physical movement.
Commodity traders are therefore at the forefront, not because they are all engaging in fake trades, but because this type of business, from a transactional perspective, is very similar to the focus of the tax authorities on fake transactions, frequent buying and selling of warehouse receipts, and not actually moving goods. By only looking at contracts, invoices, and payments, it is difficult to determine whether a transaction is a genuine trade with real business purposes or a transaction aimed at financing or inflating revenue.
Bulk trading has another characteristic, which is that revenue is particularly sensitive to invoice quotas. When a batch of goods is purchased, an input invoice is required, and when it is sold, an output invoice is required. If the same funds are turned over several times a year, it will form several times the sales revenue. In the past, the invoice quota could keep pace with the business scale, and the business could continue to operate; now that the quota has been suppressed, it is equivalent to directly setting a ceiling on the amount of business that can be done throughout the year.
Upstream direct delivery, downstream self-pickup, and on-site transfer within warehouses are not inherently problematic. For products like coal, steel, non-ferrous metals, and mineral products, each relocation incurs additional costs, so completing ownership transfer of goods within the same warehouse is commercially reasonable in itself.
The issue is that the tax authorities cannot simply take a company's word that a business transaction is genuine. They must also continue to verify whether the goods in question actually exist, whether the state-owned enterprise can independently take delivery of them, and who bears the costs and risks associated with price fluctuations and damage.
If these issues are unclear and goods are not obviously being moved, but only contracts, funds, invoices, and bills of lading are in motion, the tax system will naturally identify the enterprise as a high-risk entity.
In particular, companies that are traders with both upstream and downstream operations, have goods stored in the same warehouse for extended periods, quickly sell goods on the spot after purchase, and have transaction amounts that are significantly mismatched with their personnel scale and operational capabilities are more likely to be included in the tax authorities' risk screening range. In the past, companies thought that as long as they had contracts, invoices, payments, and warehouse confirmations, their business could be explained clearly; now, the tax authorities will continue to ask questions, such as why this trade must go through the company and what value the company has actually provided.
The State Taxation Administration revealed that the Sichuan tax authorities have taken measures such as reducing invoice credit limits and monitoring daily invoicing amounts for companies that frequently engage in warehouse receipt and goods ownership transactions and have issues with inflated economic data. For state-owned trade companies, this is not just a routine compliance reminder, but a direct impact on their ability to continue doing business.
In domestic bulk trading, once the invoice quota is insufficient, procurement, input tax deductions, and upstream and downstream settlements will all be affected, making it difficult for companies to operate on their original scale.
For trading companies that mainly rely on buying and selling to generate revenue through quick turnover, the invoice quota directly affects the scale of their business operations. After the invoice quota is greatly compressed, companies are not just issuing fewer invoices, but rather, the portion of their original business plans cannot be implemented.
So, what is compressed first in this round of rectification may not be profits, but rather the scale of revenue.
The Market Has Changed, but Revenue Metrics Haven't
The limited invoice quota is only a superficial issue, the deeper problem is that many state-owned trading companies are already struggling to meet their original revenue targets.
The current economy is no longer simply a matter of being good or bad, but rather the differences between industries are becoming increasingly pronounced.
According to data on large-scale industrial enterprises from January to July 2026 released by the National Bureau of Statistics, operating revenue increased by 6.5% year-over-year, and total profit grew by 17.6%. Looking at these two numbers alone, many people may think that the business situation is not bad, and it is not a problem for conglomerates to continue to raise the revenue targets of their trading companies.
However, looking at the industries separately, the picture is completely different. The profit of computer, communication and other electronic equipment manufacturing grew 1.1 times, with the electronics industry alone driving up the profit growth of all large-scale industrial enterprises by 9.3 percentage points, and the profit of high-tech manufacturing grew 50.1%.
Meanwhile, profits in the black metal smelting and calendering industry fell 51.2%, non-metallic mineral products industry dropped 48.2%, automobile manufacturing industry declined 20.4%, and the farm and sideline food processing industry decreased 12.3%.
On one hand, the electronics and high-tech manufacturing industries are seeing rapid profit growth, while on the other hand, traditional industries such as steel, building materials, automobiles, and agricultural product processing are experiencing declining profits, which is the real market situation faced by many state-owned trade companies. No matter how fast the high-tech industry grows, it will not automatically bring customers and orders to a steel, coal, or building materials trading company.
The company's funding turnover pressure has not eased. At the end of July, the average recovery period for accounts receivable of industrial enterprises above the designated size was 71.9 days, an increase of 0.9 days year-over-year; the turnover days of finished goods inventory was 21.3 days, an increase of 0.6 days year-over-year. For trading companies, slower downstream payments and longer inventory digestion times will ultimately be passed on to billings, prepayments, and fund occupation.
Therefore, just because national industrial enterprise profits are growing, it doesn't mean that every state-owned trade company's market is doing well. For some traditional industries, there aren't that many genuine, low-risk trade opportunities in the market, yet you still require trade companies to continue growing their annual revenue, even increasing it from tens of billions to hundreds of billions - what indicators can achieve this?
Genuine trade is not about setting a revenue target first and then finding business and contracts in the market to meet it. It requires a real supply chain, goods, and profit margins, as well as someone to bear the risks of price, quality, logistics, and payment collection.
The difficulty for state-owned trading companies lies here: targets are set at the beginning of the year, but the market changes every day. When the market is poor, the targets do not decrease accordingly, and the management team can only continue to seek out new business.
If no real enterprise can be found, then look for traders; if self-controlled customers cannot be found, then act as the upstream or downstream designated by others; if normal payment terms cannot result in large sales, then extend the payment terms; if customers do not have money to make purchases, then state-owned enterprises will first make prepayments to upstream suppliers and then sell on credit to downstream customers.
Doing so will indeed increase revenue, but the risks will also rise accordingly.
This year's revenue targets have been met, and next year's targets will be further increased on the basis of this year's targets. If the revenue targets are not met, the management team will have to explain whether it is due to insufficient capabilities or inadequate market development.
This ultimately led to an absurd situation, where the external market was becoming increasingly difficult, while internal targets were rising higher and higher, and business staff clearly knew that some businesses were not safe, yet they still had to find ways to meet the scale targets.
The tax authorities are now reducing the invoice quota, which is equivalent to exposing the contradictions that were originally hidden within enterprises. It's not that trading companies are unwilling to meet their targets, but rather that their original business scale can no longer be supported by sufficient invoice quotas and market demand.
At this point, requiring companies to proceed based on the original numbers would only push the management team towards a more complex and riskier business structure.
Revenue Forced Without Resources or Capabilities Is the Riskiest
The size of a state-owned trading company is not determined by its registered capital or the revenue targets set by its parent group, but by what it actually has in its hands.
Are there stable upstream resources available, and are there downstream clients that can be influenced directly? Is there a team in place that understands the industry, logistics, and transactions? Are there sufficient funds and cargo rights management capabilities to match the scale of the business?
Many local state-owned enterprises have just established a trading company with a team of only a few people and no accumulated upstream and downstream resources, yet their revenue targets for the second year are already in the tens or even hundreds of billions of yuan. Even if those few people don't sleep every day, it's impossible for them to build the business capabilities needed to support hundreds of billions of yuan in revenue within a year.
Trade is not just about circulating contracts, invoices, and funds. Enterprises themselves need to determine who to buy from, whether the price is reasonable, where the goods are, whose instructions the warehouse follows, and who to hold accountable if payment issues arise.
If the upstream and downstream partners, pricing, and warehousing are all arranged by others, and the state-owned enterprise is only responsible for payment, collection, and invoicing, then the revenue is booked to the SOE—yet it may not truly control the goods. In the end, the risk still falls on the SOE.
Companies lack resources but are required to meet large revenue targets, and in the end, there are roughly only two options.
One approach is to engage in channel business with limited commercial value. The upstream and downstream parties have already reached an agreement, and the state-owned enterprise is only responsible for processing contracts, funds, and invoices on the books. Even without providing capital, the risks of tax, audit, and state-owned asset accountability still exist.
Another approach is to use state-owned enterprises' funding and credit in exchange for revenue, making advance payments to upstream suppliers and offering longer payment terms to downstream clients. Such businesses may involve real goods, but state-owned enterprises bear the actual financial risk.
Especially when the cash flow is tight upstream and downstream, customers may choose to cooperate with state-owned enterprises, not because state-owned enterprises have a better understanding of the goods, but because they have money, credit, and pay quickly. You may think you've found a trade business, but what the other party has found is a cheap and stable source of funding.
This type of business, once it reaches a certain scale, will see its revenue turn into accounts receivable, and then into overdue payments and losses, if a single client encounters problems. At that point, the group will be asking questions, not about why revenue targets were not met, but about why such a large sum of money was paid out.
So the greatest danger has never been low revenue—it's when a company's resources and capabilities can only support a one-billion-yuan business, yet it takes on risks on the scale of a ten-billion-yuan enterprise.
After the invoice quota was compressed this time, the businesses that usually stopped first were also these. Circular invoicing, mutual invoicing, and businesses lacking commercial substance cannot continue, and state-owned enterprises that do not control the source of goods and customers, whose profits cannot cover funding costs, and that can only repay debts as long as downstream companies continue to secure funding, will also find it difficult to continue operating at their original scale.
A decrease in business means a reduction in more than just invoices and revenue. With fewer prepayments, there is less money tied up upstream; with fewer sales on credit, there are fewer accounts receivable; and with fewer complex warehouse receipt transactions, there are also fewer disputes over goods ownership and liability risks.
Moreover, the parts that are usually cut are not the businesses with the most resources and control, but rather the portions that were reluctantly added to meet targets. These businesses contribute significantly to revenue, but minimally to profits, and consume a lot of capital and credit. As a result, a reduction in revenue may lead to an even greater reduction in risk.
If doing less business and earning less profit can help avoid a significant bad debt, is it a step back in operations or a return to a scale that is within one's own capabilities?
State-owned trading firms didn't dare to cut business, not unwilling
Previously, the state-owned trading company's revenue indicators were not well completed, and there were reasons that could explain this.
Previous common explanations were that the external economic environment was poor, demand in traditional industries was declining, the company lacked stable upstream and downstream resources, and its team, funding, and organizational capabilities could not support such a large business scale.
The issue is that these explanations are highly subjective and, as with any judgment, people's understanding may vary.
You think the market is unfavorable, but the leader may believe that there are still many opportunities in the market, you just haven't found them. You think a certain business is risky, but the leader may think that with additional guarantees, completing the necessary documents, and going through the approval process, it can be done. You think the company lacks resources, but the leader may ask, with such a large state-owned enterprise, having a brand, credit, and bank credit, how can you say you don't have resources?
Moreover, there are still many state-owned enterprise trading companies whose revenue is increasing. If others are growing and you are not, it is difficult for leaders to attribute the reason to the external environment, and they are more likely to think that the problem lies in your management capabilities, work attitude, and market development.
When you say the industry is struggling, leaders see that others are still managing; when you say the company's capabilities are insufficient, what leaders may hear is that the management team is making excuses for not meeting targets. It's difficult to determine who is right or wrong until the risks actually materialize.
In the past, even if business personnel knew that some business operations were highly risky, it was difficult for them to proactively halt them. Stopping a business deal was a judgment call made by the business personnel and management, but a decrease in revenue was a result visible to everyone on the financial reports. In the future, if the market recovers or someone else succeeds in the business, the person who made the decision to stop the business would still have to explain why they didn't dare to do it, didn't know how to do it, or weren't willing to do it at the time.
But things are different now.
The tax authorities have begun to regulate the economy of invoicing, with companies' invoice quotas being compressed, and some businesses are even unable to issue invoices at all, which is no longer a matter of whether the market is good or bad, whether the company has resources, or whether the team has capabilities.
Without invoices, business cannot be conducted. This reason is straightforward and visible to both the management team and the group leaders. If the leaders are skeptical, they can check the company's invoice quota or directly inquire with the tax authorities.
Moreover, it's not just one company that's being affected. Many similar enterprises are facing restrictions on invoice quotas and authenticity audits of transactions, making it difficult for conglomerates to achieve the same business growth as before, and it's unrealistic to expect a single company to meet the original targets on its own.
In the past, not doing something meant a company thought it couldn't be done, and others might not have recognized it; now, not doing something means invoices can't be issued, and there's no need to argue over who has a more accurate understanding of the market.
State-owned trading companies were previously aware of the risks and willing to reduce their exposure, but they dared not use their own judgment to defy revenue targets. Now that the tax authorities have intervened to halt operations, the companies finally have a reason that everyone can see and cannot easily deny.
Why Did Tax Invoice Restrictions Stop What State-Owned Asset Supervision Couldn't?
The state-owned assets regulatory body has always been clear in its stance on financing-based trade, empty invoicing, and fake trade, and relevant documents are not new this year.
In 2023, the State-owned Assets Supervision and Administration Commission of the State Council issued a notice on regulating the trade management of central enterprises and strictly prohibiting all kinds of false trade, proposing "ten prohibitions" for central enterprise trade and making clear restrictions on businesses that deviate from the main industry, fabricate trade backgrounds, engage in empty transactions and circular trading. The Regulations on Disciplinary Actions Against Managers of State-owned Enterprises, which took effect in 2024, listed violations such as conducting financing trade and fake transactions as disciplinary cases. The 46th order of the State-owned Assets Supervision and Administration Commission, which took effect in 2026, also included financing trade, empty transactions, circular trading, as well as padding and falsifying business income, within the scope of accountability.
Regulations have become increasingly strict, from prohibiting certain activities to holding individuals accountable when problems arise. However, these businesses have yet to completely disappear.
A key reason is that resource conditions vary by region, leading to different interpretations of false trade and different enforcement standards. In some places, ports, industries, logistics, and stable upstream-downstream relationships provide trading companies with ample opportunities for genuine business. In others, where industry and commodity resources are scarce, state-owned enterprises face pressure to hit revenue targets while also bearing financing and ranking burdens—forcing them to seek partners elsewhere and engage in bulk commodity trading with both ends outside their region.
The same business can be viewed differently in various places, with some focusing on whether goods have physically moved, while others emphasize the actual transfer of ownership and risk. Some places do not allow the business if both the upstream and downstream parties are traders, while others consider it permissible as long as contracts, invoices, funds, and warehouse receipts are all in order. Due to differing standards and levels of strictness, some areas have significantly reduced trade volumes, while others have seen their trade volumes increase substantially.
More realistically, as long as these businesses do not pose a risk, they can also help local governments and conglomerates solve some problems. With increased revenue, the conglomerate's ranking becomes more prominent, its financial statements become larger, and bank financing may become easier. Before a crisis erupts, all parties can benefit, and some local governments and conglomerates may turn a blind eye.
Regulators require companies to avoid false trade, while local governments and parent groups push them to hit revenue targets, secure financing, and improve their rankings. When both sets of demands land at once, the most pragmatic path for a company is to find ways to demonstrate that its operations are neither financing-driven trade nor false trade.
As a result, contracts, logistics documents, warehouse confirmations, and project initiation materials grew increasingly complete—yet the substance of the transactions never changed. The upstream and downstream operations still weren't developed or controlled by the state-owned enterprises themselves; their primary functions remained advancing funds, providing credit enhancement, and generating revenue. As long as no problems emerged in the business, no one was willing to voluntarily halt it—because stopping meant losing current-period revenue, while the risks might only surface much later.
Tax regulation is different, as it directly controls the invoicing quota, and once the quota is reduced, the business cannot continue to operate in the current period, without needing to wait for an audit or until losses are incurred before being held accountable.
In the past, companies would first conduct business and then assess the nature of any issues that arose; now, the tax authorities first examine a company's invoicing, capital flow, and transaction characteristics, and upon discovering any suspicious points, they reduce the quota, imposing constraints before the business even takes place. This is why state-owned enterprise regulatory documents are constantly being issued, yet companies still try to find ways to operate, and as soon as the tax authorities restrict invoices, the business scale immediately shrinks.
The two regulatory tools differ in their approaches, with one focusing on accountability and the other directly controlling transaction terms. Accountability typically occurs after the fact, whereas invoice quotas can stall transactions before business even begins.
This also reminds conglomerates and local governments that as invoice quotas are reduced, revenue assessment should be adjusted accordingly. Otherwise, business pressure will not be alleviated, but rather push companies towards other, more difficult-to-identify businesses. You don't provide resources, yet you demand scale; you don't allow risk-taking, yet you want profits; and when problems arise, you still hold people accountable - this is an unfair equation, no matter who is held responsible.
Restrict the Invoice Economy, Not Real Bulk Trade
The tax invoice limit has indeed objectively helped state-owned trading companies reduce their risks, but this does not mean that the stricter the restrictions, the better, nor does it mean that large amounts, low gross margins, and unmoving goods should be restricted. This boundary must be clearly defined.
Commodity trading follows its own operational logic. Goods such as ores, coal, and steel may be stored for extended periods at ports, stockyards, or third-party warehouses, with transactions completed through the transfer of title. What truly matters is whether a company has obtained title and the capacity to dispose of the goods, and whether it bears the risks of price fluctuations, quality issues, and payment collection.
If the goods actually exist and the change in ownership is confirmed by an independent warehouse, the state-owned enterprise can directly pick up and dispose of the goods. On-site transfer is a form of delivery and cannot be considered as a case of "fake delivery" just because there is no record of vehicle transportation.
The tax authorities should crack down on fake transactions, circular invoicing, and artificially inflated sales scales implemented by shell companies for financing or performance evaluation purposes, rather than suppressing normal bulk commodity trading. The State Taxation Administration also mentioned that it will restore the invoice quota for companies that have ruled out risk factors in a timely manner and meet their legitimate demand for invoices in accordance with the law.
State-owned trading companies cannot shift all the blame to the tax authorities. Goods are stored in warehouses, but they cannot be matched with specific goods and owners; warehouses have stamped documents, but they do not accept delivery instructions from state-owned enterprises; contracts are complete, but it is unclear how they make money - such business operations are difficult for anyone to understand.
What companies should pursue is not restoring credit lines for all their previous business, but rather keeping alive the operations where the goods are real, the demand is genuine, the title to the goods is controllable, and value can be created.
After tax authorities cut their invoice quotas, state-owned trading companies are being forced to answer a question they should have addressed long ago: Should they determine their business volume based on assigned targets, or based on their own resources, capabilities, and risk tolerance?
If this issue is not addressed, suppressing the invoice-based economy today will only give rise to other methods of inflating revenue tomorrow. The pressure to hit targets will not disappear—risk will simply resurface in another form.
So the state-owned trading companies should really be thanking the tax bureau—not because there are fewer invoices, but because external oversight has finally slammed on the brakes for them. The car slows down, and revenue may dip a bit. But with less money advanced and fewer receivables left on the books, there's a better chance of avoiding a major loss down the road.
For many state-owned trading companies today, scaling back operations isn't necessarily a bad thing.
Surviving with fewer risks matters far more than straining to sustain a revenue scale you simply cannot afford.