Ali_Baba
VIP Member
2. CATIC is a trading agency that deals directly with the PAF (Pakistan Air Force). It does not have the authority to withhold payments from cooperating organizations such as CETC and AECC. After these organizations deliver the products, CATIC must pay them the full amount within a payment period (usually within 3-6 months after delivery).
In China, in all commercial collaborations, the integrator is required to pay the supplier the full amount within a payment period, with a maximum extension of one additional payment period. Any deferred or installment payment terms agreed upon with the customer are the responsibility of the integrator, who bears the risk and financial pressure, or are handled by professional financial institutions or banks.
This is how Lockheed Martin does it with the same constraints. They don't seem to have problems with it.
CATIC providing preferential payment terms to Pakistan is based on the trust relationship between the two parties. This is beyond reproach.
However, CATIC's financial capacity and risk tolerance are insufficient to support the extremely long-term installment payment terms for the larger order of 36 FC-31/J-35 aircraft. It requires the involvement of financial institutions and banks.
This is how Lockheed Martin does it with the same constraints. They don't seem problems with it. I really don't understand why you term a normal procurement and payment model as "preferential, or lenient". You have not said anything that suggest that is indeed the case.
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