The development of the private economy is vital for enhancing economic vitality, promoting innovation, accelerating the formation of new quality productive forces, and driving high-quality growth. Among the various supportive measures, improving the long-term mechanism for preventing and clearing arrears is crucial. This not only alleviates cash flow pressures, but also stabilizes long-term innovation strategies and supports the sustained growth of the private economy.

This paper leverages a quasi-natural experiment to empirically examine the impact of local government arrears clearing on the intertemporal smoothing of private enterprises’ R&D investment. The study finds that local government arrears clearing helps enterprises achieve intertemporal smoothing of R&D investment, specifically by significantly reducing the sensitivity of current R&D investment to operating income. This effect is more pronounced when enterprises face adverse market shocks. Mechanism testing indicates that the smoothing effect is primarily achieved through alleviating liquidity constraints and boosting micro entities’ business expectations. Heterogeneity analysis reveals that the policy effect of local government arrears clearing is more significant in samples with a higher proportion of government-originated arrears, greater operational uncertainty, and more severe financing constraints. Economic consequence testing shows that local government arrears clearing not only facilitates intertemporal smoothing of R&D investment, but also effectively assists private enterprises in achieving breakthroughs in core technologies in frontier fields, thereby accelerating the rapid development of new quality productive forces.

This paper makes the following contributions: (1) It reveals the microeconomic effect of local government arrears clearing based on the dynamic perspective of intertemporal R&D investment. (2) It elucidates the micro mechanism for accelerating the development of new quality productive forces from the perspective of intertemporal smoothing of R&D investment, deepening the understanding of the micro foundations of new quality productive forces. (3) By using the DID model, it scientifically identifies the net effect of local government arrears clearing on the intertemporal R&D decision-making of private enterprises, providing a scientific basis for the further promotion and optimization of local government arrears clearing policies.