China to Tighten Government Purchases of Imported Goods

From News, page 3, issue no. 416, April 27 2009
Original article: [Chinese]

China should give preference to locally-produced goods in government procurement, the Ministry of Finance said at an April 22 meeting focused on the issue.

Assistant minister Zhang Tong said at the meeting that most of the public welfare projects benefiting from the government's four-trillion-yuan stimulus package announced late in 2008 were closely related to government procurement.

Chinese law stipulates that government procurement favor local goods. But the EO has learned that many officials were not satisfied with the amount of local goods that the government had purchased since stimulus funds kicked in last November.

Against this backdrop, China's State Council ordered on April 10 that government at all levels give preference to domestic goods, and new regulations tightening government procurement have been slated for legislation in 2009.

Experts said the April 10 directive would be hard to implement, however, as it was unclear what could be considered domestic products due to ambiguity in the law.

Officials who attended the Ministry of Finance meeting noted that with globalized production lines, it's difficult to strictly classify products by their source. In response, officials from the Ministry's treasury department pointed out that import purchases could be controlled.

China has yet to sign the Agreement on Government Procurement (GPA) under the World Trade Organization (WTO) framework, which aimed to reduce trade barriers for government procurement of goods and services between members.

In 2008, Chinese government procurement was worth 590 billion yuan, nearly five times the figure for 2001.