Govt to treat domestic, foreign suppliers equally in procurement

The Chinese government has pledged to equally treat suppliers from home and abroad in terms of government procurement, as it aims to safeguard a level playing field in accordance with the nation's foreign investment law and protect foreign companies' legal interests, the Ministry of Finance said on Monday.

The measure will help to build a unified and open government procurement system that encourages fair competition, which is necessary as China prepares to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership. It will also encourage the development of foreign investment in China, experts say.

A statement released by the ministry said that in government procurement, goods and services in China, either provided by domestic or foreign-funded enterprises, will be treated equally, except for those involving national security and State secrets.

Suppliers will not be subject to differential or discriminatory treatment in the release of government procurement information, certification, qualification examination and evaluation standards, the ministry said.

Government departments should not limit goods and service providers by ownership and organizational form, ownership structure, nationality, brand or other "unreasonable conditions", according to the statement.

Improving a market-based government procurement system that encourages fair competition between domestic and foreign enterprises is in line with internationally prevailing economic and trade rules, said Wang Zecai, a researcher at the Finance Ministry's Chinese Academy of Fiscal Sciences.

It is conducive to the establishment of a standard system for the implementation of government procurement policies, said Wang.

"Fair treatment of domestic and foreign-funded enterprises is a basic policy that China has employed for a long time. The promotion and protection of foreign investment reflects policymakers' strategic decision to further open the market, which will help China to become the most attractive destination for foreign investment," he added.

Wang said that the move may promote the government's demand for goods provided by foreign suppliers in the field of green energy conservation and environmental protection, such as green construction materials, energy-saving computers and products in the fields of medicine and healthcare.

According to the ministry, the total amount of government procurement reached 3.697 trillion yuan ($579.3 billion) last year, up 11.8 percent year-on-year, which accounted for 10.2 percent of annual fiscal expenditure. It was 3.6 percent of total GDP in 2020.

Government procurement has become a measure for macroeconomic adjustment, which also plays a significant role in supporting the corporate sector, especially in supporting smaller businesses, said Luo Zhiheng, chief macroeconomic analyst at the research institute of Yuekai Securities.

The ministry's statement will protect the equal rights of domestic and foreign-funded enterprises, Luo said, which is a positive sign of China's proactive preparation for joining the CPTPP.

The government's move could attract more foreign investment into China, and the authorities should improve the transparency of information related to government procurement and ensure that domestic and foreign companies can fairly get the information, said Wang from the ministry's think tank.