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(Jul 01, 2009) On June 26, 2009, a joint statement made by the spokesmen of the Ministry of Commerce (MOFCOM) and of the National Development and Reform Committee (NDRC) was published by the official government news agency, Xinhua. The statement denied that China has imposed a "Buy China" order as part of its stimulus package and claimed it was a misunderstanding by some foreign media to label the circular China issued in early June trade protectionism.

The circular in question was jointly issued by nine government departments, including the NDRC and the MOFCOM, on May 26, 2009 [FGFG [2009] No. 1362]. According to the circular, "within the scope of government procurement," government-invested projects must buy domestically when ordering construction projects, goods, or services. (See Laney Zhang, Order to "Buy China" in Government-Invested Projects, GLOBAL LEGAL MONITOR, June 25, 2009, available at http://www.loc.gov/lawweb/servlet/lloc_news?disp3_1384_text.)

According to the MOFCOM and NDRC statement, the purposes of the nine-department circular include tightening government supervision of tenders and bidding for government-invested projects and protecting fair market competition. Before the issuance of the circular, in some places there was bias against domestic products in tenders related to government procurement, the statement said. Therefore, the circular reiterated the requirement of buying domestic products in accordance with the Law on Government Procurement. The statement emphasized that the requirement of buying domestic products as specified in the circular was not a new order specifically applied to China's stimulus package, nor was it a trade protectionist activity against foreign enterprises and foreign products, as foreign media had charged. The Chinese government would never discriminate against foreign enterprises and products, the statement indicated.

According to the statement, the requirement to buy domestic products in the circular applies only to purchases in government-invested projects that are within the scope of the Law of Government Procurement. Furthermore, the domestic products referred to under the Law include the products of foreign-invested enterprises legally incorporated in China. China has not signed the World Trade Organization's (WTO) Government Procurement Agreement, and thus the requirement to buy domestic products under the government procurement system is not against China's WTO commitments, the statement said. (MOFCOM and NDRC: So-Called "Buy China" Policy Was a Misunderstanding, Xinhuanet, June 26, 3009, available at http://news.xinhuanet.com/fortune/2009-06/26/content_11607929.htm.)

Author: Laney Zhang More by this author
Topic: Economics and Public Finance More on this topic
Jurisdiction: China More about this jurisdiction

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Last updated: 07/01/2009