China to give local products leg up in bids for government contracts

‘New thinking’ for Chinese policy as domestically made products – from all firms – get 20 per cent price advantage in government procurement

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Local producers, even those with foreign ownership, will have an advantage in bidding for government procurement deals, China’s Ministry of Finance said. Photo: AFP

Published: 5:01pm, 6 Dec 2024

Products made domestically – no matter the nature of the manufacturer’s ownership – will be accorded preferential treatment in Chinese government procurement, including a 20 per cent reduction in bidding price, said the country’s Ministry of Finance.

Observers said the move is “new thinking” on the part of Beijing to revive domestic demand, promote local products and enable equal access for private and foreign businesses as both attempt to fully localise their supply chains.

The ministry announced the policy – and requested public comment – in a draft document released on Thursday.

“[We will] treat all types of business entities equally,” read the notice. “State-owned enterprises, private enterprises, foreign-invested enterprises and other entities shall enjoy equal government procurement support for their locally made products.”

After listing the criteria the ministry would use to determine whether a given product is locally made, the document laid out how the bidding process would work. “Where both domestic and non-domestic products compete,” it said, “the price after deduction will be used for evaluation.”

As price is a major determinant for which bidder gets a contract, this would grant domestic producers a proportional advantage.