Beijing Orders 'Buy China' for Stimulus Projects

China has imposed a requirement for its stimulus projects to use domestically made goods -- a move that could strain ties with trading partners after Beijing criticized Washington's "Buy American" stimulus conditions.

Photo by: Cory Doctorow Shanghai

Projects must obtain official permission to use imported goods, said an order issued by China's main planning agency and either other government bodies.

Foreign business groups worry that foreign suppliers of construction equipment and other goods might be excluded from projects financed by Beijing's 4 trillion yuan (US$586 billion) stimulus. Foreign producers of wind turbines say they have been shut out of bidding on a $5 billion stimulus-financed power project, even though their factories are in China.

"Government investment projects should buy domestically made products unless products or services cannot be obtained in reasonable commercial conditions in China," says the government order. "Projects that really need to buy imports should be approved by the relevant government departments before purchasing activity starts."

The order, dated June 1, was reported this week by state media.

Beijing promised in February to treat foreign and domestic goods equally in purchasing for stimulus projects and has appealed to other governments to support free trade.

China criticized Washington in February for requiring stimulus-financed projects to use American-made iron and steel. The main Chinese state news agency labeled such conditions "poison" to efforts to solve the global economic crisis.

China's World Trade Organization obligations require it to treat foreign and domestic goods equally in commercial trade. But it has not signed a WTO treaty that extends such requirements to government procurement, which might limit the ability of foreign governments to challenge Beijing's order on legal grounds.

The American and European chambers of commerce in China and spokespeople for the American Embassy and European Union mission did not immediately respond to requests for comment.

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