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New study may speed up open gov't bids
By Guan Xiaofeng (China Daily)
Updated: 2004-11-08 08:08
The government may put foreign suppliers on equal footing with Chinese
producers in years to come, and a new programme is searching ways on how or when
the government procurement market will open.
As part of its commitments to the World Trade Organization, China is
preparing to start negotiations to join the Government Procurement Agreement
(GPA) in the next few years. The GPA allows companies from any of the members to
bid for government procurement contracts in other members.
China, however, faces some obstacles, including a national law which calls
for billions of yuan in government purchases to go to domestic goods and
services whenever possible.
A task force was set up a year ago to start planning for the upcoming
negotiations for GPA membership, said Yu An, a task force member and a law
professor at Tsinghua University's School of Public Policy and Management.
The task force has launched a research programme, headed by Yu, to find out
how the GPA fits within the Chinese context and how to approach the negotiations
for membership.
Those negotiations will depend largely on the research results, Yu said, but
added that the start of the programme shows China plans to open the government
procurement market.
When China gained access to WTO in 2001, it promised to initiate negotiations
for membership in the GPA "as soon as possible."
China did not sign the GPA in 2002, but became an observer with the future
goal of becoming a member. Prior to becoming a member of the GPA, China will not
be required to give foreign suppliers such equal access.
Yu said China's entry into the GPA is complicated, as China already has a
law, which took effect in 2003, on government procurement.
The Law of the People's Republic of China on Government Procurement regulates
government purchase practices at all levels.
It stipulates that government procurement shall target only domestic
commodities and services except when they are unavailable or cannot be obtained
under reasonable commercial conditions within the territory of the Chinese
mainland or when they are needed outside of the mainland.
The law does not define domestic Chinese goods, works and services, leaving
the task to the State Council.
"To become a full member of the GPA, our legislature will consider revising
our Procurement Law," said Yu.
Many overseas businesses have been keen to get a piece of China's huge
procurement market, whether by supplying goods and services to large
infrastructure projects such as Beijing Olympics-related projects or by
participating in local governments' procurement activities.
In 2000, China's total government procurement was 32.8 billion yuan (US$4
billion).
In 2003, however, China's total government procurement soared to 165.9
billion yuan (US$20 billion), five times as much as 2000 and an increase of 64.4
per cent over 2002, according to statistics provided by the Ministry of Finance.
In the coming years, government purchases and contracts are expected to grow
even more due to China's booming economy. China's GDP grew 9.5 per cent in the
first nine months of the year.
The timing for the start of the working group is not accidental.
"The reform on the investment system initiated in the first half of this year
lays down a solid institutional basis for China's government procurement
practices," said Tong Jiadong, a professor of economics from Nankai University
and director of the university's WTO Research Centre.
"China's opening up its procurement market is a natural extension of this
reform," Tong said.
In July, the State Council promulgated a Decision on Reform of Investment
System as a guiding document for the transformation, the core of which is to
give a full play to the market in terms of resource allocation by relieving
enterprises of government intervention.
The reform also aims to standardize government investment operations, making
government-funded projects more productive and using bids to decide on
investments.
The reform would also create a better institutional environment for foreign
investment in China.
Premier Wen Jiabao stressed that pushing this reform forward is of great
significance for a perfect socialist market economic system and more effective
macro-control.
"China's intention to join the WTO Government Procurement Agreement reflects
the Chinese Governments determination to accelerate China's integration into the
world market economy," Tong said.
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