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'Buy Chinese' for China stimulus raises fears of protectionism

'Buy Chinese' for China stimulus raises fears of protectionism article image

After criticising the US government for adding a 'Buy American' clause in their stimulus package, the Chinese government has imposed a requirement to procure Chinese-made goods for their stimulus projects. An order issued by China's main planning agency, and eight other government bodies, states that projects must obtain official permission to use imported goods: "Government investment projects should buy domestically made products unless products or services cannot be obtained in reasonable commercial conditions in China. Projects that really need to buy imports should be approved by the relevant government departments before purchasing activity starts." The decree comes after the government promised to treat foreign and domestic goods equally in stimulus spending in a bid to encourage other foreign governments to support free trade and avoid protectionism. While China's World Trade Organisation commitment to treat foreign and domestic goods equally in commercial trade will not change, the agreement does not cover government procurement. Foreign governments have expressed concerns that the provision would send the wrong signal to other countries and compound trade protectionism.

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