Wednesday, June 17, 2009
The Chinese appear to have borrowed a page from the U.S. play book. According to news reports, the 4 trillion yuan Chinese financial stimulus package requires that all goods and services for projects funded by the stimulus package be Chinese-made unless domestic goods and services cannot be obtained under reasonable commercial conditions. Special government permission must be obtained to purchase imports. As reported on this blog last January, the U.S. stimulus package contains a provision requiring the purchase of domestic iron and steel for projects paid for by U.S. stimulus funds. At the time, China criticized this provision of the U.S. bill and stated that China would treat domestic and foreign products alike.
Now it appears that China has not only matched the United States' actions - it went further by applying its "Buy Chinese" clause to all goods and services purchased with stimulus funds, not just steel and iron or other limited product categories. While China is a member of the World Trade Organization (WTO) which normally requires equal treatment of foreign and domestic products, China is not yet party to the WTO Government Procurement Agreement. As a result, it is unlikely that China's actions can be challenged before the WTO.