China Inches Towards Opening State Contracts To Foreign Bidders

Both the U.S. and the E.U. have been pushing for China to join the World Trade Organisation’s agreement on government procurement (GPA) to open up a market for government work that was said to be worth 700 billion yuan ($100 billion) in 2009 and growing by more than 15% a year (though that numbers strikes us a low or narrowly defined). Last month Beijing submitted a revised version of its rejected 2007 proposal for GPA membership. That excluded local governments and state-owned enterprises from the scope of Beijing’s membership, had a high threshold for qualifying public-sector contracts and a 15 year implementation timetable.

In June China hawks in the U.S. Congress proposed to ban the U.S. government buying Chinese goods until Beijing joined the GPA (which would, it should be remembered, give it reciprocal access to government procurement in the 41 countries that are already GPA members). Today Sun Zhenyu, Beijing’s envoy to the WTO, told state media that it would take “time and effort” to improve Beijing’s offer, but that it still wanted to join “as soon as possible”.

Sun said China’s revised proposal addressed two of three main points of contention by noting that the qualifying contract sizes had been reduced and the implementation timetable cut to five years. The range of public sector entities hasn’t been expanded, though. Sun, doubtlessly prepping the ground ahead of the WTO taking up the revised offer in October, also said WTO members shouldn’t be “too demanding” of Beijing’s revised proposals, and indicated that foreign companies should consider the absolute size of even a small slice of China’s government procurement rather than worry about getting access to all of it. As a theatrical agent once said to us, 10% of something is better than 100% of nothing.

Looking at how Beijing has liberalized its trade rules since joining the WTO in 2001 — gradually — membership of the GPA is unlikely to provide an immediate bonanza for foreign companies especially given how close the state and corporate China remain. But even a couple of high-profile trophy awards would be a start, albeit of a long and hard road.

1 Comment

Filed under China-E.U., China-U.S., Trade

One response to “China Inches Towards Opening State Contracts To Foreign Bidders

  1. Pingback: links for 2010-08-12 « shenzhenintel

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