China quietly sets new Chinese procurement targets for state-owned enterprises – US sources


WASHINGTON, Aug.2 (Reuters) – The Chinese government quietly released new sourcing guidelines in May that require up to 100% local content on hundreds of items, including x-ray machines and medical equipment. ‘magnetic resonance imaging, erecting new barriers for foreign suppliers, three United States. based sources told Reuters.

Document 551 was released on May 14 by the Chinese Ministry of Finance and the Ministry of Industry and Information Technology (MIIT), with the title “Audit Guidelines for Government Procurement of Imported Products”, said a former US government official, who obtained a copy of the previously unpublished 70-page catalog and parts reading to Reuters, but requested anonymity.

The former official said that when China joined the World Trade Organization, it agreed not to release such internal documents. The document also violated the spirit of the January 2020 Phase 1 trade deal with the United States, the former official said. “They need to reduce barriers, not create new ones.”

Sent to Chinese hospitals, enterprises and other public buyers, the document sets local content requirements of 25% to 100% for 315 items. They include medical equipment, ground radar equipment, testing machines, optical instruments; articles used for animal husbandry; seismic instruments and marine, geological and geophysical equipment, the former official said.

The document was not made public by Beijing.

The Chinese Ministry of Finance and the Ministry of Industry and Information Technology did not respond to questions on the matter.

Some U.S. lawmakers and industry officials are increasingly concerned about Beijing’s transparency on trade matters.

The new guidelines affect a wide range of products, including medical devices, which Beijing has agreed to purchase more under the Phase 1 trade deal. For example, magnetic resonance imaging equipment – an export key for U.S. businesses in the past – would face 100% local content requirements under the new guidelines, the former official said.

US trade experts said China’s local content rules differ from planned increases in US “Buy American” thresholds because they were not made public and affected much larger volumes of equipment. medical and other goods, because Chinese state-owned enterprises include hospitals and other entities.

BILLIONS IN-GAME SALES

China imported some $ 124 billion in goods from the United States in 2020, much of which was purchased by large state-owned and government-associated companies that control the education, health, transportation sectors. , agriculture and energy.

US medical device exports, made by companies such as Johnson & Johnson, GE and Abbott, totaled $ 47.5 billion in 2018, with exports to China valued at $ 4.5 billion, data shows. by Fitch Solutions. Chinese imports of these products fell during the US-China trade war in 2018 and 2019, but increased again after the signing of the Phase 1 trade agreement.

Doug Barry, spokesperson for the US China Business Council, said his group had heard of the document, but had not seen a copy. Members of the group that operate in China are reporting new issues to compete and win bids there, especially in areas such as test equipment and transportation, he said.

The council urges President Joe Biden’s administration to complete its review of U.S.-China trade policies and raise concerns when Biden and Chinese President Xi Jinping meet in October.

Biden’s predecessor, Donald Trump, as part of his sometimes controversial Chinese trade policy, was a strong advocate of “Buy American” and “America first”.

Biden signed a “Buy American” executive order during his first week in office in January aimed at harnessing the federal government’s vast purchasing power to boost American manufacturing, and last week unveiled new rules regarding levels of US content in goods purchased by the government.

The office of the U.S. Trade Representative, which reviews U.S.-China trade policies, declined to comment on the Chinese document or whether it violates the U.S.-China trade agreement.

USTR spokesman Adam Hodge also declined to give a timeline for when the USTR will conclude its review.

A congressman, who was briefed on the document by people who saw it, said it raised many questions, including whether foreign entities producing goods in China for the Chinese market would meet the new content criteria. local.

The non-public nature of the guidelines also meant the Chinese government could downplay their importance, the staff member said. “It is not published, it is not public. It is circulating through companies, associations and other groups,” said the staff member. “By not releasing it publicly, the PRC could deny it and say it’s just guidance.”

New import restrictions could also prevent China from catching up on its delay in meeting its commitment to purchase an additional $ 200 billion in US goods and services under the US-China trade deal, compared to 2017 levels.

With three-quarters of the deal now in place, China is on the verge of purchasing just over 60 percent of the goods needed to reach its goal, according to Chad Bown, a researcher at the Peterson Institute for International Economics.

Reporting by Andrea Shalal; additional reporting by Tony Munroe in Beijing; edited by Heather Timmons and Grant McCool

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