It's Official: Beijing's 'Buy Chinese' Policy

Posted by: Dexter Roberts on June 17, 2009

More evidence has emerged that China intends to favor its own companies as it spends money to boost its economy, including through its $586 billion stimulus package. As I blogged last Friday, there is growing concern amongst foreign companies that Beijing has been quietly instructing local governments and ministries to ‘buy Chinese’ as they implement new infrastructure projects. This issue was raised during the June 8 BusinessWeek Global Green Business Forum in Tianjin.

Now as reported in today’s Financial Times, front page for maximum impact, nine of China’s ministries and government agencies have issued a directive that states much more clearly the imperative of buying Chinese goods whenever possible. “Except for engineering, goods, and services that cannot be obtained under reasonable business conditions within China, domestic products should be purchased for the government investment program,” the notice states.

The directive, which was issued May 26 and posted later on June 4 on the website of the powerful National Development and Reform Commission, is a joint statement by the NDRC itself and the legislative office of the State Council, as well as industry and information, housing, railways, water resources, supervision, transport, and commerce ministries. The edict even goes further and claims that to date there has been discrimination against local brands in purchasing by local governments, a practice that will no longer be allowed. Foreign companies, for their part, claim that much the opposite is true. The “untenable distinction between ‘domestic’ and ‘foreign’ in government procurement practices negatively impacts the sustained growth and development of the domestic economy,” the American Chamber of Commerce complained April 27.

For regular observers of China, the latest directive could provide a bit of mental whiplash. That’s because Beijing officials have recently been on the anti-protectionism warpath, speaking out loudly and often about what they see (and probably rightly so) as examples of protectionist tendencies abroad. China’s commerce minister Chen Deming (his ministry is one of those that are now pledging to buy Chinese products whenever possible) even penned an editorial on the topic that ran in the Wall Street Journal:

“History tells us that the more serious a crisis becomes, the more committed we must be to openness and cooperation. Regrettably, however, trade measures by the U.S. against China are on the rise. Recently, American industries have petitioned the U.S. government for antidumping investigations, and for investigations under the World Trade Organization’s ‘special safeguard provision,’ which could restrict imports of Chinese products. This will seriously test China-U.S. economic and trade relations,” Chen wrote in the piece that ran on April 27. Fair enough—many trade analysts do see these measures as examples of protectionism by the U.S.

But then the whiplash: the minister continues by suggesting that both countries should see business opportunities in their respective stimulus packages: “Both governments have rolled out economic stimulus packages on a massive scale, which in turn are expected to become new growth areas for our trade and investment cooperation. For example, China’s demand for infrastructure, machinery and equipment, and environmental protection is huge. It is hoped that both countries would turn these opportunities into tangible outcomes.” To state the obvious: successfully turning these opportunities into tangible outcomes sure isn’t going to be easy when Beijing’s top ministries are ordering localities to ‘buy Chinese.’

Reader Comments

DanTe

June 17, 2009 1:34 PM

Two faced commies are a surprise? Since when?

jose

June 17, 2009 1:42 PM

I don't think anyone should get too excited, look: 1. http://www.rttnews.com/ArticleView.aspx?Id=981985&SMap=1 and 2.
http://www.forbes.com/feeds/ap/2009/06/15/ap6544664.html. It was the United States that started the "buy American" policy first (don't throw rocks when you live in a glass house). Thank you very much and have a nice day!!

TE

June 17, 2009 2:13 PM

They are mercantilists who mouth the words of free trade - until it no longer suits them. US companies who think there is going to be a jackpot at the end of the rainbow are only fooling themselves.

US companies hollowed out the buying power of the consumers in their home market and they will soon be shut out of the emerging markets.

steve

June 17, 2009 2:53 PM

Its all about global politics. Since "buy America" already approved, others country will be using the same tactics. then each one of them will negotiate individually. and try to find middle ground.

Elvis

June 17, 2009 3:53 PM

How long was China expected to turn the other cheek? Since the global recession, country after country (or bloc in the case of the EU) has been bringing cases against China in the WTO (led by India). The United States passed a stimulus plan that locks out China. Banks that received money from the US or European governments are being forced to bring back their money. General Motors was told NOT to import from China and spend money in the US to build new cars. The US is devaluating the value of the treasury bonds therefore devaluating China's assets by printing money at will. Australia pressures Rio Tinto to betray Chinalco and join up with its traditional rival. The list goes on and on, I'm suprised the Chinese have not retaliated till now. A country can only take so much abuse before it starts fighting back.

Enrique

June 17, 2009 5:32 PM

So for over two decades America and Europe have opened our Markets broadly to Chinese imports, with a Trade deficit that last year reached $440 billion ($270 bn. the U.S. and $170 bn. the E.U.)....and now China says that they will not do the same opening their Market. Hmmm.

Tit for tat

June 17, 2009 7:35 PM

I supposed this is in response to Obama's "Buy American" clause in the US stimulus plan, which as an American I have absolutely no problems with. But then guess what two can play the game.

Chan Zhenwei

June 17, 2009 9:29 PM

Well.. what goes around comes around. Americans initiated the "Buy America" clause, so its fitting that others would eventually follow suit. China would not be the last.

Joseph

June 17, 2009 9:31 PM

Did anyone think that China was actually for real free trade? Just words spoken to justify their trade surplus.

Andy

June 17, 2009 9:33 PM

The US started the protectionism trend by sanctioning "Buy American" policy. Certainly the trend is going on.

Steven

June 17, 2009 11:28 PM

there has been discrimination against local brands in purchasing by local governments, a practice that will no longer be allowed. --- Any gov in the world agaist this policy? Think about Lenovo's experience in US. US congressmen clearly order US gov to avoid lenovo computers after Lenovo bought the brand. Actually Lenovo made thinkpad with the same ways as IBM. According to my experience, I never see a police car in US is not US brand even US cars are so notorious.

Realisation

June 18, 2009 12:32 AM

Its time for US to realize that Chinese are threat with their communist characteristics. Already they lost to China in international politics... Soon we can see economically and technologically.

KK

June 18, 2009 12:40 AM

China is one of the Countries that like to say one thing while doing anthor thing. So that while asking foreign Countries to buy Chinese goods, Beijing’s top ministries are ordering localities to ‘buy Chinese is not worthy of discussion.

KK

June 18, 2009 12:40 AM

China is one of the Countries that like to say one thing while doing anthor thing. So that while asking foreign Countries to buy Chinese goods, Beijing’s top ministries are ordering localities to ‘buy Chinese is not a worthy of discussion.

petersong

June 18, 2009 5:29 AM

No any goverment can order their people to buy this or that,since China's consumer production is cheaper than U.S,of course everyone does!
U.S is the power goverment but the Policy cannot save GM.

Bob

June 18, 2009 7:43 AM

China is a massive export oriented economy, they want to be the factory of the world and want everybody to buy their stuff. It becomes problematic when other countries slow down or stop their buying of exported goods like right now during a recession. This is hurting China and they want to jump start their local economy but "Buy Chinese" may not be the right way, "Buy quality goods" might be more effective. Anyways it still remains to be seen if the Chinese population who like other Asian groups save a lot of money than spend would be inspired to buy. It may also borrow some ideas from India which has a robust local economy and is not hugely dependent on exports.

Paul

June 18, 2009 8:37 AM

I think Elvis got it spot on. How long can one take all this nonsense

Paul

June 18, 2009 8:42 AM

I think Elvis got it spot on. How long can one take all this nonsense by all these hypocrites who preach democracy, free market, capitalism and human rights. All these have been said and "preached" to their own advantage whenever it warrants so and during those days when Asians and countries like China were powerless to do anything against these hypocritical western media and politicians. Now at least, they should take note and start to learn to pay a little more respect otherwise to these white people, their racist prejudices remains high. Stop acting and talking like hypocrites and learn to live fairly and peacefully together and the world will be so much more peaceful.

Good!!!!

June 18, 2009 8:59 AM

I am glad my govt finally got wiser and is doing the same thing the bai guis are doing to China. I have full confidence in my beloved motherland, my govt and my people. I strongly believe in and support socialism with Chinese characteristics. All one has to do is look at the "west" and their failed policies in their financial/economic models. China should further develop and work closer with its partners.

Laughs

June 18, 2009 9:52 AM

For whatever reason, Buy "Fill_in_your_Favorite" locality policies are bad in the long run. Unless the WTO can nip these policies in the bud we are likely to be entering another phase of the crisis, albeit somewhat delayed as compared to the 1930's with the SHA in the USA. Businessweek, if it is still read by anyone at all, should spear-head that campaign.

shadrak

June 18, 2009 11:37 AM

Thank you President Hu, the first economy in the world to recognise that long term world development can only carry on when the internal economies of the world are self sustaining and not dependent on exports.

With the idea of a new reserve currency as well, I am beginning to see that China is going to be a very solid player in the world as it develops it's own huge market place for itself, which is what it should do in order to improve living conditions for it's population, because to do otherwise, that is to rely on imports is to needlessly to send jobs overseas needlessly, and to put yourself in the same position the US has done to the detriment of the whole world.

A courageous and innovative leader at last is beginning to emerge in world economics in a way that is befitting the wealth it will command as an independent economy in the years ahead.

How long will it take for household wealth per capita to reach that of the other 700 million or thereabouts trading block, the US and Europe? how long did they take on their own? make allowances for the greater trade that exists nowadays anyway in the world, 30 years at most, maybe 40? that's to say if the west doesn't send any more of it's wealth overseas and so reduces it's own net worth and a crossing point comes sooner than later.

Thanks for standing out from the gibbons in the crowd.

paul pablo

June 18, 2009 12:43 PM

Enough said , the almighty dollar will speak for itself. This is where the Americans will lose if they haven't lost it already.

keith

June 18, 2009 12:46 PM

China is anything but free trade...
I avoid buying Chinese products because of fearing for my safety. They will do anything to make a buck.
They sale defective, poisoned products to their own people and to the whole world. They could careless when it come to Americans.
Keep jobs in America by buying American's products

Mr China

June 18, 2009 1:27 PM

Bottom line is that this is just the start of China's long range plan to bring everything "in house". Planes, trains, autos, financial services, infastructure projects, anything with a high value add. Corporate CEO's and the US government are fooling themselves if they think we will be able to compete in the China market 10 years from now.

It would be nice to actually have a governmemt in the US who had long range plans on the key issues facing our country (energy, global competiveness, social security). It is very depressing.

Taishan

June 18, 2009 2:49 PM

American name brands dot the Chinese landscape in China's major cities. Everything from McDonald's to KFC to Starbucks to Walmart to Home Depot. The list goes on (and it is a very large list). I don't believe it is too much to ask, to over look a mandate to "Buy China" for stimulus money. Money that will be used primarily for infrastructure projects. Especially, when much of what will be kept in house in China (black iron types of industry like steel, heavy equipment, etc.) is slated to kept in house in the US as well. So, really, I don't see the problem.

Taishan

June 18, 2009 2:51 PM

American name brands dot the Chinese landscape in China's major cities. Everything from McDonald's to KFC to Starbucks to Walmart to Home Depot. The list goes on (and it is a very large list). I don't believe it is too much to ask, to over look a mandate to "Buy China" for stimulus money. Money that will be used primarily for infrastructure projects. Especially, when much of what will be kept in house in China (black iron types of industry like steel, heavy equipment, etc.) is slated to be kept in house in the US as well. So, really, I don't see the problem.

Taishan

June 18, 2009 2:57 PM

American name brands dot the Chinese landscape in China's major cities. Everything from McDonald's to KFC to Starbucks to Walmart to Home Depot. The list goes on (and it is a very large list). I don't believe it is too much to ask, to over look a mandate to "Buy China" for stimulus money. Money that will be used primarily for infrastructure projects. Especially, when much of what will be kept in house in China (black iron types of industry like steel, heavy equipment, etc.) is slated to be kept in house in the US as well. So, really, I don't see the problem.

NA

June 18, 2009 4:34 PM

Respond to KK.
The west is the one that has double standard. The west can claim first prize to that and one one else will be able to match its double standard policy.

Slumbai

June 18, 2009 9:24 PM

I see absolutely nothing wrong with "buy Chinese" principle.
First of all, free trade idea was not originated in China, but US.
Second, it was also US who promoted "free trade" and "globalization" around the world.
Third, when Lenovo purchased IBM PC unit, the US government stopped right away orders from Lenovo and switched to DELL.
Fourth, was it US who had "Buy America" first?
Sixth, many whilte people I know are intrincally practicing "buy America" all their lives. For the Chinese, I would say the opposite is true.

TS

June 18, 2009 9:56 PM

Screw China! Somebody should drop the bomb and the problem would be solved!

Haav

June 19, 2009 1:22 AM

Finally, the Chinese decide to join the developed world and follow the American leader.

They finally understand the meaning of "If you can't beat them, join them!". Since we are sticking with our "Buy American" policy and they figured they can't make our congress change anything. (Nobody can.) They will just have to join the most advanced country in the world and copy our "Buy xxx" program.

Someone please investigate whether they are infringing on our Interlectual Property Rights.

Haav

June 19, 2009 1:27 AM

Finally, the Chinese has joined the developed world and follow the American leader.

They finally understand the meaning of "If you can't beat them, join them!". Since we are sticking with our "Buy American" policy and they figured they can't make our congress change anything. (Nobody can.) They will just have to join the most advanced country in the world and copy our "Buy xxx" program.

Someone please investigate whether they are infringing on our Interlectual Property Rights.

CompEng

June 19, 2009 9:44 AM

Mercantilism is the art of decrying everyone else's protectionism while keeping your own protectionism as quiet as possible. China is a master of the art.

Downs

June 19, 2009 12:23 PM


Well done, China ! You are catching up Americans.

Well done, America ! The world is catching up you.

Bob

June 19, 2009 1:46 PM

This BW author is conducting trashy journalism. The FT article was very clear that all this started with the 'Buy American' policy that US congress passed months ago, and much of Europe was emulating. That Balfour pointedly neglect to mention how all these mess started and focus on Chinese Commerce Ministers supposed flip-flop was malicious and intentional.

Hundreds of average bloggers are doing a much better job than BW. This trashy magazine has outlasted its reason to exist.

Bob

June 19, 2009 1:52 PM

Read bloggers on Seekingalpha.com for truth and serious discussions. Don;t waste time on BW trash.

There are at least bloggers discussing this "Buy American" "Buy Chinese" issues. Pick any one and you get more objective and better educated opinions than this trash.

Try this: http://seekingalpha.com/article/144143-china-counterattacks-with-a-buy-china-policy

You will never want to read BW again.

C. H. Ng

June 20, 2009 8:20 AM

Hurray...! At last someone finally thumb the white supremists' noses and showed them what they can do, she (China) also can it too.
That should be the way. Don't bow to their bullying ways. I hope the rest of Asian countries will follow China and show them we are not easy pushover too.

jcage

June 20, 2009 12:40 PM

Most of the American media are acting more and more like a propaganda machine! That is why most of their article on China seems to be written by the same fellow!
That is why most of the American did not see the DOT.com bust or the housing bust coming since most of the media was telling everything is fine and rosy in the USA.

If there is key information that is not convenient to the power that be is get usually ignored or "blacked out" by the media like the two Japanese that was carrying 153 billion of Dollar in bond to Switzerland and it is now verified to be "fake"! If that new hit the front page it could have affect the bond interest rate!!
Go the to real state section in BW and it keep telling it is a good time to buy a house now, well for BW is always a good time to buy a house even in the middle of the recession. BW is just another instrument to spread disinformation!

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