Beijing announces price advantage for made-in-China products in government procurement
Beijing is using protectionism to fight protectionism.
On Thursday, the Ministry of Finance (MoF) released draft standards aimed at boosting the competitiveness of domestic industrial products – ranging from computers to automobiles – over foreign-made competitors in government procurement.
The implicit goal: Prevent Western countries from reshoring industrial manufacturing away from China.
ICYDK: Beijing has long worked behind the scenes to replace foreign products with domestic alternatives, particularly when it comes to chips.
The latest standards make this intention explicit:
- Made-in-China industrial products will be evaluated as though their price is 20% lower during the bidding process.
- However, if the domestic product wins, the government will pay the full quoted price, not the discounted amount.
The good news for MNCs: Products made by foreign companies in China will get the same treatment.
But there are more strings attached:
- “Key components” of final products must also be made in China.
- The share of domestically produced components must exceed a certain threshold of the total production cost.
MoF pledged to clarify these requirements within three to five years.
- Until then, all industrial products made in China will benefit from the preferential policy.
Get smart: Foreign companies with significant local manufacturing presence and domestically sourced supply chains can breathe easy.
- Those without a strong local foothold will soon find their grip on the market slipping.