China, EU each speak of barriers in securing foreign contracts

BEIJING - Analysts said on Wednesday that the huge differences in the size of China's government procurement seen in the Chinese and European data simply reflect different definitions, and Chinese bidders on foreign contracts should receive equal treatment.

A study released by the Beijing-based European Union Chamber of Commerce in China said on Wednesday that the overall public procurement market in the nation is estimated at more than 7 trillion yuan ($1.07 trillion) a year, more than 20 percent of China's GDP. Chinese data puts the figure at 741 billion yuan for 2009.

Qiang Jianxin, deputy director of the public market and government procurement institute under the International Relations University, said the chamber's definition of procurement counts purchases made in the public interest or using public funds, while China adopted only the latter standard.

Hospitals and schools, for instance, are items of public interest, but not all receive public funds.

Gilbert Van Kerckhove, chairman of the Public Procurement Working Group under the European Chamber, said that cooperation between China and Europe is in the interest of both.

"Europe's attitude toward China is not to complain about trade imbalance and the yuan issue. We are happy to have the imports from China, because they are cheap and good. We just want fair market access," he said.

Jacques de Boisseson, president of the European Chamber, said China's regulatory framework for government procurement lacks transparency and has caused "substantial missed opportunities" for European companies.

"European companies are barred from much of this estimated $1 trillion market through the poor implementation of overlapping regulations," Boisseson said in a statement.

Qiang said China has not yet become a member of the Government Procurement Agreement (GPA) of the World Trade Organization, so it has no obligation to open its market or adhere to the agreement's rules before its official entry.

China submitted a revised offer to join the GPA last year.

Zhou Shijian, a senior trade researcher at Tsinghua University, said that it's only a matter of time before China joins the GPA.

Europe should ensure equal treatment to China by lifting visible and invisible restrictions on Chinese products and companies' investments in Europe.

"Countries shouldn't adopt double standards about China and themselves," Zhou said.

European companies already have a clear access to the public procurement process in China, said Gu Liaohai, a lawyer at Beijing Liao Hai Law Firm, who works on many government procurement deals.

"In practice, many Chinese companies are complaining that public procurement bidding always gives priority to foreign companies," Liao said.

In December, a financial department of the city of Fushun, Liaoning province, awarded a contract for seven flash memory storage devices to a local dealer to buy seven Apple iTouch 4's, instead of Chinese brands, for 49,678 yuan.

The deal was cancelled when it was exposed in media reports.

China Daily