unclechina.org

Remember how China and the Europeans screamed when there was a hint of “buy-American” wording in some of the U.S. stimulus package?  This week China released information on its manufacturing industry stimulus plan, which calls for the outright maintenance of a specific domestic market share for Chinese companies. The “Implementing Regulations for the Equipment Manufacturing Industry Revitalization Plan” sets a minimum target of 70% of domestic market set aside exclusively for domestically manufactured equipment. It is not clear whether foreign companies manufacturing in China would qualify as domestic manufacturers.

The new plan focuses on eight key industry projects including auto, light industry, iron and steel, petrochemical, shipbuilding, textile, nonferrous metal, information technology, electronics and defense.  Among the methods that China will use to favor Chinese manufactuers are government procurements, subsidies for companies that are the first to use domestically produced equipment and requirements for insurance companies to provide insurance against risks, boosting VAT rebates for Chinese exporters of high tech equipment, more export credit for overseas contracting that includes equipment exports.

These are all non-tariff barriers to foreign companies wishing to enter the China market and would seem to be clear violations of WTO rules.  But will anyone object?

For more details on the Buy-Chinese provisions see:  http://www.gov.cn/zwgk/2009-05/12/content_1311787.htm