Chinese Government Institutes "Buy China" Policy

A Buy China policy? Really? I thought everyone was already buying Chinese products... but apparently not enough - at least not in house in China itself. This could be a blip on the radar or an interesting longer term dynamic - remember, some of the blame of what turned a bad recession into the Great Depression was protectionism. The U.S. has already rankled its largest trading partner [May 19, 2009: Trade Wars Brewing in Economic Malaise, even Versus Those Pesky Canadians] with "Buy America", so as this recession / recovery drags on, and job growth is especially difficult to manufacture, I'd expect to see more of this across the globe.

But from China? Really? Weren't we all waiting for China to save us with their spending / stimulus / yellow brick road? Hmmm...chartreuse shoot.

Via FT.com

• China has introduced an explicit “Buy Chinese” policy as part of its economic stimulus programme in a move that will amplify tensions with trade partners and increase the likelihood of protectionism around the world. In an edict released jointly by nine government departments, Beijing said government procurement must use only Chinese products or services unless they were not available within the country or could not be bought on reasonable commercial or legal terms.
• The government also said it was launching an investigation in response to complaints from domestic industry associations which accuse local governments of favouring foreign suppliers in procurement related to the country’s Rmb4,000bn ($585bn, €421bn, £356bn) economic stimulus package.
• The new edict bans local governments and departments from discriminating against domestic suppliers in their procurement. Foreign companies operating in China argue that the opposite is in fact true and that they have been largely cut out of procurement related to the government’s stimulus package.
• “From a domestic political perspective this makes some sense because local governments do tend to favour foreign products in some categories,” Dong Tao, chief China economist for Credit Suisse, said. “But given how important free trade is for China’s economy this is not the right message for them to be sending to the rest of the world right now.”
• Just a few months ago Beijing was raging against a proposed “Buy American” clause included in the US economic rescue package. “Some countries raised clauses to prioritise the purchase of products of their own countries in their economic stimulus packages,” Yao Jian, a Chinese commerce ministry spokesman, told reporters in February. “We express deep concern about these [measures] ... under the current financial crisis, measures issued by all countries should not cause negative impacts, and especially they should not send out wrong messages.”
• “The whole world is dying to see China spread its orders around and save their economies,” said Mr Tao. “But what this policy reflects is heightened anxiety about these job pressures and the potential for social unrest.”