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Gov't procurement soars tenfold in 10 years

By Li Xiang (Global Times)

08:45, July 03, 2012

Government procurement surged from 100.9 billion yuan ($15.9 billion) in 2002 to 1.13 trillion yuan in 2011, since the Government Procurement Law was enacted 10 years ago on June 29, according to the People's Daily Monday.

The share of the government procurement as a share of budgetary expenditures rose from 4.6 percent to 11 percent over the decade, according to the Ministry of Finance.

Although government spending on procured goods and services increased tenfold, the ministry said it saved 660 billion yuan through its open bidding process.

Open bidding jumped from 48 percent of all procured goods in 2002 to 80.7 percent in 2011.

"The procurement not only helps fight corruption and shape a competitive and fair market environment, but also helps the country's economy," Wang Baoan, vice minister of finance, was quoted by the People's Daily as saying Monday.

Wang said that during the past 10 years, the amount of imported goods made up only 3 percent of the country's total government procurement.

Mei Xinyu, a researcher with the Chinese Academy of International Trade and Economic Cooperation affiliated to the Ministry of Commerce, told the Global Times that favoring domestically manufactured goods will not trigger charges of protectionism.

"China has the most complete industrial system among all the countries in the world, so it is not a big deal that domestic goods account for 97 percent of all procurement.

"Besides, the high price of imported goods makes them too expensive for grassroots government offices," Mei said.

"Many countries have rules that give priority to domestic products that are procured by their governments," Mei added.

The procurement process has not been without critics. In a report to the Standing Committee of the National People's Congress, Liu Jiayi, auditor general of the National Audit Office, last week suggested that the Ministry of Finance's paramount power over the procurement process could lead to problems.

"Supervision is needed as the ministry has a say on everything, from setting up procurement standards and giving qualifications to procurement agencies, to approval, evaluation and even punishment," Liu said.

"Supervision of government budgets and government procurement is not an easy job, as this will require a division of some functions from the Ministry of Finance," a professor from Peking University, who declined to be identified, told the Global Times.

"When we start to talk about divisions of power, you will surely face challenges from entrenched groups," he added.

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