Don't Buy China

17 June 2009 By John Foley Follow @johnsfoley

Plans to favour homegrown goods in China s $586bn stimulus won t do much to return Chinese industrial firms to rude health. Such rhetoric is more likely to merely fan protectionist flames elsewhere. Countries with bloated export sectors shouldn t throw stones.

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China's $586bn fiscal stimulus should favour domestic suppliers, according to a directive issued by several central government agencies. The notice applies to contracts for government projects other than engineering goods, or those that cannot be obtained reasonably in China. Procurement for goods is largely undertaken at a local government level.

China has not joined up to the World Trade Organisation's government procurement agreement (GPA), a pact that prevents countries from discriminating against each other's goods and services for state projects. It has been in talks to join the GPA for two years.

The US and China recently clashed on a number of trade issues, including Chinese requirements that American CDs, books and computer software be distributed through stateowned firms. The US government agency for international trade is considering a plea by the United Steelworkers' union to restrict tyre imports from China.

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