Statement on the Notice on Implementing Domestic Product Standards and Related Policies in Government Procurement Go back »

2025-10-14 | All chapters

Background

On 5^th December 2024, China’s Ministry of Finance (MOF) issued its Notice on Standards for Domestic Products and Implementation Policies in Government Procurement (Draft for Comments) (draft Notice), which was aimed at providing guidance regarding what constitutes a domestically manufactured product, and also included requirements for components to achieve a specific localisation ratio. The draft Notice also proposed a 20 per cent price evaluation preference for domestic products.

On 30^th September 2025, the MOF released the finalised version – the Notice on Implementing Domestic Product Standards and Related Policies in Government Procurement (国办发〔2025〕34 号).

Statement

The final version of the Notice is broadly consistent with the draft version, but introduces several meaningful reinforcements – some in line with the European Chamber’s comments on the draft.

The policy establishes a five-year window for defining product-specific standards, as well as an additional three-to-five-year transition period once each standard is issued. Chamber members view this as a substantial improvement that helps reduce short-term policy shock.

It is also positive that new language introduced in the final version explicitly prohibits discrimination based on brand, company registration location or ownership. While it remains to be seen how this will be implemented, the introduction of a fair-competition clause signals an intent to address challenges faced by those foreign-invested enterprises (FIEs) that have already localised their production to be able to compete for government procurement tenders, but that have so far been unsuccessful largely due to their products being seen as ‘foreign’.

While these are positive changes, the inclusion of the 20 per cent price evaluation preference for domestic products in the final version of the Notice is concerning. This may not only further tilt the playing field in favour of domestic competitors, but also increase tensions with trade partners, as it constitutes what would essentially be a 20 per cent tariff on imported products in the context of government procurement.

The European Chamber expects more technical guidance on implementation, especially regarding component-level definitions, which need to be clarified for companies to be able to meet the requirements for ‘domestically produced’ products. The Chamber also hopes that—consistent with the policy’s commitment to broad consultation with domestic and foreign business associations and enterprises—FIEs will have equal opportunities to participate in shaping these future standards and that excessive localisation requirements will be avoided.

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