According to the law, government procurement should be in line with the principles of openness, transparency, fair play, justice and integrity. The law stipulates the scope, means and procedure of government procurement. It serves as a core for other relevant regulations to be adopted later.

Zhang Tong, a Ministry of Finance official in charge of policy-making on government procurement, said the adoption of the law was crucial for making the sector more transparent and closer to international practice.

China has yet to join the government procurement protocol of the World Trade Organization (WTO). However, it is committed to carrying out all governmental entities' procurement in a transparent and indiscriminative manner.

The new law stipulates that the person who makes the procurement must not adopt irrational conditions to give different or discriminative treatment to suppliers, and no organizations or persons should use any means to obstruct or restrict suppliers from freely entering the government procurement market in a region or an industry.

China began its first trial of government procurement in 1996, but developed the sector very fast.

In 2001, regional agents or centers of government procurement emerged all over the country, with the total procurement volume reaching 65.3 billion yuan (US$7.9 billion), more than doubling the previous year. The scope of government procurement expanded from goods to construction projects and services. Governments at both central and local levels promulgated relevant regulations.

However, the volume of government procurement accounted for merely 3.7 percent of China's gross domestic product (GDP) and two percent of government expenditure, a far cry from the ratio of the developed market economies.

Ministry of Finance officials said the lack of universal standards and poor law enforcement also crippled the development of government procurement in China.

To address these problems, the Government Procurement Law, expected to be promulgated as of January 1, 2003, standardizes the practice in terms of ways, procedures, contracts, appeals and complaints, supervision and legal liabilities.

Minister of Finance Xiang Huaicheng said that according to the transparency principle, China would set up completely separate organs for the administration and execution of government procurement in 2003.

In order to enhance the capacity of administrators and executives of government procurement, the ministry will train 10,000 professional personnel every year for the next two to three years.

Analysts here say that the adoption of the Government Procurement Law and other regulations would level the ground for foreign suppliers to enter the government procurement market in the future.

The government hopes the expansion of government procurement will help lift the old fiscal system to international standards, and more importantly, curb the rising evil of corruption.

The Ministry of Finance forecasts that the total volume of government procurement will exceed 100 billion yuan (US$12 billion) this year, including the 20 billion yuan (US$2.4 billion) to be spent by the central government.

( July 1, 2002)