Recently, the General Office of the State Council issued the Notice on Implementing Standards for Domestic Products and Related Policies in Government Procurement (State Office Document [2025] No. 34, hereinafter referred to as the “Notice”). A responsible official from the Ministry of Finance accepted an interview to answer questions from journalists regarding the “Notice.”
1. What is the purpose and significance of the “Notice”?
Implementing policies for domestic products in government procurement is a common practice among major economies worldwide. Actively aligning with high-standard international economic and trade rules, improving relevant laws and regulations, and steadily expanding institutional openness have always been key focuses of China’s efforts to deepen government procurement system reforms.
Article 10 of the Government Procurement Law of the People’s Republic of China stipulates that government procurement shall prioritize domestic products, with the definition of domestic products to be determined by State Council regulations. The Third Plenary Session of the 20th Central Committee proposed actively aligning with high-standard international economic and trade rules, achieving compatibility in rules, regulations, management, and standards in the government procurement sector, and creating a transparent, stable, and predictable institutional environment. The Action Plan for Advancing High-Level Opening-Up and Attracting and Utilizing Foreign Investment with Greater Efforts (State Office Document [2024] No. 9) explicitly requires “accelerating the formulation and issuance of standards for domestic products in government procurement.”
Drawing on international experience, the issuance of the “Notice” refines and implements the requirements of the Government Procurement Law, serves as an important measure to improve the government procurement system, and represents a practical action to ensure national treatment for foreign-funded enterprises in government procurement. It holds significant importance for accelerating the establishment of a unified, open, and competitively orderly government procurement market system, ensuring equal participation of all types of businesses in government procurement activities, and continuously building a first-class market-oriented, law-based, and internationalized business environment.
2. Could you elaborate on the process of formulating and issuing the “Notice”?
Standards for domestic products are the most fundamental and technically complex policy in the government procurement policy system. In recent years, the Ministry of Finance has been collaborating with relevant departments to conduct in-depth research and formulate standards and related policies for domestic products in government procurement.
In 2024, after the draft “Notice” was completed, the Ministry of Finance solicited opinions from relevant departments multiple times and publicly sought feedback from society at the end of 2024. During this period, to fully gather opinions and address concerns from various business entities, the Ministry of Finance, together with the Ministry of Industry and Information Technology and the Ministry of Commerce, held over 20 seminars, engaging in face-to-face communication with more than 60 domestic enterprises, over 200 foreign-funded enterprises, and more than 20 industry associations and chambers of commerce. Detailed explanations of the policy’s intent and content were provided, and extensive feedback was collected.
Stakeholders generally expressed recognition and support for the formulation and issuance of standards and related policies for domestic products in government procurement, while also offering constructive suggestions. Based on the feedback received, the draft “Notice” was revised and improved and underwent reviews for fair competition and legality by relevant departments. On September 19, the “Notice” was reviewed and approved at the State Council executive meeting. Recently, the “Notice” was officially issued as a State Office document.
3. What are the main criteria for domestic products in government procurement, and what support policies are in place?
The “Notice” specifies that the standards for domestic products in government procurement mainly include the following three aspects:
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Produced within China: Products must undergo a change in attributes—from raw materials and components to the final product—within the customs territory of the People’s Republic of China. A change in attributes refers to processes such as manufacturing, processing, or assembly that result in a product entirely different from the raw materials or components, with a new name and characteristics (purpose). Simple operations such as packaging, labeling, minor painting, polishing, or repackaging are excluded.
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Cost proportion of domestically produced components: The cost of components produced in China must account for a specified proportion of the product’s total cost.
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Key components and processes for specific products: For specific products, in addition to meeting the above two conditions, key components must be produced in China, and key processes must be completed in China, as determined by the Ministry of Finance in collaboration with relevant industry authorities.
The “Notice” stipulates that domestic products will receive price evaluation preferences in government procurement activities. Specifically, in procurements where both domestic and non-domestic products compete, the quoted price of domestic products will be deducted by 20% for evaluation purposes. This support policy does not alter the final winning bid price, as government procurement contracts will still be signed based on the original quoted price of the winning supplier.
4. What is the scope of application for the domestic product standards?
According to the Government Procurement Law, government procurement refers to the procurement of goods, engineering, and services within the centralized procurement catalog or above the procurement threshold by state agencies, public institutions, and organizations using fiscal funds. The domestic product standards apply to government procurement of goods and goods within service projects, specifically referring to products classified under the “Government Procurement Product Classification Catalog.”
However, certain products, such as buildings and structures (which generally have no non-domestic alternatives), cultural relics and exhibits (which are irreplaceable), and agricultural, forestry, pastoral, and fishery products (which are decentralized and small-scale in procurement), have been excluded from the scope of the “Notice” after comprehensive consideration of concerns from domestic and foreign enterprises, practical work needs, and policy feasibility.
5. How will the domestic product standard system in government procurement be improved in the future?
Given the wide range of industries in China and the technical complexity of determining the cost proportion of domestically produced components for various products, the “Notice” proposes a phased and steady approach to implementing domestic product standards and related policies in government procurement.
Within five years of the implementation of the “Notice,” the Ministry of Finance, together with the Ministry of Industry and Information Technology and other departments, will determine the cost proportion of domestically produced components for specific products, as well as requirements for key components and processes for certain products. Transition periods of 3 to 5 years will be set based on the development conditions of different industries, gradually establishing and improving a dynamic adjustment mechanism for the domestic product standard system in government procurement.
Before the implementation of specific requirements for the cost proportion of domestically produced components and key components/processes for certain products, any product meeting the “produced within China” requirement will be regarded as a domestic product in government procurement activities.
The Ministry of Finance will collaborate with relevant industry authorities, such as the Ministry of Industry and Information Technology, to formulate requirements for the cost proportion of domestically produced components and key components/processes for specific products, taking into account the characteristics of different industries. During this process, opinions from domestic and foreign enterprises, industry associations, and chambers of commerce will be fully solicited to ensure the standards are practical and conducive to industrial development. Suggestions from all relevant parties are welcome.
6. What requirements does the “Notice” propose to ensure equal participation of all types of business entities in government procurement, and how will the Ministry of Finance promote policy implementation?
The “Notice” clarifies that all types of business entities, including state-owned enterprises, private enterprises, and foreign-funded enterprises, are equally eligible for government procurement support policies for domestic products. Procuring entities and procurement agencies must treat all business entities equally and without discrimination in areas such as the release of procurement information, determination of supplier qualification conditions, qualification reviews, and evaluation criteria, ensuring fair competition.
The “Notice” requires all regions and departments to strengthen coordination and refrain from introducing policies that violate the provisions of the “Notice.” In government procurement activities, they must not specify brands or restrict brand registration locations or ownership, nor discriminate against suppliers based on ownership type, organizational structure, equity composition, investor nationality, or other unreasonable conditions.
To ensure the effective implementation of these policy requirements, the Ministry of Finance will focus on the following tasks:
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Issuing implementation guidelines: The Ministry of Finance plans to issue detailed work guidelines to clarify requirements for financial departments at all levels and procuring entities, ensuring smooth policy implementation.
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Strengthening policy interpretation and training: Efforts will be made to interpret and promote the policy, with training provided to procuring entities, procurement agencies, and evaluation experts to ensure accurate understanding and implementation of the domestic product standards and related policies, preventing deviations in policy execution.
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Enhancing policy implementation supervision:
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Increase inspection efforts and incorporate the implementation of domestic product policies in government procurement into relevant special campaigns.
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Facilitate feedback channels for opinions and concerns from all types of business entities through daily complaint handling and enterprise seminars.
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Strictly address violations of domestic product policies in accordance with laws and regulations to create an effective deterrent.
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