Beijing issues fiat: ‘Buy China’

BEIJING (AP) | China has imposed a requirement for its stimulus projects to use domestically made goods, a move that could strain ties with trading partners after Beijing criticized Washington’s “Buy American” stimulus provisions.

Projects must obtain official permission to use imported goods, said an order issued by China’s main planning agency and eight other government bodies.

Even before the order, business groups worried that foreign companies might be excluded from construction and other projects financed by Beijing’s 4 trillion yuan ($586 billion) stimulus. Foreign makers of wind turbines complain they have been shut out of bidding on a $5 billion stimulus-financed power project.

“Government investment projects should buy domestically made products unless products or services cannot be obtained in reasonable commercial conditions in China,” says the order, dated June 1 and reported this week by state media. “Projects that really need to buy imports should be approved by the relevant government departments before purchasing activity starts.”

Beijing’s stimulus is aimed at insulating China from the global slump by boosting domestic demand through more spending on construction of highways and other public works.

On Wednesday, Prime Minister Wen Jiabao said the economy is showing “positive changes,” but the basis of a recovery is not solid and the country should prepare for long-term difficulties, the official Xinhua news agency said.

Mr. Wen has made similar comments several times this year, reflecting government efforts to reassure China’s public and companies and encourage them to stimulate a recovery by spending more while also warning against complacency.

He cited rising industrial output, investment and retail sales, Xinhua said.