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Balance Tilts in Favor of Local Firms

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When the going gets tough, the tough, sometimes, complain - it's about where the precious money goes, and who gets the few and life-saving deals.

And sometimes, their complaints are heard and acted upon.

For the first time since the launch of the nation's 4-trillion-yuan economic stimulus package late last year, the government has responded favorably to rising protests about too many fat contracts awarded to foreign companies.

On June 1, the National Development and Reform Commission (NDRC), the top economic planner, warned in a statement that Chinese products have suffered "illegal barriers" when bidding for government purchases paid for from the stimulus budget.

It said the "discrimination" is particularly serious in industries including equipment manufacturing, which has "aroused wide concerns from industry associations and companies".

On June 4, the NDRC and eight other ministries jointly released a notice requiring local governments to give priority to Chinese products when purchasing for government-invested projects.

Lu Renqi, vice-president of the China Machinery Industry Federation, said many local governments favor imported products because of strong financial incentives.

Many machinery items fall under the Customs' "encouraged" category for import, and thus enjoy preferential tariffs. The appreciation of the yuan has played a part in the reluctance to buy local.

There are no figures on the proportion, or the value, of foreign products purchased under the stimulus budget.

But some major projects have been won by foreign companies, such as German industrial conglomerate Siemens AG's winning of a 750-million-euro (US$1 billion) order for Beijing-Shanghai high-speed rail trains.

The alleged discrimination faced by Chinese producers has evoked strong reaction among netizens.

Balance tilts in favor of local firms

A typical complaint on Sina.com, one of the top Net portals in the country, was: How they can discriminate the Chinese products while using the Chinese taxpayers' money?

"The mentality that foreign brands are better than Chinese ones has misled us for years," said Jing Yunchuan, chief lawyer of Beijing-based Gaotong Law Firm, criticizing Chinese companies which prefer foreign products.

After three decades of progress, many Chinese brands have built up core competitiveness, but some purchasers do not seem to be aware, said Jing.

But even as local firms seem to be receiving some redress, foreign companies are complaining that they are the victims of unfair bidding practices.

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