Western firms welcome China's revised purchase policy

(BEIJING) - Foreign firms in China on Tuesday welcomed a move by Beijing that could ease restrictions surrounding the multi-billion dollar government procurement market.

The Ministry of Science and Technology issued a draft for new rules removing a clause that said any firm selling high-tech goods must hold the Chinese intellectual property rights for them to be included in a purchasing catalogue.

The original rules, issued late last year, were drawn up as part of an "indigenous innovation" campaign that would favour accredited products, which foreign firms said effectively excluded them from the process.

The policy had caused concerns among foreign businesses, who criticised the move as a push by Beijing to squeeze them out of the market for selling computers and office equipment to government departments.

The latest draft issued at the weekend dropped clauses stating applicants must own the intellectual property rights and trademark, and that the use of the intellectual property must be "independent of controls by overseas organisations or individuals".

The European Chamber of Commerce in China welcomed the revisions.

"This is an important sign that policymakers in China recognise the role that fair competition plays in developing and enhancing China's high-tech capabilities" the European business group said in a statement.

The group "believes that linking innovation directly to public procurement would be detrimental in the long run, and hopes that the shift away from this model, as reflected in the latest draft, will continue."

A survey released last month showed a growing number of American businesses felt unwelcome in China because of what they saw as discriminatory government policies, in particular the procurement laws.

The draft revision will be posted on the ministry's website for public comment until May 10.