Challenges for China's Reform of Government Procurement

Abstract

China's reform of government procurement aims to promote greater prudence in expenditure management through introducing transparency, accountability, and competition into the procurement process. The reform can also be construed as China's effort to fulfill its commitment to the WTO. This paper examines the evolution of the reform and measures the success of the reform against three indicators: the amount of cost reduction, the coverage of procurement activities, and the degree of harmonization with the WTO Agreement of Government Procurement. This paper argues that the success of the reform has been limited by an array of factors, including the misconceptions of certain procurement officials and their malpractices in procurement processes, the poor capacities of some local governments in enforcing reform, structural deficiencies in the budget management system, and the lack of political will of both central and local authorities in spurring trade liberalization.