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Monday, June 7, 1999

China bid to save cash, meet WTO norms 

William Kazer  
HEFEI (CHINA): China hopes it's marathon race to join the World Trade Organisation (WTO) may not last too much longer.

And as one of its trophies, Beijing eventually may need to change the way the government makes purchases, bringing its buying plans into the open.

In this out-of-the-way province of Anhui, a small team is working on just that issue, trying to put an open bidding system in place for provincial government purchases.

Their main aim is to ensure the government gets what it pays for, but along the way they could bring China a little closer to compliance with world procurement rules.

``We will have to do this after we join the WTO anyway,``said director of the Anhui government procurement centre, Wang Yichun.

``We will have to be more open,'' he said in Hefei, Anhui's provincial capital.

For 13 years, China has doggedly tried to join the world trade body, unable or unwilling to meet Western demands for access to its markets.

After offering a host of compromises, it appeared close toa deal during a trip to the United States by premier Zhu Rongji in April.

NATO's bombing of the Chinese embassy in Belgrade in early May has added new obstacles to an agreement, and the release of a scathing report alleging Chinese nuclear spying in the US has further soured ties.

There have been no WTO negotiations with China since the bombing, but both sides are looking for ways to bring the talks back on track.

The head of the special house committee which assembled the spying report, California Republican Representative Christopher Cox, said last week he would support China's entry into the WTO on commercially acceptable terms, yet added that what negotiators have received from Beijing so far was not enough to meet that.

Though China would not be bound to the terms of the agreement on government procurement which governs state purchases and is an adjunct accord to the WTO, it would likely come under pressure to do so in the future, analysts said.

So far, China has been more at home withdecisions made out of the public eye, whether in politics or the power of the purse.

Public scrutiny of the government and ruling Communist Party is rare but officials are gradually realising that money spent behind closed doors often disappears.

And in Anhui, one of China's poorer provinces, every little bit counts.

``We are not a rich province,'' said Wang. ``We need to be careful with our money.''

Much like any careful shopper, the provincial government will require estimates from three suppliers on purchases of more than 100,000 yuan ($12,000) and construction projects of over 500,000 yuan.

Eventually, this will work its way down to the county level for purchases of more than 10,000 yuan.

Corruption in the construction sector has been a particularly thorny problem in China.

In the southwestern city of Chongqing, the collapse of a shoddily built pedestrian bridge in January killed 40 people.

The collapse of the bridge, built under a construction contract awarded without a public tender, ledto a death sentence for a Communist Party official found guilty of taking bribes.

``In some cases, money has gone into the pockets of officials,'' said Wang, though he did not point to any specific instances in Anhui.

Other parts of the country, including Shanghai, are moving ahead with similar purchasing projects.

``We are trying to do the same thing,'' said a Shanghai government official, adding that thwarting corruption was one of the objectives of the city's plans for open bidding.

The purchasing centre in Hefei, which was set up in September, estimates it has already saved six million yuan.

Helping to speed the change has been China's rapid growth in manufacturing capability in recent years coupled with a more recent economic slowdown. That has given buyers a lot of bargaining power with suppliers.

``Now it's a buyer's market for most things in China,'' said Wang.

So far, the benefits to foreign companies have been limited. Anhui officials said Oracle software was chosen for a province-widepension fund information system, though the contract went to a Chinese supplier. Wang says that eventually the province will use an outside company to hold public tenders for supplies.

Copyright © 1999 Indian Express Newspapers (Bombay) Ltd.


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