China’s government has issued certain guidelines encouraging 100% local content on many of the products including X-ray machines & Magnetic Resonance Imaging equipment. This will act as a barrier for the foreign suppliers that includes three U.S.-based sources. Document 551 was issued by the Chinese Ministry of Finance & Ministry of Industry & Information Technology (MIIT) entitled,” Auditing guidelines for government procurement of imported products” to a former U.S. government official. The WTO while joining had warned China against circulating such internal documents. The documents violated the spirit of the January 2020 Phase One trade deal with the U.S. Such restrictions create barriers to trade. The local content requirements include medical equipment, ground-based radar equipment, items used in animal husbandry, seismic instruments, marine, geological & geophysical equipment. The new guidelines affect many other goods & medical equipment that includes Beijing agreeing to buy more under the terms of the Phase 1 trade deal. Last year China imported goods worth $124 bn. U.S. medical device-making companies include Johnson & Johnson, GE & Abbott with the export of $4.5 billion to China. The China business council is urging President Joe Biden to complete its review of U.S. China trade policies concerns when Biden & Chinese President Xi Jinping meet in October. Biden signed a Buy America executive in his first week of office in January to boost up American manufacturing. The documents are circulated only in the companies & associations & not posted publicly which would reduce its importance to a mere guidance document.
Source: Money Control