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Circular of the Ministry of Finance of the People's Republic of China on Printing and Distributing the Measures for the Administration of Government Procurement of Import Products
Cai Ku [2007] No. 119
The related departments of the Central Committee of the Communist Party of China, all ministries and commissions of the State Council, the institutions directly under the State Council, the General Office of the Standing Committee of the National People's Congress, the General Office of the Chinese People's Political Consultative Conference, the Supreme People's Court, the Supreme People's Procuratorate, related people's organizations, the finance offices (bureaus) of all provinces, autonomous regions, municipalities directly under the State Council and cities specifically designated in the state plan, the finance office (bureau) of Xinjiang Production and Construction Corps., and all centralized procurement institutions:
With a view to implementing the Circular of the State Council on Some Support Policies for Implementing the National Guideline on Medium and Long-term Program for Science and Technology Development (2006-2020), impelling and promoting the implementation of government procurement policies for independent innovation, standardizing the government procurement of import products, the Ministry of Finance has formulated the Measures for the Administration of Government Procurement of Import Products in accordance with the Government Procurement Law of the People's Republic of China and other related laws and regulations. These Measures are hereby printed and distributed to you, please carry them out accordingly.
Attachment: Measures for the Administration of Government Procurement of Import Products
The Ministry of Finance
December 27, 2007
Attachment:
Measures for the Administration of Government Procurement of Import Products
Chapter I General Rules

Article 1
With a view to implementing the Circular of the State Council on Some Support Policies for Implementing the National Guideline on Medium and Long-term Program for Science and Technology Development (2006-2020), impelling and promoting the implementation of government procurement policies for independent innovation and standardizing the government procurement of import products, these Measures are formulated in accordance with the Government Procurement Law of the People's Republic of China and other related laws and regulations.

Article 2
These Measures shall apply to the activities that any state organ, public institution or organization (hereinafter referred to as the "purchaser") purchases import products (including import products that have entered into the territory of China) directly or through entrustment by using public fiscal funds.

Article 3
The phrase "import products" as mentioned in these Measures means those products that are produced abroad and have entered into the territory of China after the procedures of Chinese customs declaration, inspection and clearance.

Article 4
The government shall purchase domestically manufactured products; if it is really necessary to purchase import products, related examination and administration shall be conducted.

Article 5
When purchasing import products, the purchaser shall adhere to the principle of being good for domestic enterprises' independent innovation or the digestion and absorption of core technology, and purchase with priority the products of a supplier which will transfer the technology, offer training services or adopt other compensation trade measures to the Chinese party.

Article 6
The finance departments of the people's government at or above the level of districted city or automatic prefecture (hereinafter referred to as the finance departments) shall examine the government procurement of import products, and carry out supervision and administration.

Chapter II Examination and Administration

Article 7
Where the products needed to be purchased can not be obtained or can not be obtained by reasonable commercial terms within the territory of China, or if any law or regulation otherwise prescribes the demand to purchase import products, the government procurement shall be carried out upon the examination and approval of the finance departments.

Article 8
When filing an application with the finance department for examination, the purchaser shall submit the following materials:

(1)
An Application Form for the Government Procurement of Import Products (Please see Attachment 1 for details);

(2)
Photocopies of the laws, regulations or policies of the State for encouraging the import of products;

(3)
The Opinions of the Industrial Administrative Department on the Government Procurement of Import Products (Please see Attachment 2 for details) as issued by the administrative department in charge of the industry of import products at or above the level of districted city or autonomous prefecture; and

(4)
Expert Statement Opinions on the Government Procurement of Import Products (Please see Attachment 2 for details) as issued by the expert panel.

Article 9
Where the import products to be purchased by a purchaser belong to the ones of which the import is clearly encouraged by laws, regulations or policies of the State, the purchaser shall, when filing a report with the finance department for examination, submit the materials as provided for by Article 8 (1) and (2).

Article 10
Where the import products to be purchased by a purchaser belong to the ones of which the import is clearly restricted by any law, regulation or policy of the State, the purchaser shall, when filing a report with the finance department for examination, submit the materials as provided for by Article 8 (1), (3) and (4).

Where a purchaser plans to purchase major technical equipments or major industrial technologies as restricted by the State from being imported, it shall obtain opinions of the development and reform commission. Where a purchaser plans to purchase major scientific instruments or equipments as restricted by the State from being imported, it shall obtain the opinions of the department of science and technology.
Article 11
Where a purchaser plans to purchase any other import product, it shall, when filing a report with the finance department for examination, submit the materials as provided for by Article 8 (1), (3) and (4).

Article 12
The "expert panel" as mentioned in these Measures shall consist of five or more experts in an odd number, of which one legal expert shall be included and the product technical experts shall be those who are not employees of the purchaser but are familiar with the foresaid product.

No procurement representative may participate in the statement as an expert.
Article 13
Experts that have participated in statement may not take part in the procurement evaluation for the same project.

Chapter III Procurement Administration

Article 14
The government procurement of import products shall be made mainly by way of public tendering. If it is necessary to adopt a new procurement method other than public tendering under special circumstances, the government procurement shall be subject to the related provisions for government procurement.

Article 15
The purchaser or its procurement agent shall, in the document on procurement of import products, state that it will first purchase the import products of a supplier that will transfer technology to Chinese enterprises or will conclude schemes of digestion, absorption and re-innovation with Chinese enterprises.

Article 16
Where, due to the request for consistency of products or for supporting services, a purchaser needs to continuously add the original items from the former supplier, no new examination needs to be made, provided that the aggregate purchase capital does not exceed 10% of the purchase capital under the original contract.

Article 17
Where, during the process of performing the contract on government procurement of import products, the purchaser really needs to add the products same to the contractual target, it can negotiate with the supplier for concluding a supplementary contract, and no new examination needs to be made again, provided that other terms in the contract will not be changed and the purchase capital under the supplementary contract does not exceed 10% of that under the original contract.

Article 18
The contract on government procurement of import products shall contain an indispensable article on maintaining national interests and public interests. In case any problem of damaging the national interests or public interests occurs during the process of performing the contract, the purchaser shall terminate the contract at once.

Article 19
The purchaser or its procurement agent shall intensify the examination on import products to prevent fake or shoddy products.

Article 20
When applying for the payment of purchase capital for import products, a purchaser shall present the materials on government procurement of import products and the examination documents issued by the finance department; otherwise, no capital may be granted.

Chapter IV Supervision and Inspection

Article 21
Where a purchaser has not obtained approval from the finance department for the procurement of import products, if it is under any of the following circumstances, it shall be ordered to make corrections within a time limit and shall be warned, its principals and other persons directly liable shall be punished by the administrative department or the competent organ, and a circular on criticizing them shall also be circulated:

(1)
Illegally purchasing import products;

(2)
Providing false application materials; or

(3)
Any other violation of these Measures.

Article 22
Where a procurement agent commits an illegal act when acting as an agent to purchase import products for the government, it shall be warned, and may be fined according to related laws and regulations; if the circumstance is serious, its qualification for the related business shall be cancelled; and in case a crime is constituted, it shall be subject to criminal liabilities.

Article 23
Under any of the following circumstances, the supplier shall be fined at 0.5% up to 1% of the purchase capital, be incorporated into the list of bad record and be forbidden to participate in government procurement for a period about one up to three years; if there are illegal proceeds, the illegal proceeds shall be confiscated; if the circumstance is serious, the administrative department of industry and commerce shall revoke its business license; and if it is suspected to have committed a crime, it shall be transferred to the judicial organ for investigation and punishment:

(1)
Providing false materials to win a bid or transaction;

(2)
Vilipending or squeezing out any other supplier by unjustifiable means;

(3)
Maliciously colluding with the purchaser, any other supplier or procurement agent;

(4)
Offering a bribe or other unjustifiable interests to the purchaser or any procurement agent;

(5)
Undertaking negotiations with the purchaser during the process of procurement by way of tendering; or

(6)
Refusing the supervision and inspection by related departments, or providing false information.

Where a supplier is under any of the following circumstances as provided for by Items (1) up to (5) of the preceding paragraph, the bid winning or the transaction as concluded shall be invalidated.
Article 24
Where an expert issues false demonstration opinions, he/she shall be subject to legal liabilities according to related laws and provisions.

Chapter V Supplementary Rules

Article 25
When purchasing import products, a purchaser shall also accord with other related laws and regulations of the State. In case the procurement involves the bidding of import mechanical and electrical products, the purchaser shall observe the related measures for international bidding.

Article 26
Any matter uncovered herein shall be subject to the related provisions on government procurement.

Article 27
Any project involving national security or secret may not be subject to these Measures.

Article 28
These Measures shall enter into force as of the date of printing and distribution.

Attachments:
1. Application Form for the Government Procurement of Import Products (omitted)
2. Opinions of the Industrial Administrative Department on the Government Procurement of Import Products (omitted)
3. Expert Demonstration Opinions on the Government Procurement of Import Products (omitted)