China Overhauls Procurement, Bidding Laws for Foreign Firms

China has unveiled draft revisions to its government procurement and public bidding laws, aiming to crack down on corruption, increase transparency, and create a more level playing field for foreign and private companies competing for government contracts. The proposed changes were submitted for first reading on June 23 to the 23rd session of the 14th Standing Committee of the National People’s Congress (NPC), the country’s top legislature.

The overhaul targets opaque processes that have long disadvantaged foreign-invested enterprises (FIEs) and private firms in China’s massive government procurement market, valued at approximately 3.4 trillion yuan (about $470 billion) annually. The reforms come as part of a broader push by Beijing to attract foreign investment amid global economic headwinds, including a 15-point action plan unveiled just one day earlier on June 22.

Key Provisions of the Draft Revisions

The draft revision to the bidding law, consisting of 79 articles in six chapters, introduces several significant changes aimed at improving oversight and fairness. According to Xinhua, the draft prohibits discrimination against bidders based on their ownership forms and removes hidden barriers impeding the development of a unified national market. Policies and measures related to bidding and tendering would now be required to undergo fair competition reviews.

The draft also mandates that projects subject to mandatory bidding must publish bidding plans and disclose winning results, bid award methods, and the main reasons for selecting winning bidders. In a significant shift, evaluation criteria are being revised to prevent awarding contracts based solely on being the lowest bid, instead emphasizing technological innovation and broader quality considerations.

Under the government procurement law revisions, buyers would be banned from imposing discriminatory conditions on government suppliers and from restricting bidders based on ownership type, organizational structure, or operational scale, as Caixin Global reported.

Tougher Penalties for Corruption

The proposed changes introduce significantly enhanced penalties for misconduct. Penalties for bid-rigging would rise to 2%-10% of project value, while corrupt experts face fines up to 500,000 yuan (approximately $69,000) and lifetime bans from bidding activities, according to Caixin’s detailed reporting.

Broader Context: A Coordinated Push for Foreign Investment

The law revisions are part of a coordinated effort by Beijing to stabilize and attract foreign investment. On June 22, the Ministry of Commerce, the National Development and Reform Commission, and the Ministry of Finance jointly issued a 15-point action plan covering five areas: expanding market access, smoothing investment procedures, sharpening promotion efforts, strengthening services and guarantees, and refining foreign investment management, as reported by the State Council Information Office.

Vice Commerce Minister Ling Ji, briefing reporters on the action plan, highlighted the strength of foreign investment in China. As of end-2025, the number of foreign-invested enterprises reached 533,000, growing at an average annual rate of 4.5% over five years, with aggregate FDI stock approaching $4 trillion. In the first five months of 2026 alone, nearly 4,000 FIEs increased their investments in China.

“The external adverse factors have mainly affected the fluctuation in incremental foreign investment, but the impact on the existing stock has been marginal,” Ling said.

Expert Analysis: A Strategic Shift

Pan Yuanyuan, deputy director of the International Investment Research Division at the Chinese Academy of Social Sciences, noted that the return on FDI in China averaged around 10% between 2004 and 2021, three to four times the 3%-5% average for other destinations. “Foreign investors are motivated by profits, pure and simple,” she said. “China offers a large domestic market, a vast population, rising consumption power, stable politics, high levels of openness, robust infrastructure, and a competitive workforce.”

Sang Baichuan, dean of the China Institute for Open Economy Studies at the University of International Business and Economics, described the reforms as a clear policy signal. “The action plan reflects a clear policy orientation: improving regulation, optimizing government services, and promoting the stable development and structural upgrading of FIEs,” he said.

Domestic Product Standards and the Path Forward

The procurement reforms build on earlier measures, including the State Council’s Notice on Implementing Domestic Product Standards (Guobanfa 2025/34), which took effect on January 1, 2026. That policy redefined what qualifies as a “domestic product” — requiring manufacturing within China with a prescribed threshold of domestically produced components — while granting a 20% price preference for domestic products. Crucially, it explicitly prohibits discriminatory treatment based on ownership type, as China Daily reported.

What’s Next

The draft revisions are now in the public consultation phase, with the first reading having occurred on June 23. Chinese laws typically go through multiple readings before passage, meaning a final vote could come in the coming months. Key questions remain about implementation and enforcement at the local level, where protectionism and corruption have been most entrenched. The reforms could also facilitate China’s long-standing bid to join the WTO Government Procurement Agreement, signaling to international markets that Beijing is serious about improving its business environment.

As Sang Baichuan noted, the broader significance extends beyond China’s borders: “It injects certainty into the world economy and helps counter the tide of deglobalization. It shows that China will continue to pursue open development, share its market opportunities with foreign investors, and work for mutual benefit with the rest of the world.”