China Country Commercial Guide
Learn about the market conditions, opportunities, regulations, and business conditions in china, prepared by at U.S. Embassies worldwide by Commerce Department, State Department and other U.S. agencies’ professionals
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Selling to the Public Sector
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China’s current government procurement regime is governed by two primary laws:

  • Government Procurement Law (GPL): This law, administered by the Ministry of Finance, covers purchasing activities conducted by central, provincial, and municipal governments and some state-owned enterprises with funds from the government’s annual budget (known as “fiscal funds” in the PRC.)
     
  • Tendering and Bidding Law (TBL): This law, administered by the National Development and Reform Commission, imposes uniform tendering and bidding procedures for certain classes of construction and public works projects. The projects that use government funds are generally considered government procurement, while some projects subject to the TBL are not considered government procurement but rather are regular non-governmental construction projects.  The tendering process includes:

              o    Public announcement 
              o    Prequalification 
              o    Prepare and issue tendering information 
              o    Bidder evaluation 
              o    Winner Selection and contract signing 

In addition to these two laws, government procurement is also subject to the Administrative Measures for Government Procurement of Import Products, which require government entities procurement to purchase domestically manufactured products except “when a product is not domestically available or not available under appropriate commercial conditions”, “quality domestic products are not available”, or under special circumstances. The Ministry of Finance and other competent finance authorities must also examine and approve the government procurement of imported products and will supervise and manage such activities. 

Though most procurement for government entities and SOEs follows public invitation tendering, during which procuring entities offer projects to all qualified bidders and follow the process listed above, in practice, the process varies depending on the size of the bid, the industry involved, and the procuring entity. Provincial and local government procurement processes are also governed by the GPL and therefore proceed similarly. However, local governments have issued their own additional regulations and implementation measures governing the procurement process. In many instances, provincial and local government regulations further restrict the ability of international firms to participate in public tenders, sometimes in violation of national rules.  

Even foreign firms that manufacture their products in China may face challenges due to unclear domestic content requirements for public procurement. Under China’s GPL products that are made in China are eligible for government procurement unless it is necessary to purchase imported products. However, the PRC government has not completely clarified what qualifies as made in China, resulting in inconsistent treatment of foreign firms that manufacture locally in the procurement process. 

Although the 2019 Foreign Investment Law indicated that “the state guarantees that foreign-invested enterprises participate in government procurement activities through fair competition in accordance with the law,” in practice U.S. companies report continuing ambiguity about whether and when their products are considered domestic for procurement purposes. These challenges are exacerbated by the fact that the PRC government has long pursued a policy of import substitution in industries it deems strategically important. This was explicitly outlined in the Made in China 2025 Policy but has emerged as an increasing focus for policy makers under the rubric of encouraging “indigenous innovation” in science and technology.   

In October 2021, the Ministry of Finance (MOF) issued a circular prohibiting discrimination against foreign-invested enterprises (FIEs) in government procurement for products “produced in China.” The circular required that suppliers not be restricted based on ownership, organization, equity structure, investor country, or product brand, to ensure fair competition between domestic and foreign companies. However, foreign companies report that the Chinese government continues to enforce Document 551, “Auditing guidelines for government procurement of imported products,” issued in May 2021 by MOF and the Ministry of Industry and Information Technology (MIIT), and which outlined local content requirements for hundreds of items, many of which are medical devices. Additionally, the October 2021 circular provided no guidance on what constitutes a “domestic product” and did not address treatment of products manufactured in China that incorporate content from other jurisdictions, key concerns for a wide range of U.S. firms.  

Foreign businesses have reported that in some cases, even products manufactured completely within China are not considered to meet the local content requirements for participation in a Chinese government procurement process, as the underlying IP is not owned by a Chinese entity. (In December 2024, the Ministry of Finance released a draft policy that would clarify the definition of “domestic.” A U.S.-China Business Council assessment noted the policy’s “phased timeline and lack of specifics leave room for gaps in implementation.” Industry sources expressed concern that the proposed 20-percent price advantage for domestic content would de-emphasize product quality, technological innovation, and market demand, and render most non-domestic content noncompetitive.)

China has not joined the WTO Government Procurement Agreement (GPA), so it has few obligations to allow foreign companies to bid on PRC government procurement opportunities. In practice, opportunities do exist, in many cases when local manufacturers cannot fully meet the needs of the project. 

Restrictions on Military Sales

U.S. manufacturers should contact the following two agencies for guidance on restrictions related to sales to the PRC military.: 

Bids on Public Sector Contracts

U.S. companies bidding on foreign government tenders may also qualify for U.S. Government advocacy. Within the U.S. Commerce Department’s International Trade Administration, the Advocacy Center coordinates U.S. Government interagency advocacy efforts on behalf of U.S. exporters in competition with foreign firms in foreign government projects or procurement opportunities. The Advocacy Center works closely with our network of the U.S. Commercial Service worldwide and inter-agency partners to ensure that exporters of U.S. products and services have the best possible chance of winning government contracts. Advocacy assistance can take many forms but often involves the U.S. Embassy or other U.S. Government agency officials expressing support for the U.S. exporters directly to the foreign government. Consult the Advocacy Center’s program web page on trade.gov for additional information.

Many governments finance public works projects through borrowing from multilateral development banks (MDBs). For more information on how to work with MDBs, please connect with our U.S. Commercial Service MDB liaisons here. 

Digital Economy

China views the digital economy as a strategic pillar for future economic growth and global competitiveness. The Chinese government has issued several key plans to develop and regulate this sector, including the 14th Five-Year Plan (2021–2025) for the Digital Economy and the Action Plan for Digital China (2023–2025). These initiatives aim to integrate digital technologies across industries, enhance data governance, promote domestic innovation, and reduce reliance on foreign technology.

Central and local governments are prioritizing infrastructure investment in 5G, artificial intelligence (AI), industrial internet platforms, and data centers—often referred to as “new infrastructure. In addition, the Digital Silk Road (DSR), a component of the Belt and Road Initiative, emphasizes the export of Chinese digital standards and technologies, further reinforcing China’s global ambitions.

China’s digital economy grew to approximately $7.5 trillion (RMB 53.6 trillion) in 2024, accounting for nearly 45 percent of GDP, according to official sources. While the PRC maintains a vibrant and rapidly evolving tech ecosystem, the market remains dominated by domestic champions such as Alibaba, Tencent, Huawei, Baidu, ByteDance, JD.com, and Meituan. In the enterprise space, cloud computing, AI, and industrial IoT are seeing significant investment and adoption, especially in manufacturing, logistics, and healthcare.

While opportunities exist, foreign players—including U.S. firms—face challenges accessing this market due to regulatory restrictions, data localization requirements, and cybersecurity reviews.

Market Challenges

Regulatory Environment

China’s digital economy is governed by an increasingly dense and evolving regulatory framework. Key legislation includes:

  • Cybersecurity Law 2017 (Note: Comments for the 2025 Amendment of CSL were due April 27, 2025. As of June 2025, no final amendment has been enacted, and the draft is still under review by the National People’s Congress Standing Committee.)
  • Data Security Law (2021)
  • Personal Information Protection Law (2021)
  • Measures for Cybersecurity Review (2022)
  • Outbound Data Transfer Security Assessment Measures (2022)
  • Provisions on Promoting and Regulating Cross-border Data Flow (2024)

These laws establish requirements for cross-border data transfers, data localization, personal information protection, and national security reviews. The regulatory environment is often non-transparent and subject to sudden changes, creating compliance challenges for foreign firms.

Sector-specific rules, such as restrictions on fintech operations, content moderation requirements, and licensing obligations for cloud computing providers, further complicate market access.

Digital Trade Barriers

  • Data localization mandates requiring companies to store data in-country.
  • Restrictions on cross-border data flows, especially for “important” data.
  • Cybersecurity reviews for networked products and services deemed critical to national security.
  • Opaque licensing procedures and unequal treatment of foreign cloud providers.
  • Content censorship and algorithmic governance obligations that limit freedom of expression and innovation.

These policies raise concerns about discriminatory treatment and limit the ability of U.S. firms to scale digital services in China.

Specific Industry Sub-Sectors

  • e-Commerce: China remains the world’s largest e-Commerce market. U.S. brands can access consumers via platforms like Tmall Global and JD Worldwide, though competition is intense, and platform regulations are strict.
  • Digital Finance: Foreign fintech firms face high regulatory hurdles, but opportunities exist in compliance tools, anti-fraud tech, and cross-border payments.
  • Smart Mobility: Growing demand for EV-related digital services, mobility-as-a-service (MaaS), and automotive software offers potential.
  • EdTech: Recent crackdowns on for-profit education companies reduced the consumer-facing EdTech market, but opportunities remain in corporate and adult learning solutions.

Digital Economy-related Trade Events

  • World Artificial Intelligence Conference (WAIC) – Shanghai, July 26-28
  • World Internet Conference (WIC) – Wuzhen, Zhejiang Province, dates to be announced