China Defends Tech Rule

Beijing said the rule, which requires sellers of high-tech products to have them accredited based on local intellectual property will help develop an 'innovative' country.

BEIJING (AP) -- China's Commerce Ministry defended on Wednesday a new government purchasing plan that gives priority to goods that use Chinese intellectual property while pledging to treat all companies equally.

The rule, which has attracted complaints from foreign companies, requires sellers of high-tech products to have them accredited based on "indigenous innovation" -- or local intellectual property -- before they can be listed in a government procurement catalog, a business worth tens of billions of dollars.

"It's appropriate for the Chinese government to take these policies in transition from 'made in China' to created in China," ministry spokesman Yao Jian told reporters at a briefing.

The notice, jointly issued by the Ministry of Science and Technology, Ministry of Finance, and the National Development and Reform Commission, said the accreditation process would help develop an "innovative" country.

More than 30 business groups from the United States, Europe and other countries sent letters to the Chinese government urging it to either not proceed with or to delay the new rule.

Foreign companies were worried they will be forced to transfer their intellectual properties developed at home to China in order to win government procurement deals.

Yao said the new rule targets all companies that are set up in China.

"This policy treats all companies set up in China equally as long as they pay tax, employ Chinese staff here and own intellectual properties created here," Yao said.

China's Finance Ministry said in August that government purchasing, including nontechnical goods, in 2008 rose 28.5 percent year-on-year to 599.1 billion yuan ($81.9 billion).

Yao said that government procurement is only part of the Chinese market and the rest of it is big enough for companies to enjoy.

Associated Press researcher Bonnie Cao contributed to this report.