The prejudice has ignited gnawing worries that such actions are in direct contradiction with national policies. The Government Procurement Law stipulates that government procurements should involve a certain amount of domestically made products and services. For key projects, their value should account for at least 60 percent of the total, according to the Outline of the National Plan for Medium to Long-Term Scientific and Technological Development.

Yet adherence to such a policy is much easier said than done. A number of cases indicate how serious the "buy foreign" tendency has become. In March 2007, some government offices in Jiangsu Province mandated that their central air-conditioning suppliers must be foreign companies or at least joint venture manufacturers. In the meantime, the Jiangxi Provincial Highway Administration Bureau and the Land and Resources Bureau of Hefei, the capital city of Anhui Province, also followed suit in their own equipment purchases.

In an effort to reestablish fairness in government procurement, the Ministry of Finance in February 2008 put in place a set of disciplinary measures, although they have never been implemented. This explains why the Chinese Government has recently stepped up its efforts to woo foreign investors once again.

A positive role

In spite of the "buy Chinese" provision, it is hard to see how the country can turn its back on foreign investments, which have helped fuel its economic takeoff in the past decades. The Ministry of Commerce (MOFCOM) also issued a statement on June 16, downplaying brewing concerns over the status of foreign investors in China.

During the past three decades of development, foreign-funded enterprises have become an important part of the national economy, MOFCOM said. By May 2009, the number of foreign companies in China had reached more than 660,000, bringing in total investment of more than $890 billion. In 2008, they accounted for 29.7 percent of China's total industrial output value, 21 percent of its enterprise taxes, 55.3 percent of exports, and 54.7 percent of imports. They also created 45 million jobs, according to the ministry. The contribution was phenomenal given the fact that they only make up 3 percent of the total number of enterprises in China. Besides this, they have been playing a positive role in the country's economic rebalancing and revitalization amid the downturn, it said.

The ministry stressed that China's rapid industrialization and urbanization still need a sustainable inflow of foreign capital in the long term. In addition, a number of stimulus measures will provide a fresh opportunity for foreign players, including financial stabilization, industrial revitalization and technological innovations, it added.

The ministry also pledged to further improve the domestic business environment to polish the appeal to more foreign investment. Since late last year, the country has taken effective measures to deepen its economic openness and rebuild investor confidence. The country has even required local governments to strengthen their financial services for foreign investors.

MOFCOM's statement explicitly expressed support for foreign companies to take part in the stimulus package and make contributions to the government projects. Moreover, China will further smooth the way for qualified overseas companies to be listed on domestic stock markets in a move to meet their financing needs, it said.

"We will continue to foster a transparent and open business environment for foreign business," MOFCOM said.

In another move, the ministry pointed to the bright prospects for investment in China. A recent survey conducted by the United Nations indicated that China would maintain its attractiveness to cross-border investors because of its economic health, growing open markets and cheap labor. A poll by the American Chamber of Commerce in China indicated that 80 percent of its members said they had an optimistic outlook for their Chinese operations within five years, while 73 percent said they planned to expand here.

In defiance of the gloomy business climate, many foreign companies have already been extending their reach in China. Earlier this year, the German electronics and engineering giant Siemens AG announced it was making an additional investment of nearly $190 million in developing alternative energies in the country. American biotechnology powerhouse Genzyme Corp. said it added $99 million to firm up its foothold in China.

Contributions of Foreign Companies

To the Chinese Economy in 2008

—3 percent of the total number of enterprises in China

—29.7 percent of China's total industrial output value

—21 percent of China's total enterprise taxes

—55.3 percent of China's total exports

—54.7 percent of the country's total imports

—45 million jobs in China