REPORT FROM THE COMMISSION pursuant to Article 5(4) of Regulation (EU) 2022/1031 on the investigation under the International Procurement Instrument concerning measures and practices of the People's Republic of China in the public procurement market for medical devices
Date: 2025-01-14
Institutions: Directorate-General for Trade and Economic Security, European Commission
Subjects: China, award of contract, import restriction, market access, market supervision, medical device, originating product, public procurement, supplies contract, tendering

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 14.1.2025  COM(2025) 5 final  REPORT FROM THE COMMISSION pursuant to Article 5(4) of Regulation (EU) 2022/1031 on the investigation under the International Procurement Instrument concerning measures and practices of the People's Republic of China in the public procurement market for medical devices    {SWD(2025) 2 final}  
 
 
I. 

INTRODUCTION  

On  24  April  2024,  the  European  Commission  (the  ‘Commission’)  launched,  on  its  own 
initiative,  an  investigation  pursuant  to Article  5(1)  of  Regulation  (EU)  2022/10311  (the  ‘IPI 
Regulation’)  concerning  measures  and  practices  of  the  People’s  Republic  of  China  (‘PRC’) 
resulting in a serious and recurrent impairment of access of Union economic operators, goods 
and  services  to  the  PRC’s  public  procurement  market  for  medical  devices  (hereinafter  the 
‘alleged  measures  and  practices’).  To  launch  the  investigation,  it  published  a  Notice  of 
Initiation in the Official Journal of the European Union (the ‘Notice of Initiation’).2 

In  the  Notice  of  Initiation,  in  accordance  with  Article  5(2)  of  the  IPI  Regulation,  the 
Commission invited the Government of China (‘GOC’) to submit its views, provide relevant 
information  and  engage  in  consultations  with  the  Commission  to  eliminate  or  remedy  the 
alleged measures and practices. On the same day, the Commission also sent a Note Verbale to 
the  GOC  including  a  request  for  information  in  the  form  of  a  detailed  questionnaire  to  be 
replied within 30 days. The GOC did not reply to this questionnaire but agreed, with a Note 
Verbale  it  sent  on  27  May  2024,  to  engage  in  consultations  with  the  Commission.  The 
Commission  held  consultations with  the GOC within the meaning  of Article 5(2) of the IPI 
Regulation from 24 to 26 July 2024 in Beijing. 

In the Notice of Initiation, the Commission also invited Member States and interested parties 
within the meaning of Article 2(1)(h) of the IPI Regulation to participate in the investigation 
and provide relevant information. The Commission has received input from several interested 
parties. Pursuant to Article 5(2) of the IPI Regulation, the Commission has regularly informed 
Member  States  on  the  progress  of  the  investigation  and  consultations  within  the  Trade 
Barriers Committee established by Article 7 of Regulation (EU) 2015/18433.   

Pursuant  to  Article  5(3)  of  the  IPI  Regulation,  the  Commission  must  conclude  the 
investigation  and  consultations  within  nine  months  after  the  date  of  their  initiation.  Article 
5(4)  of  the  IPI  Regulation  requires  that,  upon  conclusion  of  the  investigation  and  the 
consultations,  the  Commission  shall  make  publicly  available  a  report  setting  out  the  main 
findings  of  the  investigation  and  a  proposed  course  of  action  that  it  shall  present  to  the 
European Parliament and to the Council.  

1   Regulation (EU) 2022/1031 of the European Parliament and of the Council of 23 June 2022 on the access of 
third-country  economic  operators,  goods  and  services  to  the  Union’s  public  procurement  and  concession 
markets and procedures supporting negotiations on access of Union economic operators, goods and services 
to the public procurement and concession markets of third countries (International Procurement Instrument – 
IPI), OJ L 173, 30.6.2022, p. 9. 

2   Notice  of  initiation  of  an  investigation  pursuant  to  the  International  Procurement  Instrument  concerning 
measures  and  practices  of  the  People's  Republic  of  China  in  the  public  procurement  market  for  medical 
devices, (C/2024/2973), OJ C, 24.4.2024. 

3   Regulation (EU) 2015/1843 of the European Parliament and of the Council of 6 October 2015 laying down 
Union  procedures  in  the  field  of  the  common  commercial  policy  in  order  to  ensure  the  exercise  of  the 
Union’s rights under international trade rules, in particular those established under the auspices of the World 
Trade Organisation, OJ L 272, 16.10.2015, p. 1. 

1 

 
 
 
 
 
 
 
II. 

SCOPE OF THE INVESTIGATION AND ALLEGED MEASURES AND PRACTICES 

The  Notice  of  Initiation  contains  an  indicative  list  of  the  categories  of  medical  devices 
affected by the alleged measures and practices in its annex.  

In  the  Notice  of  Initiation,  the  Commission  identified  the  following  categories  of  alleged 
measures  and  practices: (i)  measures  and  practices  favouring  the  procurement  of  domestic 
medical  devices;  (ii)  measures  and  practices  restricting  the  procurement  of  imported  goods, 
including medical devices and (iii) imposing conditions in the PRC’s centralised procurement 
of medical devices leading to abnormally low bids that cannot be sustained by profit-oriented 
companies.   

The  scope  of  the  investigation  covers  measures  and  practices  in  public  procurement 
procedures  relevant  to  all  medical  devices.  In  the  sense  of  Article  2(1)(i)  of  the  IPI 
Regulation, a measure or practice means any legislative, regulatory or administrative measure, 
procedure or practice, or combination thereof, adopted or maintained by public authorities or 
individual contracting authorities or contracting entities at any level.  

The  Commission  considered  the  legal  and  factual  framework  existing  in  the  PRC  and  the 
information available until November 2024.  

More  details  with  respect  to  the  alleged  measures  and  practices  are  provided  in  the 
accompanying Commission Staff Working Document (‘SWD’).  

III. 

FINDINGS OF THE INVESTIGATION  

The  investigation  confirmed  the  existence  and  application  of  the  measures  and  practices 
mentioned  in  the  Notice  of  Initiation  and  the  Commission  identified  additional  ones.  The 
investigation showed that the measures and practices favouring the procurement of domestic 
medical devices and those restricting the procurement of imported medical devices, referred 
to  in  the  Notice  of  Initiation,  are  two  interlinked  elements  of  a  ‘Buy  China’  policy 
implemented by the GOC, which sets a generally applicable preference for the procurement of 
domestic  medical  devices  to  the  detriment  of  imported  ones.  Therefore,  the  Commission 
decided  to  examine  these  two  types  of  measures  and  practices  jointly,  and  the  centralised 
volume-based procurement separately. 

1.  The ‘Buy China’ policy  

1.1.  Policy measures encouraging the domestic medical devices industry 

The Commission  found that the medical  devices industry in  the PRC, in particular its high-
end segment, is considered as strategic and encouraged through various policy tools, notably 
public procurement.  

2 

 
 
 
 
 
High-performance medical devices are one of the ten core industries identified in the ‘Made 
in China 2025’ Strategy (‘MIC 2025’)4 and the ‘Made in China 2025 technology roadmap for 
key areas’5 (‘MIC Roadmap’), which specifies goals for each industry identified in the MIC 
2025,  and  sets  specific  targets  for  the  share  of  domestically  produced  high-end  medical 
devices procured by county hospitals, which should reach 50 % by 2020, 70 % by 2025 and 
95 % by 2030.    

The ‘14th Five-Year Plan for the Medical Equipment Industry Development’ 6 (the ‘14th FYP’), 
encourages the development of high-end medical devices through public procurement7 among 
various  support  tools,  with  an  objective  to  replace  imported  products  by  domestic  supply8. 
Furthermore,  various  policy  and  legal  documents  lay  down  instructions  for  the  priority 
purchase  of  domestic  products,  such  as  the  ‘National  Medium-  and  Long-Term  Science  and 
Technology  Development  Plan  (2006-2020)’  9,  the  ‘Notice  of  the  State  Council  on  the 
Issuance and Implementation of  Several Supporting  Policies of  the ‘Outline of  the National 
Medium-  and  Long-Term  Science  and  Technology  Development  Plan  (2006-2020)’,  Guo  Fa 
[2006] No. 610, the ‘Notice on Deepening the Reform of the Medical and Health System’ Guo 
Ban  Fa  [2015]  No.  3411,  ‘Guiding  Opinions  of  the  General  Office  of  the  State  Council  on 
Promoting the Healthy Development of the Medical and Pharmaceutical Industry’ Guo Ban 
Fa  [2016]  No.  1112  and  ‘Guiding  Opinions  on  Expanding  Investment  in  Strategic  Emerging 
Industries and Cultivating Strengthened New Growth Points and Growth Poles’ NDRC High 
Technology (2020) Document No. 140913.  

the  China  Medical  Equipment  Association  (the 
The  Commission  also  found 
‘Association’)  produces  regularly  a  ‘Selection  Catalogue  of  Excellent  Domestic  Medical 

that 

4   Notice  of  the  State  Council  on  Issuing  the  “Made  in  China  (2025)”  No.28  [2005]  of  the  State  Council: 

https://www.gov.cn/zhengce/content/2015-05/19/content_9784.htm 

5    https://www.gov.cn/xinwen/2015-09/29/content_2940676.htm  
      https://www.cae.cn/cae/html/files/2015-10/29/20151029105822561730637.pdf  and 

http://www.qbj.gov.cn/qbjq/uploadfiles/ecyq/2019032810262811269.pdf   

6   Notice of the ten departments on printing and distributing the "14th Five-Year Plan" for the development of 
the medical equipment industry Ministry of Industry and Information Technology Liangui [2021] No. 208: 
https://www.gov.cn/zhengce/zhengceku/2021-12/28/content_5664991.htm  

7   The  14th  FYP  instructs  to  “further  strengthen  the  government  procurement  management  and  support  the 

medical equipment industry development”. 

8   In  particular,  the  14th  FYP  provides  that  “local  governments,  industrial  funds  and  social  resources  will  be 
guided to support the breakthroughs of medical-industry collaboration in developing medical equipment, key 
parts  and  basic  materials,  and  financial  investment  in  the  transformation  and  industrialization  of 
breakthroughs”.   

9   Outline  of  the  National  Medium-  and  Long-Term  Science and Technology  Development  Plan  (2006-2020) 

State Council No. 9 of 2006: https://www.gov.cn/gongbao/content/2006/content_240244.htm  

10   Circular of the State Council on Printing and Distributing Several Supporting Policies for the Implementation 
and 
National  Medium- 
6: 
(2006-2020), 

of 
Technology 
https://www.gov.cn/gongbao/content/2006/content_240246.htm 

Long-Term 
Fa 

Science 
No. 

Development 

Outline 

[2006] 

Plan 

Guo 

and 

the 

the 

of 

11   ‘Notice of the General Office of the State Council on Printing and Distributing the Summary of the Work in 
2014 and the Key Work Tasks in 2015 on Deepening the Reform of the Medical and Health System’ Guo Ban 
Fa [2015] No. 34: https://www.gov.cn/zhengce/content/2015-05/09/content_9716.htm 

12   https://www.gov.cn/zhengce/content/2016-03/11/content_5052267.htm  
13   https://www.ndrc.gov.cn/xxgk/zcfb/tz/202009/t20200925_1239582.html  

3 

 
 
 
Equipment  Products’  (the  ‘Catalogue’)14  under  the  direction  of  the  National  Health 
Commission  of  the  PRC15  (the  ‘NHC’).  The  scope  of  selection  is  “[d]omestic  independent 
brand  products”.  Several  policy  documents16  present  the  Catalogue  as  a  tool  for  promoting 
the use and procurement of domestic medical devices by medical and healthcare institutions 
in accordance with the Government Procurement Law of China17 (‘GPL’) as a key to promote 
the  objective  of  strengthening  China’s  medical  device  industry.  The  Commission  also 
established  that  the Association  is  subject  to  the  control,  or  at  least  strong  influence,  of  the 
State and can therefore be considered as a quasi-governmental organization.   

Section 2.1.1. of the accompanying SWD contains more details regarding the above-described 
policy measures. 

1.2.  Legal measures related to the ‘Buy China’ policy regarding public procurement of 

medical devices  

The main piece of legislation is Article 10 of the GPL, which is implemented through other 
measures  at  central  and  provincial  level.  Article  10  of  the  GPL  provides  for  a  generally 
applicable preference for the procurement of domestic goods and services, including medical 
devices,  that  leads  to  the  discrimination  against  imported  goods.  The  ‘Administrative 
Measures for the Procurement of Imported Goods’ (the ‘Administrative Measures’)18, which 
are  “formulated  […]  in  accordance  with  the  GPL”,  govern  the  procurement  of  imported 
goods. The Administrative Measures recall the principle laid down in Article 10 of the GPL 
that “in case of government procurement, domestic products shall be purchased” and provide 
for a specific and cumbersome approval procedure for the procurement of imported products 
when  it  is  “really  necessary”.  The  Administrative  Measures  also  give  priority  to  imported 
products that transfer technology to Chinese companies. Various provincial governments have 
introduced local measures implementing the Administrative Measures, some of them setting 
additional and/or more stringent requirements. In addition, as further explained in the Section 
2.1.2. of the SWD, certain local governments have issued and regularly updated annual lists 
of imported medical devices, for which the approval procedure for procurement is simplified. 
The investigation indicates that the number of medical devices included in these lists has been 
progressively reduced.  

Furthermore,  the  Commission  established  that  the  ‘Notice  on  Issuing  ‘Guiding  Audit 
Standards  for  Government  Procurement  of  Imported  Products’  (2021  Edition)’  (‘Document 

14   See Chinese Medical Equipment Association, Announcement on the Selection of Excellent Domestic Medical 
Equipment  Products,  2014:  http://www.nhc.gov.cn/ewebeditor/uploadfile/2014/05/20140526114014171.pdf.  
To date, there have been ten batches of products selected for inclusion in the Catalogue. 

15   In  2014,  China’s  former  National  Health  and  Family  Planning  Commission  (the  predecessor  of  the  NHC) 

charged the Association with the selection of “excellent domestic medical equipment products”.      

16   See recital 14 of the SWD for more information. 
17   Order of the President of the People's Republic of China No.68 of 29 June 2002 
18   ‘Circular  of  the  Ministry  of  Finance  on  Issuing  the  Measures  for  the  Administration  of  Government 
[2007]  No.  119:  https://www.gov.cn/zwgk/2008-

Imported  Products’  Caiku 

Procurement  of 
01/15/content_858659.htm  

4 

 
 
 
 
551’)19,  which  lays  a  requirement  on  all  local  authorities  to  increase  the  procurement  of 
domestic products for 178 categories of medical devices, is applied across the territory of the 
PRC.  Public  hospitals  have  committed  to  go  even  beyond  the  target  shares  of  domestic 
products contained therein20, which vary between 25 % and 100 % depending on the category, 
with a 100 % target for 137 categories.  

Finally, Article 22 of the ‘Circular of the Ministry of Health on Printing and Distributing the 
Measures for  the Administration of  Medical Equipment  in  Medical and Health Institutions’, 
Wei  Gui  Cai  Fa  [2011]  No.  2421  recalls  the  rules  governing  the  procurement  of  imported 
medical devices22, which are laid down in the Administrative Measures and its implementing 
measures. 

Section 2.1.2. of the SWD provides a comprehensive overview of these legal measures.  

1.3.  The application of the measures and practices related to the ‘Buy China’ policy 

To  confirm  the  magnitude  of  the  issues  described  above,  the  Commission  investigated  the 
actual procurement practices for medical devices prevalent in the PRC in several procurement 
portals23. The Commission managed to accede publicly available information for a set of over 
380  000  procurement  tenders  on  medical  devices  conducted  between  January  2017  and  31 
May  2024.  However,  only  35  504  of  these  tenders  contained,  in  an  accessible  form, 
information  about  eligibility  criteria  and  other  conditions  of  participation  for  prospective 
bidders (hereinafter ‘the sample’). This shows that the Chinese procurement procedures suffer 
from a serious lack of transparency as the vast  majority of published tenders do not contain 
essential  documents  and  information  in  an  accessible  form.  The  assessment  of  the  sample 
indicates  clearly  the  systemic  and  recurrent  nature  of  measures  and  practices  entailing 
discrimination  on  several  accounts:  (a)  restrictions  of  procurement  of  imported  goods  are 
applied by Chinese contracting authorities in all medical devices categories; (b) procurement 
restrictions  are  found  in  all  Chinese  provinces  (except  Tibet)  and  in  over  300  cities  across 
China, and (c), there is  a prohibition of imported medical devices  and several other forms of 
direct  and  indirect  discrimination  in  87  %  of  the  tenders  in  the  publicly  available  sample24. 
The Commission conducted an in-depth analysis of a second separate sample25 focusing only 
on tenders with explicit prohibitions and discriminatory requirements, where it found explicit 
prohibitions  of  imported  medical  devices  in  36  %  of  the  tenders  concerned  in  2022,  which 

19   Notice on Issuing “Guiding Audit Standards for Government Procurement of Imported Products” (2021 

Edition), Treasury Note [2021] No. 551:  
https://aimg8.dlssyht.cn/u/2074671/ueditor/file/1038/2074671/1629090344664695.pdf/https://www.cgwenjia
n.com/view/industry/202110110000184101?zt_id_from=54  

20   See  the  study  by  L.E.K.  Consulting  ‘Hospital  Priorities  2023  China  Edition:  Strategic  Implications  for 
https://www.lek.com/sites/default/files/PDFs/china-hospital-priorities-2023-

Companies’: 

Medtech 
medtech.pdf     

21   https://www.gov.cn/gongbao/content/2011/content_1960690.htm  
22   This  provision  states  that  “where  it  is  necessary  to  purchase  imported  medical  equipment,  the  approval 
procedures  for  the  procurement  of  imported  equipment  shall  be  strictly  performed  in  accordance  with  the 
relevant provisions of the State”. 

23   See footnote 91 in the SWD. 
24   See recitals (51) – (57) of the SWD. 
25   See recital 58 of the SWD. 

5 

 
 
 
increased  to  43  %  in  2023  and  53  %  in  the  first  half  of  2024.  This  indicates  a  sustained 
increase of the explicit prohibition of imported medical devices among the tenders at stake.     

With respect to the target share of domestic products set by Document 551, a study by L.E.K. 
Consulting  ‘Hospital  Priorities  2023  China  Edition:  Strategic  Implications  for  Medtech 
Companies’26 completed in August 2023 shows that public hospitals in the PRC have already 
largely  implemented  the  targets  laid  down  in  Document  551  and  are  committed  to  further 
implement them, even beyond the products listed therein.  

The Commission also found tenders in which medical devices listed in the  Catalogue of the 
Association  were  awarded  additional  points  during  the  bid  evaluation  process  or  where  the 
technical specifications require that products are listed in that Catalogue.  

2.  Centralised volume-based procurement 

2.1.  Measures governing volume-based procurement  

The  Commission  identified  the  applicable  legal  framework  and  the  underlying  principles 
governing centralised  volume-based procurement. The  accompanying SWD provides details 
in this respect.  

The volume-based procurement of medical devices is based on the acquisition of very large 
quantities  of  products  subject  to  strong  competition  at  national  or  provincial  level  to  obtain 
lower  prices.  To  achieve  lower  prices,  the  entity  organising  the  tender  sets  a  maximum 
number of finalists, establishes a maximum reference (or ceiling) price27 and maximum price 
margins for bid selection, as explained in recitals (63) to (66) of the SWD. This forces bidders 
to offer the lowest possible price, as the selection criteria impose a maximum deviation from 
the lowest bidding price, and in any case the price offered must be below the reference price. 
The  parameters  for  the  calculation  of  the  reference  price  are  not  published.  In  subsequent 
volume-based tenders for the same medical devices, the reference price was set at even lower 
levels.  The  bidders  compete  only  on  price  (i.e.  the  lowest  offers  win)  and  the  contract  is 
awarded  to  a  group  of  bidders  guaranteeing  the  requested  quantities  at  the  lowest  price. 
Therefore, in volume-based procurement, the level of the reference price and in particular, the 
price margins for acceptable bids are determinant to limit the competition among bidders.  

Certain  measures  governing  volume-based  procurement  specifically  refer  to  the  aim  of 
supporting domestic products. In this respect, the ‘Notice of the reform plan to manage high-
value medical  consumables’ Guo Ban Fa  [2019]  No. 3728 has  as  a general  objective, which 
applies  also  to  the  organisation  of  volume-based  procurement  of  medical  consumables,  to 
“support  domestic  high-value  medical  consumables  with  indigenous  intellectual  property 
rights  to  enhance  their  core  competitiveness”.  In  addition,  the  Medical  Insurance  Letter 

26   See footnote 21    
27   Called “highest effective declaration price”. 
28   https://www.gov.cn/zhengce/content/2019-07/31/content_5417518.htm  

6 

 
 
 
 
 
 
[2022]  No.  136  of  the  National  Medical  Security  Administration29  states  that  centralised 
volume-based procurement is “objectively supporting domestic high-quality enterprises of the 
same quality but lower cost to win the competition”.  

2.2.  The application of volume-based procurement  

The  Commission  established  that,  at  the  time  of  the  investigation,  the  PRC  has  organised 
national  volume-based  procurement  procedures  for  five  categories  of  high-end  medical 
consumables30 and several others at provincial level.31  

These  tenders  resulted  in  a  significant  price  decrease.  For  instance,  the  average  price 
reduction in the volume-based procurement of artificial joints was 82 %32, while the national 
volume-based procurement tender for coronary stents conducted in November 2020 led to a 
price  decrease  of  more  than  90  %.33  The  Commission  also  found  that  some  of  the  largest 
Chinese manufacturers of medical devices, which have benefitted from financial support have 
won  volume-based  tenders  that  have  resulted  in  significant  price  reductions  as  explained  in 
recitals (68) to (72) of the SWD.  

Section  2.3.  of  the  accompanying  SWD  contains  more  details  about  the  application  of  the 
measures and practices. 

IV.  CONSULTATIONS WITH THE GOC 

The  Commission  discussed  with  the  GOC  all  the  alleged  measures  and  practices  and  their 
application  and  implementation  in  the  PRC’s  procurement  market  for  medical  devices.  The 
GOC  did  not  contest  the  existence  of  the  alleged  measures  and  practices,  that  they  create  a 
preference in public procurement contracts for medical devices manufactured in the PRC and 
impose  specific  procedures  for  the  procurement  of  imported  medical  devices.  However,  it 
claimed, without providing convincing  arguments  or proof, that some  of  these measures  are 
not implemented in practice. At the end of the consultations, the  Commission and the GOC 
explored  possible  solutions.  The  GOC  claimed  that  the  future  accession  of  the  PRC  to  the 
Government  Procurement  Agreement  (‘GPA’)34  could  solve  the  Union’s  concerns,  while 
stressing  that  it  would  not  open  unilaterally  its  procurement  market  in  relation  to  medical 
devices  and  proposing  instead  the  negotiation  of  a  comprehensive  bilateral  agreement 

29   The  National  Medical  Security Administration's  response  to  the  Fifth  Session  of  the  13th  National  People's 

Congress Response to recommendation No. 8427:  

      http://www.nhsa.gov.cn/art/2022/9/1/art_110_8940.html  
30   coronary stents, artificial joints, intraocular lens and sports medicine medical consumables, orthopaedic spine 

consumables and cochlear implants and peripheral vascular stents. 

31   for various medical devices such as pacemakers, balloon dilatation catheters and trauma fixation products 
32  
      https://govt.chinadaily.com.cn/s/202405/31/WS6659a3b2498ed2d7b7eaef3f/centralized-procurement-of-

artificial-joints-boosts-healthcare-accessibility-in-china.html  

33 
      http://www.qinghai.gov.cn/zwgk/system/2021/01/08/010373900.shtml, 
https://www.cmdi.org.cn/zx_4/xyzl/202101/t20210124_279695.html,    
http://ybj.gxzf.gov.cn/xwdt/bjdt/t7916501.shtml  

34   https://www.wto.org/english/docs_e/legal_e/rev-gpr-94_01_e.pdf  

7 

 
 
 
 
 
between the European Union and the PRC on government procurement. On 30 August 2024, 
the  PRC  sent  a  Note  Verbale  conveying  a  request  to  terminate  the  investigation  and  to 
negotiate  instead  such  bilateral  agreement.  The  Commission  replied  by  Note  Verbale  of  7 
October 2024 explaining the reasons why it could not terminate the IPI investigation on these 
grounds35.  Section  3  of  the  accompanying  SWD  contains  further  information  regarding  the 
consultations with the GOC. 

V. 

ASSESSMENT OF  THE  MEASURES  AND  PRACTICES  IDENTIFIED  IN  THE  COURSE  OF 
THE INVESTIGATION  

The  investigation  has  confirmed  that  the  measures  and  practices  described  in  Section  III 
above  and  further  explained  in  Section  2  of  the  SWD  exist  and  that  they  are  applied  by 
procuring  authorities  and  entities  in  the  PRC.  They  are  jointly  referred  here  below  as  ‘the 
measures and practices’ unless a specific measure is individually referred to. 

The  analysis  of  the  measures  and  practices  under  investigation  shows  that  through  such 
measures  and  practices,  the  PRC  has  put  in  place  a  multilayered  overarching  system  of 
generally applicable preferences for the procurement of domestic medical devices that has led 
to  a  systematic  discrimination  against  imported  medical  devices  and  foreign  economic 
operators, implementing a comprehensive ‘Buy China’ policy.  

The cornerstone of this overarching system is Article 10 of the GPL, which is at the core of 
the  ‘Buy  China’  policy  implemented  by  the  GOC.  This  provision  creates  a  legally  binding 
obligation  for  contracting  entities  to  procure  domestic  medical  devices  instead  of  imported 
ones  whenever  both  types  of  medical  devices  are  in  competition  and  the  domestic  medical 
devices  constitute  a  reasonable  alternative.  The  discriminatory  nature  of  this  general 
obligation  is  reinforced  by  the  burdensome  approval  procedure  for  the  procurement  of 
imported goods, including medical devices, laid down in the Administrative Measures, which 
significantly constrains the ability of contracting entities to procure imported medical devices. 
The need to obtain, to this end, a specific approval by the local financial departments, based 
on the assessment by an expert group of the technical specifications and functional use of the 
imported  goods  at  stake  to  ascertain  that  there  are  no  domestic  alternatives,  is,  by  itself,  a 
significant deterrent for contracting entities to procure imported goods. Indeed, they need to 
conduct  an  additional  and  cumbersome  process  of  uncertain  outcome  on  top  of  the  regular 
organisation  of  the  tender  procedure.  The  restriction  is  further  reinforced  by  the  various 
provincial  measures  setting  up  additional  approval  procedures  for  the  procurement  of 
imported medical devices. 

The Administrative Measures and the corresponding provincial measures significantly restrict 
the  procurement  of  imported  goods,  in  particular  medical  devices,  and  thus  the  access  of 
Union  economic  operators  offering  imported  medical  devices,  even  where  such  medical 

35   The  Commission  recalled  that  the  objective  of  the  investigation  is  not  the  negotiation  of  a  comprehensive 
agreement  on  government  procurement,  but  to  achieve  reciprocity  and  ensure  a  level  playing  field,  which 
requires the elimination of the discriminatory barriers identified. 

8 

 
 
  
 
 
 
 
devices are allowed to participate in procurement tenders, as they create a preference for those 
imported goods linked to the transfer of technology to domestic companies. This significantly 
impairs the participation of potential Union bidders who do not want to share their technology 
with possible competitors.   

Regarding  medical  devices,  the  multilayered  system  of  domestic  preferences  is  further 
articulated,  and  reinforced,  through  two  main  sector-specific  measures. The  first  measure  is 
the  ‘Circular  of  the  Ministry  of  Health  on  Printing  and  Distributing  the  Measures  for  the 
Administration  of  Medical  Equipment  in  Medical  and  Health  Institutions’  Wei  Gui  Cai  Fa 
[2011] No. 2436, which underlines the obligation to strictly perform the approval procedures 
for the procurement of imported medical devices in accordance with the relevant provisions of 
the  State. The  second  measure  is  ‘Document  551’,  which  imposes  very  high  targets  for  the 
procurement of domestic medical devices and calls for the full exclusion of imported medical 
devices in 137 categories. These targets create a strong deterrent for contracting authorities to 
procure imported medical devices even in the cases where such procurement is approved, as 
the more tenders are won by bidders offering imported medical devices the more difficult for 
the contracting authority to meet the relevant targets. While Document 551 has been issued in 
the form of “guiding audit standards”, the targets set therein are established by the GOC in 
clear  terms,  with  no  indication  that  they  are  not  required  to  be  attained  by  public  hospitals, 
which ultimately depend for their funding and organisation on the State or sub-central levels 
of  government.  Furthermore,  as  explained  in  Section  III.  1.3.  above  and  in  more  details  in 
recital  (59)  of  the  SWD,  public  hospitals  have  a  strong  commitment  to  reach  and  even  go 
beyond  these  targets.  Therefore,  it  can  be  concluded  that  the  targets  are  not  just  a  form  of 
encouragement to fully autonomous contracting entities that could just decide to ignore them. 
They  constitute,  instead,  a  form  of  instruction  to  contracting  entities  to  achieve  specific 
results,  and  hence  significantly  restrict  the  ability  of  bidders  offering  imported  medical 
devices to participate in public tenders.     

In addition, the inclusion of high-performance medical devices within the list of ‘encouraged’ 
products identified in the MIC 2025 has resulted in the instruction to county hospitals to reach 
very  high  targets  for  the  share  of  procurement  of  domestically  produced  high-end  medical 
devices, 70 % by 2025 and 95 % by 2030 in the MIC Roadmap, which de facto would reduce 
to  near  zero  the  scope  for  access  of  imported  products  to  a  significant  part  of  the  Chinese 
public procurement market.  

The overarching system of generally applicable preferences applies in the whole territory of 
the PRC. Indeed, the analysis of the sample of tenders referred to in Section III. 1.3 above and 
in Section 2.3.1. of the SWD shows that requirements restricting the procurement of imported 
medical  devices  are  widespread  in  the  Chinese  procurement  market  and  affect  all  medical 
devices categories.  

36 https://www.gov.cn/gongbao/content/2011/content_1960690.htm  

9 

 
 
 
 
 
 
 
Due to the significant lack of transparency of the public procurement market in the PRC, the 
Commission has been only able to gather a subset of publicly available tenders including, in 
an  accessible  format,  the  relevant  tender  requirements.  However,  the  sample  of  tenders 
examined  by  the  Commission  is  sufficiently  representative  to  illustrate  the  extent  to  which 
contracting authorities have restricted the procurement of imported medical devices, as there 
is  no  reason  to  consider  that  the  tender  requirements  in  the  untransparent  tenders  would  be 
less restrictive than in those were such requirements are publicly accessible. Both, explicit and 
implicit  prohibitions  and  discriminatory  requirements  are  found  in  87  %  of  the  tenders 
examined,  and  the  presence  of  explicit  prohibitions  has  increased  over  the  years,  consistent 
with  the declared objective of the GOC to  substitute imported medical  devices by domestic 
medical devices throughout the whole procurement market of the PRC.  

The overarching system of generally applicable preferences for the procurement of domestic 
medical  devices  described  above  significantly  impairs  the  access  of  Union  operators  and 
Union-made medical devices to the public procurement market of the PRC. Its systemic and 
permanent nature, resulting from the fact that the domestic preferences are embedded in laws 
of  general  application  and  in  implementing  measures  and  guidelines,  either  of  general 
application or specific to medical devices, allows to conclude that this impairment is serious 
and recurrent within the meaning of Article 2.1(i) of the IPI Regulation.  

The volume-based procurement of medical devices put in place by the GOC leads suppliers to 
offer extremely low bids to meet the selection criteria within the established price margins and 
potentially  win a contract,  which has  resulted in significant  price reductions  as explained in 
Section  III.  2.2.  above  and  in  Section  2.3.2.  of  the  SWD.  Despite  the  fact  that  a  number  of 
foreign  companies  may  also  be  among  the  winners  in  the  recently  organised  volume-based 
tenders, although in  a much smaller proportion than Chinese  companies, offering extremely 
low prices is not sustainable in the long run for profit-oriented companies that cannot rely on 
State support.  

The restrictive effect of the conditions under which volume-based procurement is conducted 
may further be enhanced by the elaborated system of transfer of resources put in place by the 
PRC  in  favour  of  Chinese  medical  devices  companies,  as  explained  in  Section  2.2.  of  the 
SWD. 

The  support  specifically  linked  to  volume-based  procurement  and  granted  to  winners  of 
relevant tenders with manufacturing  and R&D activities in  the PRC,  reinforces  the de facto 
discriminatory  effect  of  volume-based  procurement  for  foreign  operators  and  imported 
medical devices, as it creates a strong incentive for domestic companies to win the tenders by 
offering  abnormally  low  prices.  More  generally,  the  financial  support  received  by  domestic 
companies  makes  it  possible  for  them  to  meet  the  selection  criteria  by  offering  very  low 
prices. This results in price cuts of more than 90 % in certain volume-based tenders, leading 
to the de facto exclusion of companies that cannot receive financial support.  

10 

 
 
 
 
 
 
Consequently,  the  specific  setup  of  volume-based  procurement  in  the  PRC  puts  imported 
medical devices and foreign economic operators at a significant disadvantage and leads to de 
facto discrimination and restriction or even exclusion of foreign operators importing medical 
devices, as well as imported medical devices competing in these volume-based tenders. 

This  finding  has  to  be  considered  in  the  light  of  the  fact  that  volume-based  procurement  is 
conducted  for  a  variety  of  high-end  consumables,  covering  a  major  proportion  of  the  total 
consumption  of  the  concerned  consumables  in  the  PRC,  and  that  there  is  an  intention  to 
include further categories of medical devices in the future. The de facto induced limitations to 
participate  in  such  procurement  procedures  therefore  deprives  bidders  from  almost  all 
business opportunities in the product categories concerned by volume-based procurement. As 
a  result,  the  practical  setup  of  volume-based  procurement  of  medical  devices  in  the  PRC 
significantly and recurrently impairs the access of Union operators and Union-made medical 
devices to the public procurement market of the PRC within the meaning of Article 2.1(i) of 
the IPI Regulation. 

VI.  CONCLUSION AND PROPOSED COURSE OF ACTION   

On the basis of the investigation and consultations with the GOC pursuant to Article 5 of the 
IPI Regulation,  the Commission  has  reached the  conclusion  that the  measures and practices 
identified  in  the  course  of  the  investigation,  put  in  place  by  the  PRC  with  respect  to  the 
procurement of medical devices, exist and are applied across the entire territory of the PRC. 
They affect all categories of medical devices in a way that results in a serious and recurrent 
impairment  of  access  of Union economic operators and Union-made  medical  devices to  the 
public procurement market for medical devices in the PRC. 

The PRC has not proposed any specific corrective action to remedy this serious and recurrent 
impairment of access.  

On the basis of the  above  findings,  the Commission  will assess the conditions laid down in 
Article  6  of  the  IPI  Regulation  in  view  of  adopting  one  or  more  IPI  measures  within  the 
meaning of Article 2(1)(j) of the IPI Regulation.   

11