The impact of Chinese investments on national procurement rules
This Anti-Corruption Helpdesk brief was produced in response to a query from a U4 Partner Agency. The U4 Helpdesk is operated by Transparency International in collaboration with the U4 Anti-Corruption Resource Centre based at the Chr. Michelsen Institute.
What are the inherent risks of Chinese investments undermining national procurement legislation/rules?
We need specific information regarding Chinese involvement and investments in Africa. It is being promoted as something new and "fresh" providing Africa with opportunities that neither European private sector nor aid can compete with.
1. Chinese investment, procurement and bribery: overview of the controversy
2. Procurement process: assessing the role of China
3. Channels of influence on procurement: China’s areas of engagement
Within a decade, China has become a powerful player in the world economy, including global procurement markets. Its participation has been either as a bidder on government and donor projects (including multilateral banks) or as a direct procurer of goods and services by Chinese companies (as a result of lending agreements with countries). China has become one of Africa’s largest trading partners, lenders and builders. It uses resource-backed development loans and grants to countries in return for concessions for and procured goods and services from Chinese companies.
China is not immune from the many risks inherent in procurement, and there have been scandals across different continents involving Chinese companies suspected of using bribery to win contacts. Critics have alleged that China is not complying with good procurement standards, particularly on issues related to labour, the environment and overall governance (transparency, accountability and integrity principles), and perceptions of experts pointing to a concern about Chinese company behaviour abroad.
However, there is currently little specific research that shows China’s engagement in procurement offers more risks as compared to other countries. Nor is there a clear indication that China is causing the bar to be set lower in countries where it is involved in procurement markets.
In fact, there are indications that the country’s legal framework for anti-corruption is improving. Unlike other G20 countries such as Japan or Germany, China has ratified the UN Convention against Corruption and has also recently modified its domestic legislation to criminalise bribery of foreign officials. Additional comparative research at the country and sector level would be needed to investigate whether China is globally negatively impacting existing procurement practices.
AuthorsCraig Fagan, Transparency International, [email protected]