The need to mitigate risks associated with uncertainty in the international market has forced Chinese businesses to increasingly focus on their domestic market to reach 1.4 billion potential consumers.  However, protectionist practices by various municipal, county-level, and other regional jurisdictions in China favoring local businesses have presented challenges to non-local businesses.  To solve the problem, the Chinese national leadership has stepped up its effort to establish a “unified national market”.  A six-month campaign recently launched by national authorities is expected to produce results that will also benefit foreign businesses seeking to overcome market access barriers in China.

China’s Unified National Market

In March 2022, the Chinese national leadership issued a document to lay out its plan to “build a high-level socialist market economic system” by accelerating the construction of an efficient, standardized, fully open “unified national market”, where competition is fair and local protectionism is banned.

To accomplish these goals, China has implemented a “unified market access system”, under which the State Council prepares one single document listing industries, fields, and types of business that are prohibited and restricted from investment and operation within the entire country.  Local governments are required to strictly follow the list prepared by the State Council and are prohibited from publishing their own lists.

“[…] all local governments are required to promptly eradicate existing policies that discriminate against foreign enterprises and Chinese enterprises registered in non-local jurisdictions […].”

In addition, all local governments are required to promptly eradicate existing policies that discriminate against foreign enterprises and Chinese enterprises registered in non-local jurisdictions and to strictly conduct reviews of new policies to make sure that these policies support fair competition.

Local Protectionism Curbed by the Judiciary

Following the issuance of the above-mentioned document, the Supreme People’s Court released a batch of typical cases in late 2023 to illustrate how some courts have helped curb local protectionism and to guide other courts handling similar cases to follow suit.

One case concerns a procurement bid for a government-run hospital located in a county.  After a particular supplier won the bid, other suppliers challenged the bidding process on the grounds that suppliers participating in the process were required to be registered on the government procurement website and the public resource trading website managed by a city with which the county is affiliated.  In effect, the requirement excluded many non-local suppliers that would otherwise be qualified.

The dispute was ultimately resolved by the courts.  The court determined that the registration requirement violated various legal rules, including the Regulation for the Implementation of the Government Procurement Law of the People’s Republic of China, which bans government procurement organizers from imposing unreasonable conditions to restrict or exclude potential suppliers.  Specifically, the court referred to a notice issued by the Ministry of Finance, in which “requiring suppliers to submit to unnecessary registration” is identified as a barrier to entering the government procurement market.  In the end, the court ruled that the bid won by the supplier at issue should be invalidated.

The Supreme People’s Court explains the significance of this typical case as follows:

The government procurement market is an important part of the unified market. Maintaining fair competition in the government procurement market plays an important leading role in building a unified national market. […] In this case, the procurement bidding documents required suppliers to register on designated websites before participating in the procurement activities.  [This requirement] restricted and excluded potential suppliers and hindered fair competition.

A Campaign Dedicated to Removing Market Access Barriers

Apparently, these typical cases are helpful but inadequate to quickly remove market access barriers set by localities.  To address the problem, the National Development and Reform Commission, the Ministry of Commerce, and the State Administration for Market Regulation jointly issued in April a notice of the launch of a campaign aimed at removing market access barriers efficiently to promote the construction of a unified national market.

“The campaign requires local authorities to review the aforementioned documents ‘article by article’, making sure that […].”

The campaign focuses on a list of tasks, including removing barriers set up by localities in the form of local legislation, administrative normative documents, and policy documents to restrict foreign or non-local enterprises’ access to their local markets.  The campaign requires local authorities to review the aforementioned documents “article by article”, making sure that any inconsistencies with related upper-level legislation are corrected and that any documents lacking a basis in the upper-level legislation are invalidated.

The campaign will last for six months.  All Chinese enterprises and foreign enterprises should seize this valuable opportunity to hold local governments in China accountable by helping identify all barriers that have restricted their market access.

---

• The citation of this article is: Dr. Mei Gechlik, China’s Unified National Market and Local Protectionism, SINOTALKS.COM^®, In Brief No. 56, May 28, 2025, https://sinotalks.com/inbrief/unified-national-market-local-protectionism.
  The original, English version of this article was edited by Nathan Harpainter.  The information and views set out in this article are the responsibility of the author and do not necessarily reflect the work or views of SINOTALKS^®. ↩︎