PUBLIC PROCUREMENT IN CHINA AND RUSSIA: COMPARATIVE ANALYSIS, OPPORTUNITIES FOR IMPROVEMENT AND IMPLEMENTATION

Abstract. This article presents a comparative analysis of the public procurement systems in China and Russia, aiming to identify the strengths and weaknesses of each model, as well as explore opportunities to improve the Russian contractual system through the adaptation of certain elements from Chinese experience. The study examines the legal framework, institutional structure, procedural mechanisms, level of digitalization, anti-corruption measures, and economic effects. Particular attention is paid to differences in approaches to supporting domestic producers, encouraging small and medium-sized businesses, transparency of procedures, and anti-corruption efforts. Based on this comparison, specific recommendations for Russia are formulated: implementing AI-based risk analysis, clarifying criteria for innovation, simplifying access for SMEs to public procurement, tightening sanctions for dishonest suppliers, and developing joint procurement projects with China.

Keywords: Public procurement, China, Russia, digitalization, anti-corruption measures, support for SMEs, contract system, comparative analysis.

Introduction

Public procurement is one of the key tools for implementing the economic and social policies of a modern state. In the context of digitalization and increasing geopolitical competition, a comparative analysis of national procurement systems becomes particularly relevant. China and Russia, as major economies with significant state involvement in economic activities, demonstrate similar priorities—supporting domestic producers, fighting corruption, and increasing transparency of procedures. However, differences in legal traditions, levels of centralization, and approaches to digitalization reveal potential for mutual borrowing of best practices.

This article aims to systematize the legal, institutional, and procedural features of the Chinese model, compare it with Russian practices, and formulate concrete recommendations for improving the Russian Federation's contract system [9].

1. Description of the System and Practice of Public Procurement in China

The legal basis of public procurement in the People's Republic of China consists of three key laws. The central piece is the Law of China from June 29, 2002, "On Government Procurement," which obligates government agencies and legal entities to predominantly purchase domestically produced goods and services. Exceptions are allowed only when the cost of foreign equivalents is more than 20% lower, the goods are intended for use abroad, or explicitly prescribed by law [3].

Complementing it is China's Law from August 30, 1999, "On Bidding," regulating procurement in construction and related works [4]. An important role is also played by China's Law from March 15, 1999, "On Contracts," whose Article 52 grants the Communist Party of China and law enforcement agencies the authority to declare a contract invalid at any stage if it violates national interests [5].

An essential element is the annually updated Centralized Procurement Catalogue (CPCatalogue), developed by the State Council at the national level and regional authorities at the local level. The central authorities define general rules and the list of goods mandatory for bidding, while provincial authorities have considerable discretion in forming local catalogs, reflecting a liberal approach to procurement in regions with high production concentrations [14].

China's accession to the WTO in 2001 significantly influenced its system. The country committed to trade liberalization, removal of non-tariff barriers, and commercialization of state enterprises. After accession, legislation explicitly provided for preferences for domestic suppliers (Article 10 of the Public Procurement Law), allowing the country to prioritize domestic goods without violating international norms [14].

Public procurement regulation in China is managed by the Ministry of Finance of China and local financial agencies. The Ministry is responsible for drafting regulations, forming catalogs, and international negotiations on market opening [16]. Procurement commissions—collegial bodies that decide on documentation, evaluation, selection, and contract amendments—play a key role [2].

The anti-corruption model operates on three interconnected levels: legislative (procurement laws and responsibilities), institutional (state, public, and judicial oversight), and corporate (internal policies, risk maps, and vetting of contractors). Structural participation of the Communist Party of China in oversight is a distinctive feature [9].

The main methods of procurement include open bidding (with mandatory publication in state media), select bidding (invitation to a limited number of participants), and single-source procurement (in emergencies or for additional work up to 10% of the initial contract value) [15].

Electronic bidding is based on a unified online platform integrating big data, AI, cloud technology, and blockchain, ensuring transparency and minimizing counterfeit risks [11].

Vendor eligibility requirements include qualification confirmation, experience in similar projects, commercial reputation, absence of tax debts, and absence of serious law violations in the last three years. A mandatory "Chinese origin" criterion stipulates that at least 50% of the added value must be created within China [16].

In China, public procurement aims to support domestic producers, especially in high-tech industries, encourage SMEs (Law of 2003 "On Promoting the Development of Small and Medium Enterprises"), and achieve environmental and social goals (Article 9 of the Law on Public Procurement). The government deliberately limits foreign competition in strategic sectors to foster local innovations and ensure national security [7].

Monitoring is multi-layered: financial bodies, audit agencies, and the public participate in oversight. Since 2012, the Unified Official Website of State Procurement has disclosed all transaction details, including alternative proposals and prices. A three-year campaign to combat violations continues in 2025 to further enhance transparency [10]. Decisions can be appealed through procurement commissions or higher authorities.

According to the Ministry of Finance of China, in 2024, public procurement totaled 3.38 trillion yuan (~$477 billion), approximately 3% of GDP [5; 7]. The distribution is mainly in engineering (41.01%), goods (23.54%), and services (35.45%). Open tenders remain dominant. Key sectors include infrastructure, IT, and energy (including renewables). The government continues localization policies, especially in high-tech sectors [7].

2. Comparative Analysis of Chinese and Russian Public Procurement Regulation Systems

Comparing China's and Russia's procurement systems reveals both common trends—such as adapting procurement laws to the digital economy—and principal differences due to distinct governance models, degrees of centralization, and economic priorities [9].

The Chinese system is based on two key laws: the Law of China "On Government Procurement" (2002) and "On Bidding" (1999), supplemented by the "On Contracts" law (1999). These laws feature concise wording and minimal reference norms, reducing ambiguities. Russian legislation primarily consists of Federal Law No. 44-FZ "On the Contract System in the procurement of goods, works, and services for state and municipal needs" (2013) and Federal Law No. 223-FZ "On procurement by certain types of legal entities" (2011) [14].

Structurally, China's Law "On Government Procurement" resembles the Russian 44-FZ, while "On Bidding" is similar to 223-FZ. However, funding sources differ: China mainly relies on state budget financing, whereas in Russia, 223-FZ covers procurement from the own funds of legal entities. Chinese legislation emphasizes achieving state socio-economic goals, while Russian norms focus more on supplier selection procedures and contract enforcement. The Russian system is more detailed, with many subordinate legal acts, which increases predictability but may lead to bureaucratic delays [7].

China combines centralization at the State Council and Ministry of Finance levels with regional decentralization: provincial authorities have significant freedom in forming local procurement catalogs. Russia also combines federal regulation (Ministry of Finance and Federal Treasury) with decentralized execution by agencies at all levels, coordinated through a Single Information System (EIS), ensuring tighter federal oversight [6].

Procurement commissions in China are collegial bodies evaluating bids and selecting winners, with anti-corruption structures under the Central Commission for Discipline Inspection playing a major role. In Russia, oversight functions are distributed among control agencies (FAS Russia, the Accounts Chamber, regional internal financial control bodies). Unlike China, Russia lacks a unified advisory body for procurement participants, which is considered a gap [9].

Both countries predominantly use competitive procedures: in China—open and select bidding; in Russia—electronic auctions and contests. Single-source procurement is allowed in China for emergencies or additional works up to 10% of the initial contract cost, with broader, strictly regulated grounds in Russia under 44-FZ [14].

Supplier selection criteria in China include qualification, experience, commercial reputation, and a mandatory requirement for "Chinese origin" of the product (at least 50% value added). In Russia, along with price, qualification, experience, and innovativeness are considered, and a national regime with preferences for domestic manufacturers operates. The timelines for procurement procedures in Russia are more strictly regulated, while in China they can vary depending on regional norms. The appeal system in Russia provides for administrative and judicial procedures via the Federal Antimonopoly Service (FAS) and courts; in China, complaints are reviewed by procurement commissions with the possibility of further appeals to higher authorities [7].

Digital transformation of procurement in China relies on a unified online platform integrated with big data, cloud technologies, AI, and blockchain, which ensures transparency in supply chains and reduces counterfeiting risks. In Russia, the key element is the Unified Procurement Information System (EIS), where from 2020–2024, all procedures under Federal Laws 44-FZ and 223-FZ have been fully transitioned to an electronic format [9].

Both systems provide public access to procurement information; however, Chinese platforms emphasize AI-based risk analysis, while the Russian EIS focuses on automated control and mandatory publication of all documents. Russia combats manipulation through anti-dumping mechanisms and expertise, whereas China employs party oversight and blockchain registries. The level of data openness for the public is comparable, but Russia additionally has mechanisms for public oversight [6].

The share of public procurement in China’s GDP in 2024 was about 3% (3.38 trillion yuan). In Russia, the total volume of procurements under 44-FZ and 223-FZ exceeded 19–20 trillion rubles annually in 2023–2025, which also represents a significant portion of budget expenditures. Both countries actively support small and medium-sized businesses: since 2003, China has had a special law on SME development prioritizing procurement; Russia has established quotas.

Support for domestic manufacturers in both countries is implemented through preferences and restrictions on foreign goods, stimulating internal competition but simultaneously reducing price pressures. The economic impact is positive: procurement acts as a tool for promoting innovation and infrastructure development, although Russia exhibits a more pronounced dependency on budget financing [7].

Typical violations in both countries include collusion among participants, price inflation, conflicts of interest, and "splitting" of procurements. In Russia, over 1,100 corruption crimes in procurement were registered in 2022; in China, about 24,000 cases were recorded in 2023. Russia fights these risks through electronic document management and independent expertise, while China employs party campaigns and strict criminal sanctions [9].

Barriers for foreign suppliers remain in both jurisdictions: in China, localization requirements; in Russia, the national regime and restrictions set by the Russian Government. Corruption schemes in Russia are more often associated with "carousel" refusals and regional norm variations, while in China, they are linked to collusions in construction and infrastructure projects. Measures against these include Russia’s National Anti-Corruption Plan and China’s institutional control at three levels. The Chinese experience of more concise legislation and strengthened financial oversight could be considered for further optimization of the Russian contracting system [6].

Thus, despite the common goals (transparency, support for the national economy, anti-corruption efforts), the Russian system is characterized by greater procedural detail and digitalization, whereas the Chinese system features regional regulatory flexibility and party oversight integration. The further development of both models will depend on balancing market openness with the protection of national interests [14].

It is additionally appropriate to highlight two aspects that were not included in the main comparison but are essential for understanding the differences between the systems. The first is the degree of participation of foreign suppliers: in China, strict localization barriers and preferences for domestic goods are maintained, which effectively eliminates foreign competition in strategic sectors; in Russia, a national regime operates, allowing the participation of foreign companies provided they comply with the restrictions set by the Government of the Russian Federation [7].

The second aspect concerns the dynamics of corruption risks: in China, violations mostly occur in infrastructure projects and construction, which are curbed through centralized party campaigns; in Russia, typical issues remain the "splitting" of procurements and regional schemes, which are tackled mainly through digital oversight and judicial practice [6].

3. Opportunities for Improving Russian Practice through the Adaptation of Chinese Experience

The adaptation of certain elements of the Chinese public procurement model appears to be a promising direction for enhancing the effectiveness of the Russian contract system. China's experience demonstrates how a combination of centralized control, digital technologies, and an emphasis on national priorities can minimize corruption risks while simultaneously stimulating innovation and supporting small businesses. At the same time, any borrowing should be selective, taking into account differences in legal traditions and the level of decentralization [9].

The adoption of regulations aimed at encouraging innovation could significantly strengthen the innovative component of Russian procurements. In China, Article 9 of the Public Procurement Law explicitly establishes the duty of procurers to consider environmental, social, and innovative criteria, making it possible to prefer domestic technological solutions even if their price is slightly higher. In Russian practice, similar provisions are largely declarative and require clearer regulation in Federal Law 44-FZ [13].

Clarifying the rules for procuring complex technological solutions is also advisable. The Chinese “Law on Bidding” provides for selective procedures and the possibility of negotiations for high-tech products where price is not the only criterion. In Russia, the dominance of auctions under 44-FZ often leads to the selection of substandard solutions. Implementing similar mechanisms with mandatory consideration of the supplier's qualifications and innovative potential could improve procurement outcomes in IT and energy sectors [14].

The introduction of elements from Chinese e-procurement platforms could increase transparency and reduce transaction costs. China’s unified online platform integrates big data, artificial intelligence, and blockchain for automatic risk analysis and supply chain verification. The Russian Unified Information System (EIS) has already achieved a high level of digitalization, but lacks such real-time analytics. Adapting AI modules to predict collusion and automatically reject suspicious bids seems promising [11].

Integration with tax and financial control systems could create a unified digital ecosystem. In China, procurement data is automatically checked against suppliers’ tax filings, minimizing tax evasion. In Russia, similar integration of EIS with the Federal Tax Service and the Treasury is at an early stage and requires regulatory consolidation [12].

Adapting Chinese preferential programs for small businesses could expand SME access to government contracts. Since 2003, China has had a special law granting preference to small enterprises in the case of equal bids, as well as simplified participation procedures through digital platforms. In Russia, quotas exist, but actual SME participation remains below target due to high administrative barriers. By the end of 2025, purchases from SMEs under 223-FZ exceeded 9.5 trillion rubles, but growth potential remains [11].

Simplifying requirements for bid security is also appropriate. Chinese platforms allow small businesses to participate without bank guarantees at early stages, replacing them with digital deposits or insurance. In Russian practice, mandatory security often excludes small businesses from competitive procurement. Introducing similar mechanisms could increase competition and lower prices [7].

Expanding the scope of published contract data aligns with global best practices and the Chinese experience. In China, the official unified website discloses not only the winners but also all bid prices, technical specifications, and contract execution stages. The Russian EIS publishes a significant amount of information, but the lack of detail on alternative proposals reduces public oversight [10].

Creating a unified blacklist of unscrupulous suppliers with strict sanctions will strengthen discipline. The Chinese system provides for automatic exclusion of violators for up to three years along with public disclosure of reasons. Russia also maintains such a registry, but its exclusion mechanism is less strict and permits judicial appeals. Tightening sanctions by following the Chinese model could increase participant accountability [6].

Participation in joint procurements with China under the “Belt and Road Initiative” opens up new opportunities for infrastructure projects. Russian-Chinese transport corridors and the energy sector already demonstrate successful examples of coordination. Creating joint procurement procedures could reduce costs and accelerate the implementation of large projects [8].

Exchanging experience in combating corruption and cartel collusion is also promising. China’s party campaigns and three-tiered anti-corruption model could complement Russia’s digital tools. Joint training sessions and working groups within existing commissions would allow for the adaptation of best practices [9].

Possible challenges in adaptation are primarily connected to differences in legal systems and levels of bureaucracy. The Chinese model relies on party control and centralized planning, which cannot be directly transplanted into Russia’s decentralized system. Furthermore, strict preferences for domestic producers in China could conflict with Russia’s international commitments [14].

The need for pilot projects before wide-scale implementation is evident. It is recommended to start with experimental clusters in certain sectors (IT, infrastructure) and regions, followed by analysis of the results. Only after testing and refining the regulations should systemic changes be introduced [12].

Conclusion

The comparative analysis has shown that the Russian public procurement system features a high level of digitalization and regulatory detail but can be significantly strengthened through selective adaptation of the Chinese experience. The introduction of AI-based risk analysis, clarification of innovation criteria, simplification of SME access, and tightening of sanctions for unscrupulous suppliers will help improve budget efficiency, reduce corruption risks, and encourage national economic development. Nevertheless, any transplantation should be phased, with due regard to national legal specifics and the use of pilot projects. Further development of Russia’s contract system in the context of global challenges will largely depend on the ability to integrate best international practices while maintaining a priority on national interests.