Managing Sustainable Public Procurement: A Nationwide Survey in China

Abstract

Sustainable public procurement (SPP) is an important element of China’s public policy and a market instrument to achieve sustainable development. This research aims at achieving insights into China’s SPP through a nationwide survey of Public Procurement Centers (PPCs), telephone interviews, and an expert workshop. The results show that China’s SPP is a hierarchical and centralized multi-level system, which is characterized by a top-down structure and is mainly driven by legal and policy initiatives, social benefits, and commitments of public bodies. There is huge potential for more SPP that remains untapped in China, and barriers are observed at the SPP operational level. The main barriers include a lack of trust in sustainability information about different products, limitations of the two SPP lists used, a lack of knowledge and skills, the perception of higher prices in the case of SPP, a lack of transparency, a lack of user-friendly tools, and soft social–environmental criteria that have low operability in the local situation. This research recommends a reform of SPP, moving from applying technical and functional specifications from the existing two-list approach to involving state-owned enterprises and infrastructure projects in a different SPP approach. Theoretical conclusions concern the Chinese SPP practice. In China, SPP is more like social responsible public procurement. Secondly, it was found that there are advantages to a more decentralized system, and finally, the implementation of SPP is declining because of specific barriers identified in this study.

1. Introduction

Sustainable public procurement (SPP) is a highly relevant policy instrument and provides other organizations the direction to go. In many countries, the total expenditures of all state agencies and public institutions can exceed the financial impact of the biggest private players by far. When utilizing this huge lever, governments can incentivize the market for improving sustainability without directly regulating market actors [1]. International practices have shown significant progress made by SPP in addressing economic, environmental, and social challenges. Hence, SPP has been adopted widely by governments pursuing multiple objectives of resource efficiency, environmental protection, sustainable consumption, cleaner production and circular economy, social justice, and recently low-carbon development [2,3,4].

The legal basis for sustainable public procurement in China is provided by the Government Procurement Law of China issued in 2002, China’s Bidding Law issued in 1999, and Promotion Law on Cleaner Production issued in 2002. These laws offer scope for taking into account the multiple and soft goals defined in Article 9, which emphasizes the needs of SPP by taking into account protecting the environment, supporting the development of less developed areas or ethnic minority areas, and promoting the growth of small and medium-sized enterprises. China’s SPP started in 2004 when the National Development and Reform Commission (NDRC) and the Ministry of Finance introduced energy-efficient procurement. In 2006, China’s Ministry of Finance and the State Environmental Protection Administration (now the Ministry of Ecology and Environmental Protection) launched an initiative promoting green public procurement (PP), which focuses on procuring environmentally friendly products. In both cases, central product lists were issued to guide and support local procurement decisions. These two lists of energy efficiency and environmentally friendly products are the basis for SPP in China [5]. The legal and policy framework and the relevant institutions have been developed in China. China’s PP operates on two levels. At the national level, the central government formulates the principles and framework for SPP. At the local level, local public procurement centers implement procurement, specify and customize regulations, and train procurement officers. China’s PP is centralized and comprises all purchases for public service units such as municipal administrations, all public institutes, universities and schools, hospitals, and state-owned enterprises.

SPP is defined as “a process whereby organizations meet their needs for goods, services, works and utilities in a way that achieves value for money on a whole life basis in terms of generating benefits not only for the organization, but also for the society and the economy, whilst minimizing damage to the environment” [6]. Theoretically, SPP addresses more environmental considerations and finds ways in which environmental objectives can be effectively addressed through public procurement [7]. This could explain why SPP originates from the concept of green public procurement and why most international SPP practices are characterized by green or environmental public procurement (GPP) and applied as an environmental policy tool [8]. Due to the massive value of the expenditure in public procurement, SPP is generally considered to be capable of accelerating a green transformation in the markets. SPP is being developed in the way that society, economy, and environment are taken into account and an overall increase in the strength of social objectives, which, in turn, point toward a growing potential for public procurement to achieve wider societal benefits [9,10].

Sustainable procurement is also a rapidly increasing research topic. Most of the research on GPP is related to its status in public policies and treaties, its societal importance, possibilities to incorporate green criteria into procurement processes or public contracts, and some focus on giving guidelines and sharing good practices [7]. Although considerable progress has been made worldwide, SPP is still in its infancy, particularly in emerging economies [2]. In recent years, many researchers have increasingly focused on investigating barriers, needs, and key elements at different levels in promoting SPP. Walker [11] argues that there is a need to have greater focus on the linkages and trade-offs between different sustainability elements. Halonen [7] also argue that works integrating the three dimensions and discussing the trade-offs between them are scarce. Khan et al. [12], in a multidisciplinary and empirical study, have concluded that green supply chains can be enhanced by green purchasing, eco-design, and green human resource management. Song et al. [13] have addressed the key elements of product attributes, perceived consumer effectiveness, eco-labeling, and environmental awareness in promoting sustainable consumption and SPP. Ayar and Gürbüz [14] studied the key factors from the consumer side and how these factors influence SPP and sustainable consumption. The key factors are attitude, subjective norms, perceived behavioral control, and altruistic values. After a systematic literature review, Sönnich and Clement [15] concluded that awareness and knowledge are important and that beliefs and values of procurers are highly relevant in the transformation towards SPP and circular procurement, simply not going for the lowest price, but finding an optimum combination that includes risk, timeliness, and cost for the public institution on a life-cycle basis. Eco-labels, standards, life-cycle assessments, and life-cycle costing are core parts of the process. There has been a considerable amount of work on the selection of suppliers in promoting SPP by adding more important criteria such as flexibility, risk responsiveness, and environmental and social criteria, due to changes in technology, economy, politics, and consumer orientation [16]. The main SPP issues identified by most researchers of international SPP initiatives include the legal and policy framework in use; the criteria chosen; the technical tools used in sustainability assessment and tendering assessments (life-cycle analysis, ecolabels, etc.); professional capacities of procurers; awareness and knowledge of procurers; information availability and trust in sustainable products; transparency of the process; attitudes of different stakeholders; product groups/categories covered in SPP; trade-offs between social, economic and environmental considerations; and SPP impacts on improving sustainability [2,3,17,18].

China’s SPP has many similarities to international SPP initiatives. Interestingly, China’s SPP is quite centralized, and the main actors are the local Public Procurement Centers (PPCs) that are always working directly under the responsibility of local authorities (mostly under the financial department of local governments). Therefore, if doing well, China’s public purchasing offers more opportunities for effective SPP not given in other countries where most public organizations take care of their own procurement needs. In practice, however, huge possibilities still remain untapped under China’s current SPP system. This study has been inspired by the fact that China’s SPP policies and institutions are well developed, while the performance of SPP remains relatively weak. The huge potential of SPP is not yet realized. Therefore, there is a need to systematically assess the performance of SPP in China.

Many Chinese researchers have investigated the reasons that the great potential of China’s SPP have not been effectively mobilized. Liu et al. [19], using the data collected from 139 Chinese local government officials, found that procurement officials’ awareness of GPP implementation policies exerts a positive, direct impact on their GPP performance. Wang et al. [20], by analyzing 838 public procurement contracts in Chengdu city, China, concluded that both the price efficiency and the time efficiency of PP are negatively associated with the implementation of green public procurement (GPP). Many studies have recently focused on investigating how SPP practices as a sustainability policy tool incentivize environmental firms’ environmental performance. Ma et al. [21] have explored the relationship between GPP market pressure and firms’ environmental certification practice based on institutional theory, and they found that SPP market pressure is positively associated with environmental certification practice. Liu et al. [22] have analyzed the black box of the influence mechanism between external stakeholder drivers and green public procurement practice and concluded that external stakeholder drivers have a positive relationship with GPP practices. Through a systematic literature review, Cheng et al. [23] point out that GPP discussion has mostly focused so far on the specific impacts of GPP implementation, while the discussion on GPP as compared to other environmental policy tools, in terms of efficiency and innovation, is still lagging.

This article reports on a nationwide survey of SPP in China. Its aim is to assess the performance of China’s SPP and answer the question of whether SPP can help China mobilize the potential for achieving more sustainable development. Specifically, this paper addresses the following research questions, after giving a profile of SPP in China, including SPP development, legal and policy frameworks, institutions, and features of local PPCs:

(1)

What are the main differences between China’s SPP and international SPP practices? IISD [5] concluded that China’s SPP is quite different from international SPP in many respects due to the Chinese centralized SPP system. Placek [24] concludes that the decentralized SPP system is advantageous compared to the centralized SPP system. This article intends to explore more deeper differences behind the centralized SPP system and to compare the effectiveness of the centralized and decentralized SPP systems.

(2)

What are the main driving forces promoting SPP in China? International studies have pointed out that the main driving forces for upscaling SPP include legal and policy, environmental benefit, social benefit, economic benefit (less life-cycle costs), market demand, commitments of public bodies, and good image for public bodies [2,17,25]. With a survey, this article intends to explore the real driving forces among the variables above for pushing SPP development in China.

(3)

What are the main barriers and constraints in SPP development in China? The literature [15,26,27] also points out that the main barriers to SPP development include a lack of legal and policy support, a lack of political support, vagueness of environmental criteria, vagueness of social criteria, perception of higher prices due to SPP, lack of knowledge and skills, lack of transparency, and lack of trust in product sustainability information. The above variables are applied to explore the main barriers to developing China’s SPP.

(4)

Do local PPCs have the necessary capacity to implement SPP? In international SPP practices, relevant capacities are needed for procurers, since procurers need to identify sustainability features of products and judge whether the products or services to be procured have sound sustainability [28,29]. In China’s centralized SPP system, instead of identifying sustainability features of products, procurers (local PPCs) can only make procurement choices from lists of green product, which should be much easier compared to international SPP practices.

(5)

Do local conditions allow for tapping the potential of SPP under the current situation? Obvious advantages of the international decentralized SPP are the high flexibility and the greater power that the procurers have in assessing and selecting sustainable products and services [3,30]. Such advantages allow for tapping much more potential of SPP [17], which is essential for upscaling SPP. This article addresses the issue of whether the SPP potential can be mobilized effectively in China’s local conditions of a centralized SPP system.

(6)

Is SPP more effective at the national level or at lower levels of government? International SPP practices show that the effectiveness of SPP can be quite different between different levels of government, since SPPs at the different levels are independent [31,32]. This article will address the interesting issue of whether the effectiveness of SPP at different governmental levels should be no different in centralized China’s SPP system.

(7)

What recommendations for China can be made for scaling up SPP? The ambition has always been to formulate policy implications on the basis of this nationwide survey. This article will provide recommendations to Chinese policymakers on how to deepen and upscale SPP.

2. Methods

This research builds on the conceptual framework that SPP as a policy instrument could effectively address the sustainability pillars of economy, society, and environment in a balanced way. Therefore, SPP is assumed to have a strong effect on the social, economic, and environmental objectives of the country [7]. By applying this conceptual framework, we will assess whether China’s SPP is able to achieve the sustainability goal and, if not, the reasons behind this, as well as how China’s SPP could be improved and strengthened.

This is an empirical study, and the selected methods are a function of the research questions. Figure 1 presents the methods being used in this research. In order to gain a full understanding of the profile of SPP in China, we have explored the national public procurement website (http://www.ccgp.gov.cn/ (accessed on 1 October 2021)), as well as many websites of local PPCs. Both the national PP website and the local PPC websites provide all necessary information about the development of PP and SPP, SPP policies and procedures, organizational aspects of local PPCs, the performance of local PPCs, and specific features of local PPCs. In addition, legal and policy documents and directives promoting SPP at both national and local levels have been reviewed. For comparison of China’s SPP and international SPP practices, a literature review was carried out focusing on comparing the elements of SPP policy frameworks, tools and criteria applied, organization of SPP, elements of sustainability being taken into account, and the scale of SPP as a percentage of the total PP and as a percentage of national gross domestic product (GDP).

For identifying driving forces, barriers, and local PPCs’ capacities to implement SPP, a survey using a pre-coded questionnaire and a number of telephone interviews was undertaken. There are 32 provincial PPCs (including 5 PPCs in the five autonomous regions and 4 PPCs in the four municipalities directly under the central government), 293 municipal PPCs, and 2010 county-level PPCs in mainland China. The pre-coded questionnaires were sent to all 2335 PPCs. Among the 2335 PPCs, 1371 responded (a response rate of 58.7%). The survey was carried out in the period of April–June 2019. The pre-coded questionnaire aimed at gleaning information on the profiles of local PPCs: size of PPC; percentage of female staff and percentage of staff who had received higher education on environment and/or sustainability, driving forces, barriers, and constraints; existing performance of implementing SPP; environmental criteria and social criteria that have been taken into account in procurement activities; tools used in bid evaluations and contract awarding; and product categories/groups included in the SPP. All PPCs were also invited to evaluate the SPP legal and policy framework, the establishment of relevant institutions, and the overall performance of SPP at local level by providing a score between 0–10. A low score means a less powerful or bad performance and a high score means a more powerful or even excellent performance. Scores obtained from all surveyed PPCs were subsequently added. This yielded an aggregate score with a range of 0 to 10. The answers collected were first checked and reviewed by a committee that was established to ensure the quality and reliability of the data collected.

In addition to the survey, we conducted telephone interviews with the PPCs of Tianjin (a city directly under central government), Qinhuangdao (a medium-sized seaside city in Hebei Province), and Lanzhou (capital city of Gansu Province). These three PPCs were selected because the three cities have participated in a project, entitled Sustainable Public Procurement in Urban Administrations in China (SuPP-Urb China), which was funded by the European Commission (EC contract: CN/SWITCH-ASIA/002 (153-224) and was implemented in the period of December 2008 to December 2011. Through this EC project, technical capacities and real-life experiences of the three PPCs on how to conduct SPP should have improved. Telephone interviews with these three PPCs aimed at obtaining feedback on the above-mentioned EC projects, in particular, the lessons learned from this EU project. These lessons are relevant to improving and scaling up SPP in these three cities. A total of 12 telephone interviews were conducted, with 4 for each of the three PPCs. Interviewees included the three PPCs’ directors or deputy directors, managers of the three PPCs’ procurement departments, and two procurement operators from each PPC. Telephone interviews with the staff of these cities’ PPCs also aimed to obtain information on the key elements that may have had a major impact, negatively or positively, on SPP and to obtain local PPCs’ recommendations for further improving and scaling up SPP practices.

To generate recommendations for promoting and upscaling SPP in China, a one-day expert workshop was organized. Fourteen experts participated, including national procurement authorities, representatives from local PPCs, and experts from relevant universities and research institutes. At the beginning of the workshop, the findings and relevant issues coming from the survey, literature review, and telephone interviews were presented. After this, experts discussed the findings of this research and the issues related to China’s SPP, allowing an intensive exchange of ideas between experts. After open discussions, each of the 14 experts gave a speech with their conclusions and suggestions for strengthening driving forces and overcoming the barriers to promoting and upscaling SPP in China.

Variables used in this research are selected based on the following principles:

(1)

Variables are selected that are the most frequently mentioned in the existing literature;

(2)

Variables are selected for which data were available in the local existing SPP statistical system;

(3)

Repeated variables were deleted;

(4)

Policy relevance, scientific soundness, and measurability were considered.

To understand the profile of China’s SPP, two simple variables for the value of public procurement and the value of SPP were selected. These two variables are commonly used in assessing international SPP practices. China’s SPP is solely implemented by provincial municipal and country-level Public Procurement Centers, and thus, to obtain insight into China’s SPP institution, the following variables have been used at the provincial, municipal, and county levels: number of professional staff, educational levels of staff, and gender distribution of staff. Variables for identifying drivers were selected from the literature. These variables are legal and policy driving forces, environmental benefits, social benefits, economic benefits (lower life-cycle costs), market demand, commitments of public bodies, and good image (green image of public bodies). Variables for identifying barriers were selected from the literature and green international SPP case studies. These variables include a lack of legal and policy support, lack of political support, vagueness of environmental criteria, vagueness of social criteria, perception of higher prices due to SPP, the lack of knowledge and skills, the lack of transparency, the limitations due to the two SPP lists, and the lack of trust in product sustainability information.

3. Results

3.1. Profile of China’s SPP

China’s PP is growing in leaps and bounds, given the fast growth in public consumption. Figure 2 indicates that China’s total PP increased from 1638 billion CNY (Chinese Yuan) in 2013 to 3697 billion CNY, with an annual growth rate of 12.3%, which is slightly higher than the annual GDP growth rate. However, China’s SPP decreased during the period of 2013–2020, particularly between 2018 and 2020.

Figure 3 shows that the share of China’s PP in its GDP has stabilized at about 3.5–4.0%, which is significantly lower than 10–15% of GDP in European countries [28]. The main reason is, as indicated in Figure 2, that only 10–12% of China’s government expenditures is spent on PP, and the rest (88–90%) goes to non-public procurements. This is one of the reasons that China is still in the process of negotiations for complying with the World Trade Organization (WTO) Government Procurement Agreement (WTO GPA). Figure 3 shows that the percentage of SPP in total PP decreased rapidly. The reasons will be discussed in Section 3.5. Despite the initial steps and SPP progress made in 2014, research shows that a huge potential for SPP remains untapped under the current PP system in China. There is real untapped potential for SPP.

The structure of China’s PPC includes four levels: national PPC, provincial PPC, municipal PPC, and county-level PPC.

Table 1. Data on PP/SPP organizations in mainland China.

Number of PPCs at the provincial level	32
Average number of staff working for each of PPCs at the provincial level	42.5
Average number of female staff working for each of PPCs at the provincial level	28.4
Average number of staff who received higher education	37.3
Number of PPCs at the municipal level	374
Average number of staff working for each of PPCs at the municipal level	36.2
Average number of female staff working for each of PPCs at the municipal level	21.6
Average number of staff who received higher education	31.2
Number of PPCs at the county level	2010
Average number of staff working for each of PPCs at the county level	18.1
Average number of female staff working for each of PPCs at the county level	11.4
Average number of staff who received higher education	4.7

Source: primary data, 2019.

shows the manpower at each level of PPCs. At the provincial level, there are 42.5 staff members on average in each PPC; the majority (67%) are female, and 88% have received higher education. At the city level, there are on average 36.2 staff members in each municipal PPC, of whom 60% are female and 86% have received higher education. At the county level, there are on average 18.1 staff members per PPC, of whom 63% are female and 26% have received higher education.

3.2. A Comparison of SPP Practices in China and Europe

To compare SPP practices in China and Europe systematically, we identified the key elements of the legal and policy framework, institutional arrangements, procedures and tools applied, and the environmental and social criteria applied [33,34].

Legal and policy frameworks for SPP in China and Europe differ greatly. Two EU directives on sustainable public procurement were introduced in 2004, which emphasize the policies, principles, and sustainability requirements that should be taken in SPP. SPP in EU is, however, fully decentralized, and the EU member states issue their own national laws and formulate policies for cases below the directives’ threshold. China’s bidding law (1999), public procurement law (2002), and promotion law on cleaner production (2002) are the legal basis for China’s SPP. Local authorities may formulate local regulations and policies for operationalizing the above-mentioned national laws. However, local policies and regulations should be the same as or higher than the national threshold. The national government is responsible for formulating laws, policies, and criteria, while local governments are mainly responsible for developing local actions and strategies for implementing SPP.

With regard to institutional arrangement, SPP in China is centralized at the local level, and local PPCs are solely responsible for procurement, including providing procurement information, organizing tender evaluations, and awarding contracts. Thus, PPCs, other governmental organizations, and public institutions are the users in China. In the EU, SPP is decentralized. Public procurement is carried out by all kinds of public authorities, and the public authorities are often procurers and users as well.

With regard to SPP tools and procedures, the EU Directives on SPP include two basic tools, performance-based and technical-based specifications. Performance-based specifications focus on the functions of the products, while technical-based specifications are more focused on product quality. Sustainability criteria can be included in both tools. China’s SPP is quite different. To support local administrations, the central government of China has issued two product lists for SPP. One is the list of Energy Conservation Products (ECP list, issued by Ministry of Finance and NDRC) and the other is a list of Environmental Label Products (ELP list, issued by Ministry of Finance and Ministry of Environmental Protection). The consideration of environmental criteria in government procurement is mainly based on these two lists.

Prier et al. [35] state that “there are several eco-labels available in Europe, for example the European Ecolabel, the Nordic Swan, the Blue Angel, the Energy Star or the EU Energy Label”. In the EU for SPP practices, a tendering document can require that the product to be procured should be certified with one or more labels. China’s SPPs solely rely on the ECP list and the ELP list, while products on the ECP list should be certified with Energy Efficiency Labelling, and products on the ELP list should be certified through China Environmental Labelling. Both lists specify the name of each product’s manufacturer, the registered trademarks, and the expiration date of its certification. Both lists have a large number of products that procurers (mainly local PPCs) can use to make their purchasing decisions.

Table 2. Main labels adopted by the EU and China in their SPP.

Labels	Description
EU Energy Star	Year of introduction: 2002 Program type: voluntary Verification: manufacturer’s declaration, irregular third-party verification Certificated products: displays, computer equipment (desktop computer, notebook, computer, integrated desktop computer, thin client, small-scale server, workstation, game console), imaging equipment (copier, digital duplicator, fax machine, mailing machine, multifunctional device (MFD), printer, scanner)
EU Energy Label	Year of introduction: 1998 Program type: mandatory, comparative label Verification: manufacturer’s declaration, irregular third-party verification Certificated products: refrigerators, freezers and combined appliances; washing machines, tumble dryers and combined appliances; dishwashers; ovens; air conditioners; light bulbs; televisions.
Germany Blue Angel	Year of introduction: 1978 Program type: voluntary Verification: third-party verification Certificated products: Around 10,000 products in 80 different product categories for many kinds of industrial and consumer goods, such as furniture, floor coverings, paints, construction machinery, building materials and office devices.
EU Eco-label	Year of introduction: 1992 Program type: voluntary Verification: third-party verification Certificated products: Cleaning (all-purpose cleaners and cleaners for sanitary facilities; detergents for dishwashing machines; hand dishwashing detergents; laundry detergents; soaps, shampoos and hair conditioners), clothing (textile products; footwear), paints and varnishes, electronic equipment (personal computers; portable computers; televisions), floor coverings (wooden coverings; textile coverings; hard floor coverings), wooden furniture, gardening (growing media and soil improvers), household appliances (light bulbs, heat pumps), lubricants, mattresses, paper (copying and graphic paper; tissue paper), services (campsite services; tourist accommodation service).
TCO-Certified	Introduction of year: 1992 Program type: voluntary Verification: Third-party verification by an accredited, independent laboratory. Certificated products: Displays, desktops, notebooks, all-in-one PC, projectors, headsets, mobile phones, printers.
China Environmental Label	Year of introduction: 1993 Program type: voluntary Verification: Third-party verification, regular supervision (once per year) Certificated products: Household refrigerators; lead-free gasoline for vehicles; products made from recycled paper; Hg-Cd-Pb free rechargeable battery; detergents; Hg-free dry cells and batteries; moth resistant woolens; packaging materials; soft drinks; energy-saving fluorescent lamps; energy-saving low-mercury double-capped fluorescent lamps; energy-saving electronic ballasts; toys for children; low-noise washing machines; energy-saving low-noise room air conditioners; energy–saving and low-discharge gas ranges; aerosol; CFCs-free refrigerating equipment for industry and commerce; household microwave ovens; asbestos free building materials; halon-free fire-extinguishers; adhesives; phosphorus gypsum building materials; ecotypic textile; non-aluminum pressure cooker; safe mothproof agent; low radiant color TV; magnetic electric antiscald hydrotreater; pipe; wood based panels and finishing products; low pollution motorcycle; plastic water and sewage copier; ODS substitute; CFCs-free foamed plastics; aerosol products; products made from recycled plastics; disposable food and drink container; fibrous desiccants for packaging; low pollution light weight vehicles; clay pigeons; solar-powered watch and clock; smokeless convolve mosquito-repellent incense; water based coatings; metal welding and cutting gas; energy-saving doors and windows; microcomputers and displays; sanitary ceramics; blocks for architecture; dry-type power transformers; furniture; wallpapers; ceramic ware, glass-ceramic ware and glass dinnerware in contact with food; footwear; lightweight wall boards; printers, fax machines and printer and fax combinations sanitizing incenses.
China Energy Label	Year of introduction: 2005 Program type: Mandatory, comparative label Verification: Manufacturer’s declaration, third-party verification Certificated products: Listed in the Catalogue of Products that Require Energy Efficiency Label.

presents the main labels being adopted by the EU and China.

The European Commission has addressed various social criteria and asked member states to include these social criteria in SPP. The social criteria cover promoting employment opportunities, promoting decent work, promoting compliance with social and labor rights, supporting social inclusion and promoting social organizations, promoting accessibility and design for all, seeking to achieve wider voluntary commitment to corporate social responsibility (CSR), protecting against human rights abuse, and encouraging respect for human rights and promoting small and medium enterprises (SMEs). In practice, member states are always taking into account the above-mentioned social criteria, but normally not all social criteria are considered in all member states. China, however, has addressed social criteria for supporting local SMEs, micro-producers, poverty-reduction-related products, and the promotion of employment opportunities for people with disabilities.

3.3. Driving Forces of SPP in China

This research has identified seven driving forces, as discussed in the introduction section, through a literature review. These driving forces are legal and policy drive, environmental benefits, social benefits, economic profit (minus life-cycle costs), market demand, commitments of public bodies, and good image [36,37]. The data on the sample of 1371 PPCs in

Table 3. Driving forces of SPP in China, N = 1371.

Driving Forces	Average Score (0–10)	Standard Deviation
Legal and policy-driven	9.5	0.87
Environmental benefit	4.7	0.11
Social benefit	8.2	0.72
Economic benefit (less life-cycle costs)	3.9	0.08
Market demand	5.5	0.18
Commitments of public bodies	8.3	0.42
Good image	5.8	0.31
Overall average	6.6	2.11

Source: primary data, 2019.

suggest that China’s SPP is mainly driven by legal and policy considerations, social benefits, and commitments of public bodies. According to the literature, SPP is mainly driven by perceived environmental benefits [38]. However, this is not the case in China’s SPP, since environmental benefits score low. Many researchers [39,40] have pointed out that SPP products have relatively lower life-cycle costs and thus enjoy advantages in public procurement. Lower economic benefit scores of China’s SPP suggest that procurers mostly focus on the prices of products while less attention is paid to life-cycle costs. Market demand as a driving force scores relatively low, which suggests that public environmental awareness is still weak and is to be improved by more effective environmental communication.

The average score of driving forces is 6.6, which is worryingly low and it is not strong enough for driving SPP development in China. The average low score for driving force has answered the question raised in Figure 2 of why SPP decreased in the past decade.

3.4. Main Barriers of SPP in China

As discussed in the introduction section, the main barriers addressed by the SPP literature include lack of legal and policy support, lack of political support, unspecified environmental criteria, unspecified social criteria, the perception of higher prices in the case of SPP, the lack of knowledge and skills in implementing SPP, the lack of transparency, the limitation of two SPP lists, and the lack of trust in product sustainability information provided by producers/suppliers [2,41,42]. Does Chinese SPP suffer from these weaknesses?

Table 4. Main barriers of SPP in China, N = 1371.

Barriers	Average Score (0–10)	Standard Deviation
Lack of legal and policy support	4.8	0.19
Lack of political support	5.3	0.32
Vagueness of environmental criteria	7.3	0.46
Vagueness of social criteria	7.9	0.49
The perception of higher prices due to SPP	8.3	0.79
The lack of knowledge and skills	8.5	0.83
The lack of transparency	7.7	0.38
The limitations due to the two SPP lists	8.5	0.77
The lack of trust in product sustainability information	8.8	0.71
Overall average	7.5	1.36

presents the answers based on the nationwide survey. It seems that a lack of legal and policy support (score of 4.8) and a lack of political support (score of 5.3) are not the case in China’s SPP, since China’s SPPs have a legal basis and the policy framework has been developed as indicated by Table 3. The weaknesses of China’s SPP are not at the policy level but at the operational level, because SPP implementation remains rather weak. The other barriers identified by international practices also exist in China’s SPP. The score of each barrier, with the exception of legal and policy support and political support, is more than 7.0.

It is interesting that the biggest barrier to China’s SPP is a lack of trust in the information on the sustainability of the product provided by producers and suppliers. Products on the lists of ECP and ELP are selected according to criteria described by the Environmental Labelling certification and the China Energy Label, but these products are limited. In many cases, local PPCs have to ask for more information (e.g., other energy and environmental labels, sustainability-related certificates, and even life-cycle analysis data) from the producers. Normally, local PPC staff members have no professional knowledge or skills to check and verify the information provided, and mostly, producers may exaggerate the sustainability characteristics of their products.

SPP is clearly a complex procurement task because assessing and measuring sustainability quantitatively is difficult. Consequently, having the lists of ECP and ELP in place represents an important simplification for procurement officers, in particular for those PPCs with limited capacities. In the initial stage, the two SPP lists have made, without a doubt, a significant contribution. These lists played a crucial role in raising awareness of sustainable production and consumption among the actors of public procurement. However, many disadvantages occur during the SPP development, and the limitations of the two lists have increasingly been an insuperable obstacle in China. Therefore, as indicated in Table 3, the limitation of two SPP lists is a major barrier with a score of 8.5, and this can also explain why SPP development in China is slow and even decreasing. We suggest two options for China to overcome the existing limitations of the two lists. One is that the two lists should be revised and strengthened in order to reach their full potential and reflect up-to-date technical innovations and sustainability progress, and that the product range included in the lists could be widened. The second option is that the government should move beyond predefined product lists. A potential new design could include specifying only obligatory environmental criteria or benchmarks but not concrete manufacturers. From doing this, China’s SPP could develop toward matching the international method, in which technical or functional specifications can be adopted for tendering, instead of using the existing product lists.

Lack of knowledge and skills has been a barrier in China and other countries. The quantitative identification of environmental and social values is difficult, and thus high professional capacities are needed for local PPCs (procurers) to customize national regulations for the optimized fulfillment of economic, environmental, and social targets at the local level. The adoption of the existing two lists has been an obstacle for local PPCs to improve their SPP capacities and to reduce internal resistance to change, since it is quite simple and easy to check products against the lists and local PPCs are not motivated to learn more about the sustainability criteria used.

The main barriers also include the perception of paying higher SPP prices for sustainable products. Additionally, the lack of transparency and the lack of user-friendly tools and soft social–environmental criteria that have low operability at the local level were mentioned. The perception of higher SPP prices has been a recognized barrier in other countries, and many practices have proven that the adoption of a life-cycle analysis (LCA) approach is the ideal way to overcome this barrier. To improve transparency, there is a need to reform the existing SPP by establishing a strong and well-functioning procurement system, in which a clear legal framework establishes the rules for transparency, efficiency, and mechanisms of enforcement. It remains a challenge to move from the existing soft social–environmental towards more tangible, quantitative, and measurable criteria.

3.5. Performance of SPP in China

There are various tools being used internationally in conducting SPP [43,44]. The list approach is only being used in China. Other tools commonly used in international SPP practices include life-cycle analysis (LCA), life-cycle costs (LCC), environmental labels or ecolabels, energy certificates, environmental certificates, and ISO certificates.

Table 5. Tools used in SPP in China, N = 1371.

Tools	Numbers of PPCs	Percentage
Energy Conservation Products (ECP) list	1371	100%
Environmental Label Products (ELP) list	1012	73.8%
Life-cycle Analysis (LCA)	21	1.5%
Life-cycle Costs (LCC)	33	2.4%
International Energy Star	17	1.2%
International Eco-labels	25	1.8%
ISO certificates (e.g., ISO 14000)	64	4.7%

presents the tools being used in China’s SPP practices.

China’s PPCs are inviting different parties for tendering to purchase products from the ECP list and primarily, but not compulsorily, to purchase products from the ELP list. Thus, as presented in Table 4, all 1371 PPCs surveyed are adopting the ECP list. Although adopting ELP is not compulsory, it is given priority. Of the 1371 surveyed PPCs, 73.8% are still adopting ELP lists. There is an argument that this reflects the fact that saving energy is a high priority for achieving low-carbon development in China [5]. Our interviews with central PPC staff show that this is not the case. In practice, energy saving and environmental protection are equally important to China’s sustainability agenda. It is a technical issue that ECP is compulsory but ELP is not, since energy saving is easily measured and assessed. However, environmental performance is defined too broadly and may cover many issues, which means that it is always difficult to measure quantitatively.

In addition to the list approach, as indicated in Tale 4, other approaches that are commonly used internationally are rarely used in China’s SPP. Except for the complexity of LCA/LCC that may restrict their applications, eco-labels, energy labels, and various international certificates are easy to use and have been adopted by many products and services. Therefore, linking the two lists to international labels and certificates would be a real opportunity for China to upscale SPP.

As one of the three fundamental elements of sustainability, social criteria are being increasingly considered in international SPP practices, and socially responsible public procurement (SRPP) can illustrate how social and economic considerations can be mutually reinforcing and thus how SRPP can contribute to enhancing compliance with national or international commitments to social development goals [45,46,47]. Through a literature review, key social criteria being adopted by international SPP practices have been identified and are presented in Table 5. During the survey, 1371 local PPCs answered the question: what are the social criteria being considered in the operation of your procurements?

Table 6. Social criteria considered in SPP in China, N = 1371.

Social Criteria	Numbers of PPCs	Percentage
Support to local SME producers/suppliers	1371	100%
2. Poverty-reduction-related products	1017	78.1%
3. Creating employment opportunities for those with disabilities	889	64.8%
4. Creating employment opportunities for disadvantaged groups	119	8.7%
5. Compliance with occupational health and safety laws	1339	97.7%
6. Gender equality and non-discrimination	118	8.7%
7. Creating employment opportunities for older workers	19	1.4%
8. Promoting “corporate social responsibility” (CSR)	37	2.7%

presents the survey results.

All 1371 local PPCs surveyed are adopting the social criterion of supporting local SME producers, and this has been the most important principle that every PPC should comply with. In addition, 97.7% of the surveyed PPCs are adopting social criteria of compliance with occupational health and safety standards. Social criteria of poverty reduction, using local products (in particular agricultural products that are produced in poverty-stricken areas), and promotion of employment opportunities for people with disabilities are also highly adopted by local PPCs. As compared to environmental criteria, China’s SPP pays more attention to including social considerations. As indicated by Figure 4, strategic perspectives of China’s SPP are more focused on supporting local producers and suppliers (specifically local SMEs) than on overall systemic advantages. The average share of PP supporting local SMEs is about 76% of total PP, which is much higher than the share of SPP in total PP, as indicated in Figure 3. In this sense, China’s SPP is closer to socially responsible public procurement, since the environmental consideration of China’s SPP is far from the requirements of the existing SPP.

Three methods are being used by China’s PP in tendering evaluation and awarding contracts. The first is the method of the lowest quotation bid evaluation, which means the bid with the lowest quotation will be awarded the contract. This method is the most commonly used, and it is suitable for procuring products that are quite standardized with simple technical and functional specifications, e.g., IT products. The second is the comprehensive scoring method, and this method is used in procuring complex or normally non-standardized products or services. The full score is 100, and scoring factors include technical factors, the quotation, environmental and social criteria, and after-sale services. The third one is the value-for-money method, which is not used commonly in China’s PP. This method has many similarities to comprehensive scoring.

Based on

Table 7. Tendering criteria for awarding contracts in SPP in China, N = 1371.

Social Criteria	Numbers of PPCs	Percentage
A. Applying the lowest quotation bid evaluation method
1. Energy Conservation Products (ECP) list is compulsory.	1371	100%
2. Supporting local SMEs is compulsory.	1371	100%
3. The quotation will decrease by 10% when procuring products on the Environmental Label Products (ELP) list.	892	65.1%
4. The quotation will decrease by 11–15% when procuring products on the ELP list.	461	33.6%
5. The quotation will decrease by 16% or above when procuring products on the ELP list	18	1.3%
6. Social criteria are considered in a case-by-case way, and the weights are more than the environmental criteria.	1279	93.3%
B. Applying the comprehensive scoring method
1. ECP is compulsory.	1371	100%
2. Among the total of 100 points, the ELP list product will be given 10 points.	912	66.5%
3. Among the total 100 points, the ELP list product will be given 11–15 points.	371	27.1%
4. Among the total 100 points, ELP list product will be given 16 points or above.	88	6.4%
5. Social criteria are considered in a case-by-case way, and there are more points than for the environmental criteria.	1319	96.2%
C. Applying the value-for-money method
1. ECP is compulsory.	1371	100%
2. A 10% weight is allocated to environmental criteria.	928	67.7%
3. An 11–15% weight is allocated to environmental criteria.	361	26.3%
4. A 16% or above weight is allocated to environmental criteria.	82	6.0%
5. Social criteria are considered in a case-by-case, normally their weight is more than 20%.	1348	98.3%

, the following conclusions can be drawn concerning China’s SPP tendering evaluation and contract-awarding practices:

(1)

Applying ECP lists and supporting SMEs are compulsory.

(2)

About 65% of PPCs give a 10% score to the products on ELP lists, and about 30% of PPCs give an 11–15% score to the ELP products. Very few PPCs (less than 6%) give a score of more than 16% to the ELP products.

(3)

Social criteria are commonly considered in the tendering evaluation in a case-by-case way. This is the same as in Europe [45]. Normally, the weights of social criteria are higher than those used for environmental criteria. On average, the score of social criteria is about 20%, while the score of environmental criteria is about 10–15% in China.

(4)

Adoption of different tendering evaluation methods has no impact on the degree to which social and environmental criteria are being considered in China’s SPP practices.

4. Discussion

We relate our findings to the theory of using relevant criteria [4] to centralized or decentralized procurement [42], and to why implementing sustainable procurement practices is so difficult [35].

The adoption of the two lists, ECP and ELP, is controversial in China. On the one hand, the lists provide specific products, manufacturers, trademarks, location of production, and relevant certificates and their expiry date. Thus, no knowledge and skills are required for procurers implementing SPP. The lists approach can also increase transparency and improve the efficiency of SPP implementation. On the other hand, the approach of using two lists obviously has many disadvantages compared to commonly and normally used international approaches of technical and functional specifications. Product groups covered by the two lists are limited, and thus only a small part of the necessary goods can be selected from the lists. Obtaining certifications is time-consuming, the process is always bureaucratic, and the certificate may not take into account up-to-date technical innovations or reflect all sustainability criteria. In the mid and long terms, it is recommended that approaches of technical and functional specifications using the relevant environmental and social criteria replace the existing lists approach used in China for SPP.

The SPP literature points to the use of centralized systems as an important factor hindering the promotion and upscaling of SPP [2,41,42]. Does Chinese SPP also suffer from this weakness? The Chinese SPP is a hierarchical and centralized multi-level system. An advantage of this system is the efficient and direct transfer of directives to local levels. A centralized system can also facilitate the implementation and operations of SPP at the local level and ensure that the same criteria are applied to the SPP everywhere in the country. However, up-to-date practices have already shown that there are obvious disadvantages of centralized SPP systems. Two challenges remain. One is that China still uses the centralized SPP system, but reforms are certainly needed. The second challenge is that China’s SPP moves towards a decentralized system, which is more efficient, as proven by international SPP practices. A decentralized system is characterized by high accountability and transparency. Transparency and accountability can be more easily implemented in a decentralized system. At the same time, mechanisms of control should also exist to ensure a more accountable governmental organization [48].

Governments (the public institutions and the state-owned sector together) are the biggest consumer in China, and thus China’s public procurement system is very powerful. PP in China plays a crucial role in demonstrating and promoting sustainable consumption and uses sustainable procurement practices, although the emphasis is not on environmental criteria as in Europe. China’s SPP is more focused on socially responsible public procurement, or blue public procurement as it is called in China, since more attention is paid to social criteria in PP practices, while environmental criteria are only being considered by the product lists of energy conservation and environmental protection, which include limited product groups and categories.

An interesting result of the survey is that the implementation of SPP practices remains rather weak in China, where the SPP legal and policy framework and institutions have been sufficiently developed. China’s SPP experiences have resulted in discussing an important issue, namely the issue of whether a centralized SPP system is functioning better than a decentralized system. International experience favors a decentralized SPP system, and we argue that the most difficulties in implementing PP reform consist in the extent to which the procurement functions are decentralized [49]. Sharma [50] also points out that corruption scandals in public procurement are rampant even in countries such as Switzerland, Germany, France, UK, and the USA, where public procurement institutions and the judiciary are quite evolved, and independent and public procurement is quite decentralized. The United Nations Environment Program [2] argues that “Problems of inefficiency and lack of accountability associated with such a centralized system has, however, led many countries to move towards a more decentralized arrangement where the user agencies manage all the procurement for their own needs”.

5. Conclusions

SPP offers immense potential for resource efficiency, emissions reductions, innovation, and the development of micro-, small, and medium-sized enterprises. A crucial challenge associated with this study is how the huge SPP potential could be tapped within the existing centralized PP system in China. This research has shown that there is no obvious weakness in the existing legal and policy framework and institutional set-up. In addition to overcoming the main barriers indicated in Table 3, this leads to the following recommendations:

(1)

Vigorously expanding the SPP coverage and involve as many products and services into SPP as possible, since the existing two lists are limited.

(2)

Including China’s state-owned enterprises (SOEs) in SPP. There are great challenges to involving SOEs in Chinese SPP, and this has created many discussions in the academic sector and negotiations between China and the EU. The state sector is huge in China, and its procurement is also powerful. SPP should be made mandatory for SOEs in order to better leverage the purchasing power of public procurement and to improve SOEs’ innovations and sustainability.

(3)

Infrastructure projects should be included in China’s SPP. Environmental and social considerations should be included in the procurement of infrastructure. The full potential of Chinese PP cannot be fully leveraged to advance sustainable consumption without including infrastructure projects, as they form an important part of PP and give rise to significant environmental and social impacts.

This research evaluated the status of China’s SPP development in a systematic way through a nationwide survey. Given the well-developed legal and policy framework of SPP and the existing institutional structure, great progress has been made in China. However, SPP in China has not achieved the expected result, due to the fact that the share of SPP in total PP is very low and the total values of SPP decreased in recent years, while PP and GDP are growing by almost 10%. In summary, there are more barriers than driving forces in China’s SPP development, and the untapped great market potential of SPP would be a crucial argument for upscaling SPP in China.

This research concludes that China’s SPP is more similar to socially responsible public procurement since more concrete social criteria are used compared to more environmental criteria in the European Union. To ensure the high sustainability of publicly procured products, it is recommended that China’s SPP may move from the existing predefined product lists that are based on concrete manufacturers to specifying only obligatory environmental characteristics or benchmarks. The predefined product lists are the existing major operational tools for fostering China’s SPP. Compared to most international tools of green labeling, LCA analysis, and ISO certificates, China’s product lists are more operational and may require less skill for procurers. Although the lists are updated twice every year, there are limitations such as limited scope and relatively low standards, which might impair the future success of SPP.

It is also recommended that China’s national SPP policies should encourage using more international tools and making life-cycle costing mandatory. To ensure high environmental sustainability, the score of environmental criteria could increase from the existing 10% to more than 15% in the tendering evaluations.

As supporting policies to the above recommendations, a national capacity-building program appears highly recommendable, and SPP capacity building has also been recognized by international SPP practices [51]. Capacities need to be built up for local PPCs on issues such as life-cycle analysis, sustainability aspects of SPP tendering, international eco-labels, and information management.

There are limitations to this study. There is now a rapid development of more decentralized PP happening in China’s PP. Thus, this study may not represent the whole picture of updating the development of PP in China, and future studies are therefore needed. Although the conclusion made by this research builds on a nationwide survey, 1371 of the total 2335 PPCs responded. A response rate of 58.7% is not high enough to achieve the all insights into China’s SPP, and there may have been a selection bias in the sampling methods. For example, the larger procurement organizations in urban areas in the eastern part of China may have reacted more often than smaller organizations in the western part of China. It is suggested that China’s central government could initiate a national comprehensive evaluation program by involving not only the procurers of all PPCs but also the main users of public bodies and the main producers and suppliers of the goods and services to achieve a more complete insight into SPP performance in China. Another interesting issue for future research could be a comparison of cases of corruption among centralized SPP and decentralized SPP.