Macroscope | IP and tech control will continue to inflame US-China relations, whatever the outcome of the trade talks
- Neal Kimberley says investors hoping for a quick resolution of the current stand-off over trade should brace themselves for a protracted conflict, as both countries compete to protect their technological edge and strategic interests
Issues around intellectual property (IP) and forced technology transfers are key in China-US trade negotiations. The two sides may find common ground, but investors shouldn’t get too excited. Technology will remain a massive bone of contention between Beijing and Washington.
What investors know is that Washington has raised a raft of grievances with Beijing about technology.
Regarding trade, Commerce Secretary Wilbur Ross told Fox Business News on December 5 that “the bigger question and the more complicated one and, I suspect, the harder one to ultimately get resolved is the whole thing about forced technology transfers, theft of intellectual property rights, cybersecurity breaches, the whole nine yards on stealing our technology”.
In actuality, it might suit China to engage with the US on these issues. “With China moving up the value chain and becoming an innovation leader, we believe IP violation is becoming a domestic as well as an international problem,” analysts at US investment bank Jefferies Financial Group wrote earlier this month.
“Ten years ago, China was not an innovator and had little to gain from IP protection, 10 years from now, China will have the most IP to lose,” analysts at Jefferies wrote in a separate research note.