Is the US right to cry foul about forced technology transfer to do business in China – and what is Beijing’s position?
- Foreign companies’ concerns about having to share their tech secrets are among the matters being discussed in ongoing US-China trade talks
- Beijing’s draft foreign investment law could legislate against the practice, but businesses are sceptical about enforcement
As the trade war between China and the United States rumbles on, its focus has shifted from deficits and surpluses towards more technological matters. Washington is not only demanding Beijing end its practice of forcing foreign joint venture partners to transfer technologies to their Chinese collaborators, but also scrutinising the work of Chinese researchers based in the US. In the second of a series of reports on these issues, we look at the allegations of forced technology transfer.
Of the many criticisms of China from the Donald Trump administration, those on forced technology transfer have been among the fiercest.
It is a chronic and prevalent problem that Beijing uses “a variety of tools” to pressure the transfer of technologies to Chinese companies, the United States argues, and more tolerance of it would cause heavier losses to the US, especially with Beijing pursuing world dominance in many industries.
The Chinese government has rejected such accusations both publicly and in government-to-government communications.
Forced technology transfer (FTT) means that when a foreign company wants to enter the Chinese market, it has to surrender its technology to Chinese companies through a joint venture agreement, or in some cases regulations. Some foreign companies have said they were forced to do so.
If there were coercion, Chinese officials claim, foreign companies could choose not to invest in China. If multinationals make hefty profits on the mainland then they benefit from investing in China under terms which are neither discriminatory nor coercive, they have said.