Beijing contemplates new law to discourage forced tech transfer
Dec 25, 2018 (China Knowledge) - Forced technology transfer was one of the core issues in U.S. and China trade dispute. President Donald Trump, on number of occasions, during his speeches has claimed that Beijing has stolen American ideas.
Beijing is contemplating to ban local governments from forcing foreign companies to transfer proprietary technology to their Chinese partners, signifying a step taken by central government to address the U.S. concern in ending the trade disputes between the two countries.
According to Xinhua, the draft law on foreign investment has been submitted to the bimonthly session of the National People’s Congress (NPC) Standing Committee on Sunday. The facilitation, protection, and management of foreign investment such as negative list management, and equal participation was included in the draft laws submitted.
U.S. Ambassador Dennis Shea has claimed that forced technology transfer was an unwritten rule for foreign companies entering joint venture with Chinese companies when accessing the country’s marketplace, especially if the partner is a state-owned enterprise. China has rejected the criticism multiple times since then.
This draft law submitted will not only address the world and the U.S.’s concern on forced technology transfer issue, and may give a break to the trade dispute; but also enhances the market for foreign businesses.
The new laws, when adopted, will also help promote and protect foreign investment in China, aligning with the government’s goal of reforms and opening up. As of November 2018, there are a total of 950,000 foreign-funded companies registered in China, bringing in more than USD 2 trillion into economy.
The safeguard and enhancement made to the competitive landscape of businesses for foreign companies will encourage foreign investment in China. Foreign presence will continue to be a major driving force in China’s economic and social development.
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