China Does About-Face On Tech Handover Demands

Might one leg of the trade war between China and the United States have fallen away?

As the Associated Press reports, China will stop demands that overseas firms give access to their trade and tech secrets to the government — a handover that up until now has served as a key to enter the much coveted Chinese market.

At this writing, that policy change has yet to be enacted into law, but such a shift might be codified soon. Ning Jizhe, who serves as vice chairman of China’s economic planning committee, said a law will “clarify” that approach and will mandate that when it comes to foreign firms, those companies “cannot be required to transfer technology by administrative means, providing a more encompassing and beneficial legal guarantee,” the report said.

Policymakers are now meeting at the National People’s Congress. As has been reported, Chinese Premier Li Keqiang has said foreign companies can look toward being treated as “equals” in China, and that statement in turn comes as the government targets an economic growth rate of about 6 percent to 6.5 percent, where last year’s stated goal had been 6.5 percent, and where just a few years ago that rate topped 7 percent.

News reports swirled at the beginning of the week that an end to the trade war between the U.S. and China may be in the offing, which would in turn stave off further tariff actions.

The Tech Landscape

Drilling down a bit deeper into that competitive tech landscape, Forbes noted this week that a survey by the American Chamber of Commerce in Beijing — gathering the opinions of hundreds of U.S. firms operating in China — said tech transfers, done across joint ventures, remain a “non-issue.” What is of more concern, these firms said, is the regulatory climate.

As many as 53 percent have said that transparency and fairness tied to the regulatory environment are either “very” or “extremely” significant when it comes to making a decision to invest efforts in the Chinese market. Forbes noted that 16 percent of firms said sharing tech details with joint venture partners had an impact on decisions to invest in the market. Also, 56 percent said that regulations tied to IP in China have “improved.”