US accusation of China forcing technology transfer is nonsense

August 21st, 2019

Some US officials are interested in discrediting China with the so-called “forced technology transfer” accusation and it seems that they’ll never get bored with it. Though their remarks were doubted internationally and domestically, and despised by the US business circle, these officials just couldn’t resist stirring things up.

China made a clear commitment that it would not require foreign investors to commit to technology transfer into China in its WTO accession protocol. The WTO Agreement on Trade-Related Aspects of Intellectual Property Rights sets high standards of intellectual property protection and China did more than it was required through making the commitment. In fact, most WTO members did not made such a promise under the multilateral trading system.

In China, there is no law that requires foreign companies to transfer technologies to their Chinese partners, and technology transfer between enterprises is a normal business practice in international economic cooperation.

What foreign companies and their Chinese counterparts do, such as carrying out technological cooperation in accordance with market principles and signing legally binding agreements on the basis of equal consultation, is a choice independently made by market players for mutual benefits and win-win results.

The enterprises are free to make reasonable demands in negotiations considering cost effectiveness, which is within their rights of bargaining and should be protected.

Foreign investors have every right to file appeals and lawsuits against monopoly on the basis of international rules if they believe that the Chinese companies are abusing their dominant power in the market.

No company wants to do unprofitable or forced business in China. Insightful people in the world pointed out that the so-called “forced technology transfer” accusation not only violates business ethics, but also insults the intelligence of foreign entrepreneurs.

Input and output have always been correlated. Technological innovation and exchanges drive the advancement of productivity forces. By transferring some technologies, the corporations could effectively recover the cost of innovation and open up the market, which provides follow-up support for them to develop new technologies. This is the normal operation mode of multinational companies.

What’s more, under the highly competitive market environment where only the fittest survives, a company will not possibly share the market and make profits without advanced technologies.

It is odd that some people in the US could stir up trouble from such a simple market rule and economic knowledge.

Daniel Gros, director of the Center for European Policy Studies, pointed out that China’s technological progress is an important reason why certain people trumpeted “forced technology transfer”.

“Previously, Western companies were more willing to transfer their technology, based on the expectation that Chinese competitors would be unable to adapt and master it, anyway. With China now producing more graduates with bachelor’s degrees in science and engineering than the US and Europe combined, that expectation is no longer tenable.” Gros said.

China has a huge market with nearly 1.4 billion and the world’s largest and fastest growing middle-income group. The country welcomes foreign investment and did not and will not set a threshold of technology transfer for foreign companies.

Foreign companies and their Chinese partners cooperate in scientific research and transfer technologies driven by market rules and mutual interests, instead of being forced. Their purpose is to occupy a larger share of the market and make more profits.

It is pure nonsense to say that China forces foreign companies to transfer technologies. In fact, it is the US that has blocked Chinese companies from investing in the American technology enterprises, restricted the export of high-tech materials to China and employed political power to impose pressure on China’s private companies.

Some people in the US wish that they could enjoy the benefits on the foreign market and maintain dominance in high technology, cornering other countries to the lower end of the global value chain.

The truth will finally reveal itself and justice always inhabits people’s hearts. Some people in the US really need to stop spreading rumors and looking for troubles. Even though they are good at chopping logic and staining others’ reputation, their nonsense will eventually be revealed to the entire world.

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