China denies forcing foreign firms to transfer technology

Washington to push Beijing on the issue

BEIJING: China on Thursday denied US charges that it forces foreign firms to hand technology over to Chinese rivals as the price of entry to its huge market, saying its policies are in line with global rules.

“Countries around the world have taken a lot of measures to encourage technology innovation,” a commerce ministry official, who declined to be named, told a news agency. “The Chinese policies are in line with relevant WTO rules.”

The comments were in response to a US Chamber of Commerce report this week that accused China of abusing the allure of its vast market to push foreign companies to transfer their latest technologies to Chinese competitors.

This was a “blueprint for technology theft on a scale the world has never seen before”, it said.

The chamber’s report is the latest in a chorus of complaints by foreign businesses and governments over perceived unfair policies and market restrictions in the world’s third-largest economy.

US Trade Representative Ron Kirk joined the fray on Wednesday, responding to the chamber’s complaints by saying Washington planned to push Beijing on the issue.

“That is going to be one of the top items that we continue to engage China on,” Kirk told reporters in Washington.

China committed at high-level Sino-US talks in May that its innovation policies would be non-discriminatory, protect foreign intellectual property rights (IPR), and ensure open markets and trade, according to Washington.

Beijing also pledged to leave the terms and conditions of technology transfer, production processes, and other proprietary information to individual enterprises, Kirk’s deputy Demetrios Marantis said earlier this month.

China launched its “indigenous innovation” campaign in 2006, officially to encourage the development of domestic technology and thereby reduce its reliance on foreign know-how. The commerce ministry official said the push did not discriminate against foreign companies and that IPR protection was “key to encouraging homegrown innovation”.

“China will further strengthen IPR protection, including that of foreign companies, exactly because we encourage homegrown innovation,” he said.

Tensions flared after Beijing issued rules late last year under the innovation campaign that were widely seen by foreign businesses as squeezing them out of the government’s multi-billion-dollar procurement market.

Concerns over indigenous innovation extended to security encryption rules, domestic patent laws and preferential policies for domestic companies, the US Chamber of Commerce report said.

On Wednesday, a Chinese railway official rejected suggestions foreign companies participating in the development of high-speed rail in the country had been forced to transfer their technology in order to gain market access.

China’s high-speed trains were based on foreign technology but it had improved the technology to make the trains even faster, He Huawu, chief engineer of the railways ministry, told a news conference.

“We made substantial innovation based on this foundation and improved the speed to 350 km (from 200 km per hour),” he said.

Published in The Express Tribune, July 30^th, 2010.