China US Trade Tech Theft

FILE - In this Aug. 15, 2018, file photo, a video screen plays footage of Chinese People's Liberation Army (PLA) soldiers on a robot from a Chinese robot maker at the World Robot Conference in Beijing. For four decades, Beijing has cajoled or pressured foreign companies to hand over technology. And its trading partners say if that didn't work, China stole what it wanted. (AP Photo/Mark Schiefelbein, File)

BEIJING — For four decades, Beijing has cajoled or pressured foreign companies to hand over technology. And its trading partners say if that didn’t work, China stole what it wanted.

Communist leaders deflected demands for change until foreign frustration erupted into a showdown with President Donald Trump. He sent shockwaves through their export industries by slapping punitive tariffs of up to 25% on Chinese goods.

Europe, Japan and other trading partners object to Trump’s tactics but echo American complaints. They say Beijing’s tactics violate its market-opening commitments under the World Trade Organization.

American prosecutors go further. They say the Communist Party is the ringleader of a global industrial spying operation.

Chinese leaders have promised stronger patent protections and other legal changes. Foreign experts say that will make little difference if the party won’t enforce them.

The share of companies in a survey by the European Union Chamber of Commerce that said they felt compelled to hand over technology doubled from two years ago to 20 percent.

“It is unacceptable that this practice continues,” a chamber vice president, Charlotte Roule, said Monday. “Ending its persistence needs to be a priority.”

Here are some tactics Beijing’s trading partners complain it uses to improperly obtain foreign technology.

The strongest tool in Beijing’s arsenal is the longstanding requirement for companies in most industries to work through state-owned local partners.

The goal is for the Chinese partner to learn and eventually displace its foreign competitor.

Some balked but thousands of companies cooperated as the price of admission to the most populous global market.

Many companies say Chinese partners abide by promises not to abuse their access to technology. But some say partners have copied chemical formulas, industrial processes and other secrets for their own operations, sometimes with local government support.

Beijing denies it forces foreign companies to hand over technology, but joint ventures won’t work without foreign technology and manufacturing expertise.

In the auto industry, China has promised to lift requirements for joint ventures and allow full foreign ownership by 2023. Experts say that suggests they believe Chinese automakers no longer need foreign tutors.

 Pressure to hand over technology pervades Chinese law and action by regulators.

Beijing promised when it joined the WTO in 2001 to treat Chinese and foreign companies equally. But 18 years later, business groups and governments say foreign companies still face special burdens, including sharing technology.

The European Union filed a WTO challenge last June to Chinese laws on technology licensing it says discriminate against foreign companies. It said China’s own companies are free to negotiate licensing terms, but Beijing dictates terms for foreign companies.

A law approved in March bans using “administrative measures” to compel foreign companies to hand over technology. Business groups welcomed that but said Chinese officials can still use other pressure tactics.

Business groups say Chinese regulators misuse a 2008 Anti-Monopoly Law to pressure foreign companies in negotiations on technology licensing.

The law includes an unusual provision prohibiting “abuse of intellectual property right.” Lawyers say that runs counter to the spirit of patents and copyrights, which are meant to encourage technology creation by giving the owner a temporary monopoly and the right to charge others for using it.

Lawyers said Chinese regulators sometimes intervene in contract negotiations and push foreign companies to accept lower fees by threatening to launch an anti-monopoly investigation.

Authorities also use “window guidance,” or verbal orders given in secret, to compel companies to support Chinese technology development in ways the government doesn’t publicly acknowledge.

A decade ago, for example, global automakers agreed to help Chinese partners create new local brands.

That injected foreign expertise into fledgling brands the Communist Party hoped eventually will compete in global markets in a way joint venture vehicles made under foreign brand names cannot.

It made life harder for automakers by spreading their resources more thinly and adding to competition in a glutted market. Despite that, global automakers said they had commercial motivations and regulators denied they applied any pressure.

The real reason? Industry researchers say regulators told automakers in private they had to cooperate if they wanted permission to expand production of their own brands.

Regulators also pressure foreign companies to help potential Chinese rivals develop technology.

Global companies in engineering, software, pharmaceuticals and other fields have set up research centers with Chinese partners. Many say they are to take advantage of China’s scientific talent pool, but such arrangements benefit potential Chinese competitors and are unusual abroad

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