Briefing: European firms say forced tech transfers rising in China

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China’s tech transfer problem is growing, EU business group says – Reuters

What happened: European businesses in China have reportedly been facing greater pressure to transfer technology to local companies. The European Union Chamber of Commerce in China said on Monday that 20% of the 585 participants reported forced technology transfer to maintain market access in an annual survey, an increase from 10% seen two years ago. In certain “cutting edge” industries the incidence of reported transfers was as high as 30% in chemicals and petroleum, for example, and 28% in medical devices, said European Chamber Vice President Charlotte Roule.

Why it’s important: The report echoes the US investigation into China’s alleged forced technology transfer under Section 301 of the Trade Act of 1974 which started two years ago. The Communist Party’s mouthpiece People’s Daily said in a commentary published Saturday that the Washington’s accusations on the issue were “purely fabricated” without any evidence. China has long been accused of adopting unfair legal practices requiring foreign enterprises to hand over technology to gain access to the world’s second-largest economy. China’s central government tried to reassure foreign investors by passing the Foreign Investment law in mid-March during the country’s Two Session meetings. The new law, which will take effect on Jan. 1, 2020, prohibits use of administrative measures to force technology transfer.