Forced Technology Transfer in the Case of China

Abstract

Forced technology transfer (“FTT”) has been the most acrimonious issue in the current U.S.–China trade war. The United States has imposed several rounds of hefty tariffs on China because of the latter’s FTT practices. This Article provides a comprehensive analysis of China’s alleged FTT practices. The United States has accused China of using ownership restrictions and administrative processes to compel United States’ firms to transfer technology to Chinese entities. While China has undertaken a series of reforms prohibiting FTT practices and has signed the Phase-One trade agreement with the United States, the concerns of its trading partners and foreign businesses over FTT have not been entirely alleviated. This Article notes that China’s FTT practices are not uncommon in the developing world. However, such “market-for-technology” or quid pro quo policies have been increasingly scrutinized in the international investment, trade, and intellectual property policy settings in recent years. Moreover, despite China’s above-mentioned reforms, FTT remains an unsolved issue in the current international economic environment.

Keywords: forced technology transfer, trade secret, trade war, joint venture, foreign investment, Phase-One trade agreement