Is China’s Foreign Investment Policy to Blame for US-China “Forced Technology Transfer” and Trade Conflict?* – Comment on Trump Administration’s Section 301 Investigation of China

Li Liming (李黎明)1, Liu Haibo (刘海波)2,3 and Zhang Yafeng (张亚峰)2,3
1 School of Humanities, Economics and Law, Northwestern Polytechnical University, Xi’an, China
2 Institutes of Science and Development, Chinese Academy of Sciences, Beijing, China
3 University of Chinese Academy of Sciences, Beijing

Abstract: The paper presents a new analytical framework to discuss the effect of Chinese foreign investment policy on the international technology transfer absorbed by enterprises of different ownership. The US Trade Representative claims that the Chinese government’s requirements regarding joint ventures pressure US companies to transfer intellectual property to Chinese companies. However, we argue that: (1) Based on analysis of the technical fees of technology import contracts and the number of US patents transferred to enterprises registered in the Chinese mainland, China’s foreign investment policy does not pressure US companies to transfer unremunerated technology to Chinese companies.(2) The invention and utility model patents filed by Chinese joint-venture enterprises or Chinese partner companies do not show an abnormally rapid growth, which means China’s FDI policy does not force US companies to transfer intellectual property in exchange for China’s market. (3) After 2012, the US-China technology transfer absorbed by enterprises of different ownership showed a significantly positive effect in reducing China-US trade
surplus.

Keywords: technology transfer, intellectual property, trade balance, FDI policy, Section 301 survey
JEL Classification Codes: F13, F42, O33
DOI: 1 0.19602/j .chinaeconomist.2020.03.04

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