June 16, 2021

China is considering prohibiting by law the forced transfer of technology

China is considering prohibiting by law the forced transfer of technology



The Chinese authorities have presented a bill on foreign investment that would replace three existing laws and that would prohibit the forced transfer of technology, local media reported today.

The bimonthly session of the Standing Committee of the National People's Assembly (ANP, legislative) will review throughout this week the bill, which if passed will replace three laws: on joint ventures of Chinese and foreign capital, on joint ventures without capital, and about totally foreign owned companies.

The draft notes that "China will continue to develop and improve its policies of liberalization and facilitation of foreign investments" in order to "create a stable, transparent and predictable environment," the state news agency Xinhua reported.

Thus, the bill stipulates that "all investment parties must decide the conditions of technological cooperation with respect to foreign investment through negotiations" and that "neither government departments nor officials can use administrative means to force transfers." technological ".

In this sense, the specialized magazine Caixin notes that "the project sends a strong signal of China's determination to open up its markets and protect the interests of foreign investors, addressing the main criticisms of the Trump administration during its commercial war with Beijing. "

In addition, the bill stipulates that "the intellectual property of foreign companies will be protected" and that "their benefits in China can be transferred freely outside the country."

"Local governments must rigorously comply with their policy promises and all kinds of legal contracts with companies with foreign funds," the bill says, adding, "Otherwise, foreign companies must be compensated for their losses." "

It also includes mechanisms to ensure equitable treatment for foreign businesses that "will boost its confidence in the Chinese market," Xinhua added.

These mechanisms include the so-called national treatment prior to the establishment and management of negative lists, equal support policies and equal participation in public procurement.

According to the agency, "these measures represent an institutional reform in response to new developments in economic globalization and changes in international rules for investment."

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