Ever since negotiators from the US and China sat down in Beijing after a Christmas meltdown in global markets, US President Donald Trump has sought to calm investors and claimed that his trade talks are making great strides — but that glosses over a more uncomfortable reality.
According to people close to the discussions, the two sides have so far made little progress on the issue that any deal Trump strikes with China might ultimately be judged on: ending what the US has dubbed as decades of state-coordinated Chinese theft of US intellectual property (IP).
That stands in contrast to movement on other fronts that has lifted stocks in recent sessions, including a Bloomberg report on Friday last week that China offered a path to reducing its trade surplus to zero by 2024.
The next round of talks is scheduled for Jan. 30 and 31, when Chinese President Xi Jinping’s (習近平) top economic emissary, Liu He (劉鶴), is to visit Washington.
China’s alleged intellectual property theft and its related practice of forcing foreign companies to hand over technology to gain access to its market formed a large part of the agenda for the three days of talks earlier this month.
However, the discussions amounted more to an airing of grievances than constructive negotiations, participants and others briefed on the talks said.
US Trade Representative Robert Lighthizer confirmed the lack of progress in discussions on structural issues such as intellectual property in a meeting with lawmakers last week, congressional aides said.
While it is unclear if the US made any new demands on intellectual property during the latest round of talks, last year it called on China to eliminate specific policies and practices linked to technology transfer, cease government-sponsored cybertheft, strengthen intellectual property enforcement and end government support for industries covered by the “Made in China 2025” plan.
China has publicly denied the US’ claims regarding intellectual property theft and the forced transfer of technology, and insists that it has lived up to the commitments it made when it joined the WTO in 2001, including by establishing special intellectual property courts.
The intellectual property stalemate gets to the heart of Trump’s trade wars and questions over his ability to turn the leverage he has created with tariffs into meaningful Chinese policy changes.
His administration has begun a federal investigation into Huawei Technologies Co (華為) for allegedly stealing technology secrets from US companies, which comes shortly after it announced a “China Initiative” designed to prioritize trade theft cases and litigate them as quickly as possible.
The tussle over China’s treatment of intellectual property gets at one of the central complaints levied by foreign companies doing business in China or competing with increasingly aggressive Chinese rivals: that China’s rapid rise has as much to do with a state-coordinated campaign to sprint up the value chain as it does with reforms over the past 40 years.
That is part of the reason business groups who have otherwise opposed Trump’s tariffs have been more willing to back his approach to China and are now insisting that any deal must tackle intellectual property issues to be meaningful.
“We have not been particularly enamored of the tariff route that the administration has gone with, but there is no question that these are serious issues,” said Charles Freeman, a top Asia executive for the US Chamber of Commerce. “We agree with the diagnosis. Just not the prescription.”
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