In an unusual step, China’s National People’s Congress (NPC) is due to endorse a law meant to help end a bruising tariff war with Washington by discouraging officials from pressuring foreign companies to hand over technology.
The battle with China’s biggest trading partner is overshadowing the annual congress session, the country’s highest-profile event of the year, which brings 3,000-plus delegates to the ornate Great Hall of the People in Beijing for two weeks of speeches, meetings with senior leaders and political ritual to endorse the Chinese Communist Party’s (CCP) economic and social welfare plans.
A gathering of non-communist groups held at the same time brightens Beijing’s drab winter, drawing tech billionaires, movie stars and ethnic minorities in distinctive traditional dress.
That gives Chinese President Xi Jinping’s (習近平) government a platform for advertising changes aimed at ending the fight with US President Donald Trump that has disrupted trade in goods from soybeans to medical equipment.
The technology measure is part of a proposed law on foreign investment that aims to address complaints by Washington, Europe and other trading partners that China’s system is rigged against foreign companies.
Trump cited complaints Beijing steals or pressures companies to hand over technology when he slapped punitive tariffs on US$250 billion of Chinese imports in July last year.
Europe, Japan and other trading partners disapprove of the tariff hikes, but echo US complaints.
China has balked at changing its strategy for nurturing technologies that US officials worry might challenge US industrial dominance, but communist leaders face pressure to reach a settlement after economic growth sagged to a three-decade low of 6.6 percent last year.
On the domestic front, companies and investors are hoping officials announce details of how Beijing is to carry out promises to curb the dominance of state industry and support entrepreneurs who generate much of China’s new jobs and wealth. They are looking for details of a promised cut of up to 1.3 trillion yuan (US$200 billion) in value-added and other taxes.
The congress opens tomorrow with an annual “work report” on government plans by Chinese Premier Li Keqiang (李克強), the No. 2 CCP leader behind Xi and China’s top economic official.
State media have cited other potential topics including revising China’s patent law — another source of foreign complaints — and measures to encourage foreign investment in agriculture and technology and developing free-trade zones.
Chinese officials deny Beijing steals or pressures companies to hand over trade secrets and technology, but they are trying to mollify Trump and other governments by promising better legal protections.
“I think the [US and European] complaints have been reflected in the revision of the law,” Shanghai-based Citigroup chief China economist Liu Li-gang (劉利剛) said.
Under the proposed law, officials would be barred from using “administrative methods to force technology transfers.”
American Chamber of Commerce in China chairman Tim Stratford called the measure a “step forward,” but business groups say they need to see how it will be enforced.
It was unclear whether the vaguely worded measure would appease Trump. The American embassy in Beijing said it had no comment.
Companies have been disappointed in the past after “hearing positive words,” said Stratford, a former deputy US trade representative.
The European Union Chamber of Commerce in China said the law’s “vague language” gives regulators too much discretion.
The focus on “administrative methods” would leave officials free to use other pressure tactics, it said.
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