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China’s tech transfer problem is growing, an EU business group says

BEIJING (Reuters) – the Cases of European companies are forced to transfer technology in China are increasing despite Beijing saying: the problem does not exist, a European business lobby said, adding that the outlook on the country the regulatory environment “bleak”.

FILE PHOTO: A supervisor walks past, the EU and China flags ahead of the EU-China High-level Economic Dialogue at the Diaoyutai State Guesthouse in Beijing, China, June 25, 2018. REUTERS/Jason Lee

China’s trading partners have long complained that their businesses are often being forced to hand over valued technology in exchange for access to the world’s second largest economy.

The requirements imposed by the United States that China is tackling the problem are central in the two countries,’ the state of the war, which has seen both sides pile tariffs on billions of dollars of each other’s goods.

The European Union Chamber of Commerce in China said on Monday that the results of the annual survey revealed that 20% of the members reported to be forced to transfer technology for market access, with an increase of 10% two years ago.

Almost a quarter of those who reported such transfers, said the practice is currently underway, while the other 39% said that the transfer had occurred less than two years ago.

“Unfortunately, our members have reported that a forced transfer of technology will not only continue to exist, but that they happen at double the rate of two years ago,” European Chamber Vice President Charlotte Roule said at a news briefing on the survey.

“It could be caused by a number of reasons… Either way, it is unacceptable that this practice continues in a market as mature and innovative as China,” Roule said.

In certain “cutting edge” industry, the incidence of reported transfers was higher, such as 30% in chemicals and petroleum, 28% in medical devices, and 27% in the pharmaceutical sector, she added.

China ‘s most important newspaper of the Communist y, the People’s Daily, said Saturday that Washington’s complaints about the subject “made of air”.

In the middle of the spiral of the U.S.-china trade war, Beijing has the pressure on the EU to stand with it against the US President Donald Trump’s trade policy, although it is the world’s largest trading bloc, has largely rejected these efforts.

The EU has also increasingly frustrated by what they see as the slow pace of economic opening in China, even after years of the granting of China nearly unfettered access to the EU markets for trade and investment. However, the European officials openly say that they do not support the use of tariffs as a solution.

Trump earlier this month raised rates on $ 200 billion in Chinese imports to 25 percent of the 10 percent, and has said the jobs, allowing companies to move production from China to Vietnam and other countries in Asia.

The majority of the European companies in the room the survey said that their business strategies are not changed by the working class, even though it was completed by 585 respondents in January and February, also for the United States’ last rate increase.

At the time, 6% of the respondents said that they were moving or has moved production from China as a result of the rates and 4% said that they were considering or already decreased the investment in China. Forty-nine percent of the respondents affected by the U.S. tariffs, said their companies had covered the cost themselves and kept the prices the same.

The chamber added that the members had a “gloomy outlook” on China ‘ s regulations, with 72% of the members say that they are the expected obstacles to increase or stay the same in the next five years, even as the Chinese government has promised continued reform and opening.

Reporting by Michael Martina; Editing by Jacqueline Wong

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