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China rejects US charge of 'forced technology transfer' at WTO

Both sides have launched legal complaints to the WTO; a legal case could take several years to settle

Chinese ambassador to the WTO Zhang Xiangchen said the US accusations are baseless.


CHINA told the World Trade Organization's dispute settlement body on Monday that accusations by the United States concerning Beijing having forced companies to hand over technology as a cost of doing business in China were groundless.

Both sides launched legal complaints at the WTO over the issue earlier this year. "There is no forced technology transfer in China," Chinese ambassador Zhang Xiangchen told the meeting, according to a copy of his remarks provided to Reuters.

"According to the US's view, China forces the US companies to transfer technologies by imposing joint venture requirements, foreign equity limitations and administrative licensing procedures," Mr Zhang said. "But the fact is, nothing in these regulatory measures requires technology transfer from foreign companies."

Mr Zhang said the US argument involved a "presumption of guilt". The US Trade Representative believed US firms in China faced an obligation to hand over technology, while failing to produce a single piece of evidence.

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Some of its claims were "pure speculation", he said, adding that the USTR saw Chinese M&A activity as a Chinese government conspiracy.

Technology transfer was a normal commercial activity that benefited the US most of all, he said, while Chinese innovation was driven by "the diligence and entrepreneurship of the Chinese people, investment in education and research, and efforts to improve the protection of intellectual property".

Legal experts say Washington needs WTO backing to implement its tariffs as far as they relate to WTO rules, while China has rejected the tariff plan wholesale and resorted to WTO action to stop it.

Under WTO rules, if disputes are not settled amicably after 60 days, the complainant can ask for a panel of experts to adjudicate, escalating the dispute and triggering a legal case that can take years to settle.

The US, which launched its complaint on March 23, could have used the dispute meeting on Monday to take that step.

China could do so at next month's meeting.

But since the dispute erupted, US-China trade policy has been the subject of high-level bilateral talks. US President Donald Trump tweeted cryptically that "our trade deal with China is moving along nicely" but that it probably needed a "different structure".

The US put China's technology transfer policies on the agenda of Monday's meeting, without elaborating. A copy of the US remarks was not immediately available. Mr Trump has threatened to impose tariffs on up to US$150 billion (S$201 billion) of Chinese goods to combat what he says is Beijing's misappropriation of US technology through joint venture requirements and other sticking points such as the trade deficit between the two countries and Beijing's industrial policy.

Beijing has threatened equal retaliation, including tariffs on some of its largest US imports. The two sides are currently working to avoid a trade war. US Commerce Secretary Wilbur Ross will visit China early next month for another round of talks amid ongoing trade frictions between the world's two largest economies.

Mr Ross will visit China from June 2 to 4, the official Chinese news agency Xinhua reported on Friday, adding that Vice-Premier Liu He, China's chief negotiator in the trade dispute, had spoken with Mr Ross over the phone. It gave no further details.

The trade dispute took on added complexity this week when Mr Trump announced a national security investigation into imports of cars and trucks, a probe that could lead to tariffs against China as well as key US allies such as Canada, Mexico, Japan and Germany.

In the last round of talks in Washington in the middle of this month, China agreed to ramp up purchases of US agriculture and energy products, and the two sides worked towards a possible reprieve for ZTE Corp from a US ban on American companies supplying the Chinese maker of telecoms equipment. REUTERS

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