China is said to be considering a new law on foreign investment that would emphasize the illegality of forced tech transfers — the practice of which has been a major complaint from Washington amid the ongoing tariff battle between the world’s two largest economies.
Multiple local outlets reported on the under-consideration law, and Beijing-based news agency Caixin said Sunday the current draft calls for the prohibition of local governments "forcing foreign businesses to transfer technology or illegally restrict(ing) their market access."
The draft law has been construed as a move from Beijing to address complaints raised by the U.S. and others about the way China treats foreign firms hoping to do business in the country. Those disputes, coupled with a giant trade imbalance between the two global super powers, have led to the ongoing tariff battle which has roiled global markets.
China has long maintained that forced tech transfers are against its policy — and do not occur whatsoever — yet foreign business and government groups say the practice has continued nevertheless. A new law from the country’s central authority may do little to quell concerns about what many describe as a regime of unwritten rules that force companies’ hands.
According to the news agency, the law speaks of treating foreign companies and domestic firms equally unless they are operating in certain areas specified on a "negative list."
If the draft is eventually signed into law, it could replace three existing laws regarding Chinese-foreign equity joint ventures, contractual joint ventures and wholly foreign-owned enterprises
