China Considers Domestic Policy Changes

As high-level U.S.-China trade talks continue to take place, China has announced it is considering changes to government policies concerning technology transfer -- an area of key concern for the U.S. and a catalyst for the ongoing trade war. China said it held vice-minister-level talks with the U.S. over the phone late last week, according to a statement on its Ministry of Commerce’s website. The two sides exchanged views on trade balance and enhancement of intellectual property rights protections during the call and made "new progress," the ministry said. They also discussed arrangements for next call and visits. China and the U.S. held a same-level phone call on December 19. Meanwhile, new efforts to address policies that motivated U.S. trade actions against China have also surfaced. China is considering a new law on foreign investment that would reiterate the illegality of forced technology transfer. The measure could replace three existing rules on wholly foreign-owned enterprises, Chinese-foreign equity joint ventures and contractual joint ventures. Forced technology transfers were a key issue cited by the U.S. when it initiated trade actions against China earlier this year. A Section 301 investigation conducted by the Office of the U.S. Trade Representative found Chinese government "acts, policies and practices" promoted forced tech transfer, deeming such actions "unreasonable or discriminatory" and a burden to U.S. commerce. The conclusions of report were the motivating factor for tariffs the U.S. went on to impose on scores of Chinese imports. That initial round of duties marked the beginning of a trade war between the two nations that escalated throughout the year.