US may need new tools and a fresh attitude to respond to China

Technology is considered the most important part of the U.S. economy. According to U.S. Trade Representative Robert E. Lighthizer, China maintains a policy of “forced technology transfer,” along with practising “state capitalism,” including buying U.S. technology companies and using cyber-theft to gain technology.

As a result, officials in the Trump administration were, by early 2018, taking steps to prevent Chinese state-controlled companies from buying American technology companies and were trying to stop American companies from handing over their key technologies to China as a cost of entering their market.

According to political analyst Josh Rogin: “There was a belief that China would develop a private economy that would prove compatible with the WTO system. Chinese leadership has made a political decision to do the opposite. So now we have to respond.”

The Trump administration is now basing U.S. policy on a recognition that the massive scale of China’s technology transfer effort cannot be addressed with the usual levers of trade policy. That means the United States and other countries will have to respond with new tools and a new attitude.

“Technology is probably the most important part of our economy,” U.S. Trade Representative Robert Lighthizer has said. “And we concluded that, in fact, China does have a policy of forced technology transfer; of requiring licensing at less than economic value; of state capitalism, wherein they go in and buy technology in the United States in non-economic ways; and then, finally, of cyber-theft.”

Lighthizer released the results of a months-long investigation by his office meant to form the basis of the new U.S. response. Its findings confirm what academics and the private sector have long known. His office estimates that Chinese illicit practices rob the U.S. economy of at least $50 billion annually.