Just the Facts

Five Facts on the Tech Transfer with China

By Emma Petasis
May 8, 2019 | Blog

The joint venture and tech transfer between the U.S. and China are important components of the ongoing trade war between the two countries. Here are the facts.

1. Tech transfer is the sharing of technology to gain access to the market.

Technological transfer is a strategy that requires companies in other countries to form joint ventures with Chinese state-owned partners and share their technology in order to gain access to the Chinese market.[1]This gives China valuable technological information that would not likely be given up if there were free access to the market. CNN writes that Apple, Amazon, and Microsoft are three examples of companies that are in computer services partnerships with China in exchange for access to their market.[2]

2. The problem of technology transfer with China is not a new issue.

The U.S. International Trade Commission in 2011 laid out estimates of serious monetary losses due to the technological advances China makes through technology transfers with the U.S.[3]Intellectual property owned by the U.S. has been used and infringed upon by Chinese companies in previous U.S. administrations as well as the current.

3. Among the tariffs imposed on Chinese imports, Trump demanded Beijing end the forced transfer of American technology to Chinese companies.

Trump argued these practices result in systematic theft of U.S. intellectual property, and competitors using this technology is proving to be a problem for U.S. companies. The tariffs were imposed in an effort to force China into changing the way they do business with other countries, including the U.S.[4]In response, China argues that any transfers were legitimate, and that the problem is not to the extent alleged by the U.S.[5]


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4. The size of the Chinese market makes it hard to stay out of.

Econofact writes that if companies push back on technology transfer and stay out of the Chinese market, they could miss out on profits, and rival companies are given the opportunity to secure deals in such a massive market.[6]This forces U.S. companies to give up their technological secrets, for fear that they will be overrun by their competitors. 

5. “Made in China 2025” is Beijing’s plan to make China the “manufacturing superpower” in robotics and IT by 2025.

Made in China 2025 explicitly states that China intends to replace Western industry powerhouses, with Chinese companies. Critics argue that this plan relies on Chines joint-ventures which has produced a dependency on tech transfers with other nations, especially the U.S.[7]and could become a threat to technological companies.








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