Beijing to pass new law banning forced tech transfers

BEIJING • China's Parliament will vote in March on a new foreign investment law that will ban forced technology transfers and illegal government "interference" in foreign business practices, the official Xinhua News agency reported yesterday.

The timetable suggests that the law will probably be formally approved then by the largely rubber-stamp legislature - accelerating a process that usually would take a year or more - as Beijing rushes to meet Washington's demands in a bid to de-escalate their trade war.

The full annual session of Parliament, which opens on March 5, tends to pass only select landmark legislation, with other laws being passed by its standing committee.

Parliament is unlikely to reject the law as its delegates are chosen for their loyalty to the ruling Communist Party and its agenda.

The Trump administration has accused Beijing of theft and forced IP transfers of intellectual property, demanding change and threatening further tariffs since trade tension flared between the two countries last year.

China has repeatedly rebutted such accusations.

The two sides yesterday began two days of talks in Washington - the highest-level discussions since United States President Donald Trump and Chinese President Xi Jinping agreed on a 90-day truce in their trade war in December.

The decision to accelerate the legislative process came after the National People's Congress Standing Committee convened a special two-day session this week to conduct a second review of the draft.

There is an "urgent need" for such a law to be passed as current legislation "could hardly catch up with the changing requirements in building a new system of open economy", said Justice Minister Fu Zhenghua, a Xinhua report said.

Once adopted, the law will replace three existing laws that regulate joint ventures and wholly foreign-owned enterprises.

Some law experts and business consultants have expressed scepticism about how far the legislation would protect the interests of foreign firms, given a general lack of rule of law in China.

As of October, there were almost 950,000 foreign-funded companies registered in China, accounting for investments exceeding US$2.1 trillion (S$2.8 trillion), according to Xinhua.

REUTERS

A version of this article appeared in the print edition of The Straits Times on January 31, 2019, with the headline 'Beijing to pass new law banning forced tech transfers'. Print Edition | Subscribe