EU firms in China will not have to share know-how, says Premier Li

Summit chair Donald Tusk (left) and European Commission head Jean-Claude Juncker welcoming Chinese Premier Li Keqiang in Brussels. Mr Li's pledge at the annual EU-China leaders meeting yesterday follows similar offers to the United States and potenti
Summit chair Donald Tusk (left) and European Commission head Jean-Claude Juncker welcoming Chinese Premier Li Keqiang in Brussels. Mr Li's pledge at the annual EU-China leaders meeting yesterday follows similar offers to the United States and potentially signals an opening that European companies have long lobbied for.PHOTO: REUTERS

BRUSSELS • Chinese Premier Li Keqiang has promised his European Union hosts that Beijing will no longer force foreign companies to share sensitive know-how when operating in China and was ready to address industrial subsidies.

Marking a significant shift, Mr Li's pledge at the annual EU-China leaders meeting yesterday follows similar offers to the United States and potentially signals an opening that European companies have long lobbied for.

Summit chair Donald Tusk called it a breakthrough.

"European companies will enjoy equal treatment," Mr Li told a news conference following the three-hour summit with Mr Tusk and European Commission (EC) head Jean-Claude Juncker in Brussels, offering to set up a dispute mechanism to handle complaints by foreign companies in China.

Western governments have long complained that their companies are pressured into handing over technological know-how to Chinese joint-venture partners, officials or regulators as a condition for doing business in China. That technology is often subsequently used by Chinese competitors, undercutting Western companies, said the EU, which fears Chinese dominance in strategic industries.

Mr Tusk said it was the first time China had agreed to engage in discussions on reform of World Trade Organisation rules. China also agreed to address EU concerns over state subsidies to industrial firms.

"Both sides will intensify the discussions with the aim of strengthening international rules on industrial subsidies," said the two global trading powers in a final summit statement yesterday.

 

Diplomats reportedly agreed at the eleventh hour on the communique, which highlights European and Chinese determination to present unity in the face of US President Donald Trump's "America First" challenge to the multilateral order. The EU is China's No. 1 trade partner, while the Chinese market is the second biggest for exports from the bloc after the US.

While pressing China to cut industrial subsidies and open up more to foreign investment, Europe is resisting protectionism by Mr Trump, wary of his trade war against Beijing.

The EU is also keen for Chinese help in the fight against climate change after the US withdrew from a landmark international accord to cut greenhouse-gas emissions.

The Trump administration on Monday threatened a sharp escalation in transatlantic commercial tensions by proposing to impose tariffs on US$11 billion (S$14.9 billion) of US imports of goods from the EU in response to alleged European subsidies to planemaker Airbus, a rival of Boeing.

In a policy paper on China last month, the EU described the country as a "cooperation partner" in some areas and a "systemic rival" in others.

"This requires a flexible and pragmatic whole-of-EU approach enabling a principled defence of interests and values," said the March 12 paper by the EC, the bloc's executive arm.

REUTERS, BLOOMBERG

A version of this article appeared in the print edition of The Straits Times on April 10, 2019, with the headline 'EU firms in China will not have to share know-how, says Premier Li'. Print Edition | Subscribe