No evidence foreign firms forced to transfer tech: industry insiders

Workers check cargo trains to be exported to Argentina at a plant in Ziyang, Southwest China's Sichuan Province in December 2017. Photo: VCG

The US is urged to correctly understand the Made in China 2025 initiative, which adheres to the principles of transparency, openness and fairness, while the US' 301 investigation is groundless and has distorted the meaning of this initiative, China's Ministry of Commerce (MOFCOM) said Tuesday.

Made in China 2025 aims to propel the upgrade of China's manufacturing sector, which is open to all companies operating in the country, including domestic firms and foreign-owned enterprises, MOFCOM said in a post published on its WeChat account.

In fact, several US companies have already taken part in projects related to the initiative, such as the C919 aircraft program, which is part of China's ambitious move to elevate the status of its aviation industry, according to the website of the Commercial Aircraft Corporation of China.

Companies like GE and Honeywell were major suppliers for the C919, which made its maiden flight in May 2017.

The initiative includes indicators that form a predictable guideline for future industrial development, but they are not mandatory, MOFCOM said.

The Section 301 Investigations under the US Trade Representative Office (USTR) reflect its concerns over the possibility that China may one day surpass the US in high-end manufacturing, driven by the integration of informatization and industrialization, Cong Yi, an economics professor at Tianjin University of Finance and Economics, told the Global Times on Tuesday.

"The US is seeing the writing on the wall that its supremacy in technology and innovation is likely to be challenged one day," he said.

By 2020, 40 percent of necessary parts and machinery should be supplied domestically in the aerospace, telecommunications, power generation and machine industries, according to the Made in China 2025 initiative, details of which are published on the government's website. And by 2025, 70 percent of core equipment and basic materials will be supplied domestically.

In fact, the US government has misinterpreted the initiative, particularly in terms of understanding the targets outlined by the Chinese government. "It's just a common way of expression for industrial planning, and not fixed indicators to be reached," Cong said.

The USTR's report said that Made in China 2025 sets explicit market share targets that are to be filled by Chinese producers both domestically and globally in dozens of high-tech industries. Foreign technology acquisitions through various means remain a prime focus under the initiative, because China is still catching up in many of the areas prioritized for development, while US companies are frontrunners.

Made in China 2025 is in line with China's obligations under the WTO structure, which is transparent, open and not discriminatory, Chinese Vice Commerce Minister Wang Shouwen told a press briefing on April 4.

Wang also noted that many other countries have similar guiding indicators and planning, such as the National Information Infrastructure under the former Clinton administration in the US and Barack Obama's plans to double US exports, which were both guiding objectives.

Some companies in high-tech and manufacturing sectors the Global Times contacted on Tuesday said there has never been an issue for foreign enterprises in terms of the technology transfer mechanism in China, which is a market-driven action.

"There are two ways of introducing technologies from foreign firms, one is paying patent fees, the other is setting up a joint venture," said a source at a State-owned shipbuilding company that also produces military products like submarines and missile destroyers.

"It's about trading technologies for larger market shares," the source said, asking not to be identified.

Fair tech transfer

WTO members agree to facilitate the provision of technical assistance to other members, especially developing countries, according to the WTO's detailed presentation on tech transfers.

"It has been always a voluntary move for foreign companies in China to work with their Chinese counterparts in terms of technology cooperation, which is a choice companies make themselves," Cong said.

There is no concrete evidence that foreign companies have been forced to trade their technologies to their Chinese partners, said another source close to the semiconductor industry, who also refused to be named.

For example, the national semiconductor plant based in Wuhan, Central China's Hubei Province, has hired some engineers from South Korea, which is also a move to attract more foreign talent to the country, he noted.

Working with foreign firms in the chipmaking sector is more like coordinating with each other to gain reciprocal benefits.

"By working with Chinese companies, foreign firms have access to a larger market, more support facilities and lower-end consumers, so why not work with them for the sake of business profits?" he said.