President Trump is expected to direct the U.S. Trade Representative to open a 301 investigation into China’s violation of U.S. intellectual property rights, especially through forced technology transfer. This signals a tougher trade stance on the part of the administration, but it will be some months before it is clear how serious U.S. actions will be.
High-tech U.S. companies cannot currently do business in China unless they form joint ventures with local partners and turn over key technology to those partners. In sectors such as cloud computing, Chinese law also prevents the use of the foreign brand name, which would put U.S. firms at a disadvantage in the future if China ever does open up. American companies agree to these technology transfers because it’s the only way they can access the second-largest market in the world, rapidly on its way to number 1.
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