U.S. plans to probe China trade poli­cies

Trump ad­min­is­tra­tion weighs crackdown on Bei­jing for such things as forc­ing U.S. firms to share tech­nol­ogy.

Los Angeles Times - - BUSINESS BEAT -

Frus­trated by China’s in­abil­ity to pres­sure North Korea over its nu­clear pro­gram, the Trump ad­min­is­tra­tion is weigh­ing plans to pun­ish China for fail­ing to crack down on in­tel­lec­tual prop­erty thefts and forc­ing U.S. and for­eign com­pa­nies to share their tech­nol­ogy in re­turn for ac­cess to the vast Chi­nese mar­ket.

That’s ac­cord­ing to two peo­ple fa­mil­iar with the dis­cus­sion, who spoke on con­di­tion of anonymity be­cause the plans have not been made pub­lic.

The ad­min­is­tra­tion is con­sid­er­ing in­vok­ing the rarely used Sec­tion 301 of the Trade Act of 1974, which em­pow­ers Wash­ing­ton to in­ves­ti­gate Chi­nese trade prac­tices and im­pose sanc­tions — in­clud­ing tar­iffs — within months, ac­cord­ing to one of those peo­ple.

The in­ves­ti­ga­tion would fo­cus on China’s al­leged forced tech­nol­ogy trans­fer poli­cies and prac­tices, one of the peo­ple said, adding that the Trump ad­min­is­tra­tion could move to launch such a probe this week. The sec­ond per­son cau­tioned that no de­ci­sions or time­lines had been fi­nal­ized yet.

U.S. and other Western gov­ern­ments and business groups ac­cuse Bei­jing of un­fairly nur­tur­ing Chi­nese com­peti­tors — in such fields as med­i­cal equip­ment, re­new­able en­ergy and elec­tric cars — by re­quir­ing for­eign firms to hand over pro­pri­etary tech­nolo­gies in ex­change for be­ing al­lowed to op­er­ate in China.

Amer­i­can com­pa­nies have long com­plained that Chi­nese com­peti­tors steal their tech­nol­ogy and use it to com­pete against them. Be­ing forced to hand over tech­nol­ogy to gain ac­cess to the Chi­nese mar­ket adds to the risk.

China’s Min­istry of Com­merce did not im­me­di­ately re­spond to a faxed re­quest for com­ment.

Th­ese de­lib­er­a­tions come as the ad­min­is­tra­tion has sig­naled a harsher stance on trade with China than it took in the first six months of Trump’s pres­i­dency.

Pres­i­dent Trump tem­po­rar­ily set aside com­plaints about mar­ket ac­cess and cur­rency when he met with Chi­nese Pres­i­dent Xi Jin­ping in April in hopes Bei­jing would help pres­sure North Korea to end its nu­clear weapons de­vel­op­ment. But ten­sions bub­bled up last month at a U.S.-Chi­nese di­a­logue where U.S. Trea­sury Sec­re­tary Steve Mnuchin blamed China’s $347-bil­lion trade sur­plus with the United States last year on “gov­ern­ment in­ter­ven­tion in its econ­omy.”

Trump has also grown in­creas­ingly frus­trated by what he says is China’s re­luc­tance to rein in North Korea.

“I am very dis­ap­pointed in China. Our fool­ish past lead­ers have al­lowed them to make hun­dreds of bil­lions of dol­lars a year in trade,” he tweeted re­cently, “yet they do NOTH­ING for us with North Korea, just talk.”

“We will no longer al­low this to con­tinue,” he added. “China could eas­ily solve this prob­lem!”

The Wall Street Jour­nal and New York Times also re­ported that U.S. trade of­fi­cials are dis­cussing ways to counter piracy of copy­rights and patents and other in­tel­lec­tual prop­erty in China.

Last year, the U.S. ran a $347-bil­lion trade deficit in goods with China. De­spite Trump’s pledge to nar­row the deficit, the gap has grown this year — to $138.1 bil­lion in Jan­uary through May, up from $131.2 bil­lion in the first five months of 2016.

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