China to consider significant changes to foreign investment and intellectual property legislation

China to consider significant changes to foreign investment and intellectual property legislation
Photo: Reuters/Aly Song
Photo: Reuters/Aly Song

China’s highest legislative body—the National People’s Congress Standing Committee—will begin a five-day session today, mulling over foreign investment and revisions to intellectual property laws. It comes amid mounting speculation that China and the United States will reach a new year trade deal to end their nine-month trade war.

At the heart of US complaints is a fundamental lack of trust in the Chinese legal system enforcing any laws. For example, lower courts often reach judgements without hearing evidence from foreign companies. Another big complaint is forced technology transfers from US to Chinese companies in joint ventures. Washington puts the cost at $600 billion a year in losses to the US economy—a sum that Beijing denies.

The prospects of any law changes are good, as it is in line with China steadily strengthening its IP laws over the past year, including the establishment of 16 specialist IP Courts and increased fines. However, they are unlikely to satisfy the Americans unless they give greater procedural protections to foreign companies in the legal system, especially in the provincial courts. Furthermore, Beijing is yet to fully acknowledge that technology transfers are even an issue. Ultimately, the law changes are unlikely to resolve the trade dispute in the short-term.

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