China will not use technology transfer as pre-condition for market access

Commerce Minister Chen Deming of China responded to questions on the so-called “forced transfer of technology” through written interview with Bloomberg. The full text is as follows.

Bloomberg: Investment environment in China has always been a topic of interest to foreign governments and companies. We’ve heard some companies complain about forced transfer of technologies from foreign investors to their joint ventures in China. Is that the case?

Chen Deming: Shortly after it joined the World Trade Organization, China conducted comprehensive review of its laws and regulations governing foreign trade and economic relations. It revised those not conforming to WTO rules and its accession commitments, and canceled stipulations of forced technology transfer. Taking this opportunity, I want to reiterate that the Chinese government is committed to the policy of reform and opening up and welcomes and encourages, as always, foreign investment. Technology transfer and technological cooperation shall be decided by businesses independently and will not be used by the Chinese government as pre-condition for market access.

Closer Cooperation at Sub-national Levels Serves as Powerful Driving Force of Trade and Economic Relations between China and the US.

Bloomberg: Why has China been strengthening its commercial and investment ties with American states and big cities? Is that because American states are now more open to Chinese investment?

Chen Deming: A stronger cooperative relationship between China and theUnited Statesis in the fundamental interests of Chinese and American people, and is also the consensus and shared will of all walks of life in both countries. 38 and 176 sister relations have been forged between the two sides at provincial and city levels respectively. Exchanges and cooperation across the two countries in trade, investment, energy, environment and cultural fields are being broadened at sub-national levels.

As the financial crisis is spreading and worsening, all countries are faced with the task of promoting economic growth and creating more jobs. China and theUSare seeing greater interest at provincial and city levels to strengthen trade and commercial ties. Such a will of cooperation is shared by both Chinese provinces and cities and American states. For 29 out of the 50 American states China has been one of their top 3 markets of exports. 45 states increased their export trade to China between 2007 and 2010, among which 10 states including Vermont, Oregon and Montana grew their exports to China by over 100%. More than 30 investment and trade promotion offices have been opened in China by American states. Last year, the Ministry of Commerce of China set up a “US Pavilion” at the China Import and Export Fair, the biggest and most well-known trade fair in China, to host governments and companies of some American states were invited to set up booths and display their products. This invitation was warmly echoed by the US side.

Closer communication and cooperation at sub-national levels serves as a solid foundation for a stronger friendly relationship between China and the US as well as a powerful driving force of bilateral trade and economic relations. We are hopeful that the comprehensive cooperation at sub-national levels between China and the US will enable the bilateral trade and economic cooperation to generate more benefits for both peoples.

China Will Adopt Various Measures to Maintain Stable Growth of Foreign Trade.

Bloomberg: When visiting some trading companies in Guangzhou, Premier Wen Jiabao said export and import policies will maintain overall stability. Should there be any change, it will be more of a support than restraint. Given lackluster demand from the United States and Europe, what measures will be taken by the Chinese government to keep stable growth in export?

Chen Deming: China’s foreign trade growth has slowed down in the second half of 2011. Export in January this year cannot make us optimistic and is expected to have negative growth year-on-year due to Chinese New Year and other factors. Chinese trading companies, particularly small and micro businesses, have come under growing pressure. Foreign trade, an integral part of the Chinese economy, is essential to people’s life and jobs. Premier Wen Jiabao has said on various occasions that the government will adopt measures to help businesses overcome difficulties in order to maintain stable growth in foreign trade.

First, we will keep the overall stability of our export and import policies. For example, we will keep export rebate policy basically stable and speed up its implementation. We will maintain the overall stability of RMB exchange rate and relevant policies of processing trade. Should there be any fine-tuning, it will be supportive rather than discouraging. Second, we will take concrete measures to ease the tax burden on trading companies and give more financial support. For example, we will speed up the pilot program for replacing business tax with VAT for small and micro businesses and improve structural tax reduction policy. We will introduce a creditworthiness assessment and rewarding system on small businesses and encourage qualified commercial banks to give more credit to small and micro businesses. We support small and micro businesses in raising funds through the stock market and give more support to export insurance. Third, we will intensify trade promotion. We will step up efforts in building business platforms such as e-commerce, professional markets, demonstration centers at home and broad, and marketing networks etc. we will vigorously carry out trade and investment promotion events, such as Canton Fair, China International Fair for Investment and Trade inXiamen, Expo Central China, and China-Eurasia Expo etc.

While taking measures to stabilize exports, the Chinese government will continue to energetically expand imports and further balance foreign trade. For example, we will do more in removing unreasonable restrictions in imports, promote import facilitation, and formulate financial policies to encourage and support imports.

Source: Ministry of Commerce Website; http://english.mofcom.gov.cn/aarticle/newsrelease/significantnews/201202/20120207959772.html

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