China ready to retaliate as US launches IPR probe
Any protectionist measures the US government might take would impair bilateral economic and trade relations between the US and China and have a negative impact on the interests of companies of the two countries, China's Ministry of Commerce (MOFCOM) said on Tuesday, after US President Donald Trump ordered an investigation into China's intellectual property practices.
"If the US takes actions that impair trade relations, disregards the facts and disrespects multilateral trade rules, China will not sit idle but take necessary measures to safeguard our legitimate rights," the MOFCOM statement said.
In the presidential memorandum, Trump authorized the US trade representative Robert Lighthizer to determine whether China's relevant laws, policies or practices would hurt US intellectual property rights (IPR), innovation or technological development.
On the same day, Lighthizer issued a statement saying that he would conduct a thorough investigation and, if needed, take action to preserve the future of US industry.
The MOFCOM statement said economic cooperation between China and the US has improved since Chinese President Xi Jinping and Trump met in April.
"The US should cherish the sound conditions and cooperative trend of the two countries' economic and trade relations," the statement stressed.
Bai Ming, a research fellow at the Chinese Academy of International Trade and Economic Cooperation, told the Global Times on Tuesday that the proposed investigation would "cast a shadow" on the two countries' trade relations, which have already improved in recent months.
China-US trade surged by 14.3 percent in the first seven months in 2017 compared to the same period last year, customs data showed.
Bai said if friendly China-US economic relations are damaged because of this issue, China would also take corresponding actions, which would affect not only Chinese companies but many US ones as well.
"The US probe will have a short-term negative impact on Chinese companies. But in the long-run, after China retaliates, many US businesses will also be impaired. I think the US government is a bit short-sighted," he said.
He said it's difficult to say what specific measures China would take against US companies. "In general, what was solved through negotiations must be resolved through sanctions," he said.
Direct Chinese investment in the US reached $45.6 billion in 2016, three times the 2015 level, according to media reports.
Bai also said that many US industries rely heavily on China, such as agriculture and aviation.
Martin Petch, vice president of US-based ratings agency Moody's, said that the broad architecture of US-China trade ties would remain stable despite such friction.
"China's GDP growth is largely dependent on domestic demand. As such, US measures targeted at specific sectors are unlikely to have an economy-wide impact," Martin said, according to a statement Moody's sent to the Global Times on Tuesday.
Sound IPR protection
Reuters reported on Tuesday that Trump administration officials have estimated that China has stolen intellectual property worth $600 billion.
The report added that China has a policy of forcing foreign companies to turn over technology to Chinese joint venture partners.
Chang Yachun, a lawyer specializing in IPR issues at Beijing Kangda Law Firm, said that it's unfair to say that Chinese joint venture companies have "stolen" intellectual property from their US partners.
"Commercial conduct is voluntary and restricted by contracts signed by companies. It's not a matter of forcing," he said.
Chang said China has a relatively sound legal system to protect IPRs. For instance, the central government has set up three courts to deal with IPR cases. China's current laws on IPR protection are also in line with international law.
"As China's technologies improve, Chinese goods also require IPR protection," he told the Global Times on Tuesday.
But he admitted flaws in the domestic IPR system exist.
"The judicial system for IPR cases is not mature in many less privileged regions in China," he said.
He also noted that judging IPR infringement cases is not easy, and one-sided investigations from the US should not be that convincing in a legal sense.
The MOFCOM statement noted that China has improved legislation of intellectual property rights, and the achievements made have been recognized both domestically and internationally.