China violating free-trade pledges with tech plan, says business group

By Joe McDonald, AP

BEIJING — China is violating its free-trade pledges by pressing foreign makers of electric cars and other goods to share technology under an industry development plan that is likely to shrink access to its markets, a business group said Tuesday.

The report by the European Union Chamber of Commerce adds to mounting complaints Beijing improperly shields its fledgling developers of robotics, software and other technology from competition.

Technology is a growing flashpoint in trade tensions with Washington and Europe, which worry their competitive edge is eroding as Beijing buys or develops skills in semiconductors, renewable energy and other fields.

European companies express frustration Chinese enterprises have been permitted to acquire technology leaders such as German robot maker Kuka while most of China’s assets are off-limits to foreign buyers. In December, Germany blocked the Chinese purchase of a chipmaker, Aixtron, after Washington objected on security grounds.

The European chamber warned tactics Beijing is using to carry out its “China Manufacturing 2025” initiative might inflame sentiments in Europe and the United States in favor of trade controls.

The plan calls for China to be able to supply its own high-tech components by 2020 and materials by 2025 in 10 industries from information technology and aerospace to pharmaceuticals. A broad outline was issued in 2015 and officials have been gradually releasing details.

Against WTO Rules? Suppliers of electric cars and other goods are under pressure to hand over technology in violation of Beijing’s World Trade Organization commitments, the European chamber said. It said that also contradicts the ruling Communist Party’s repeated promises of equal treatment and to give market forces a bigger role in the state-dominated economy.

That strategy “is in fact a large-scale import substitution plan aimed at nationalizing key industries, or at least severely curtailing the position of foreign business in them,” the chamber said.

In a possible response to such criticism, China’s top economic official, Premier Li Keqiang, promised in a speech Sunday foreign companies would receive “equal treatment” under the manufacturing plan. He gave no details.