2010 September 25 Saturday
China Wants Free Western Electric Vehicle Tech

The Wall Street Journal reports on a plan by China's Ministry of Industry and Information Technology to force foreign auto makers to hand over electric car technologies in ventures where they would have only minority stakes.

The draft suggests that the government could compel foreign auto makers that want to produce electric vehicles in China to share critical technologies by requiring the companies to enter joint ventures in which they are limited to a minority stake, the executives say.

The plan is "tantamount to China strong-arming foreign auto makers to give up battery, electric-motor, and control technology in exchange for market access," says a senior executive at one foreign car maker. "We don't like it."

The United States let China join the World Trade Organization, granted China Most Favored Nation status, and let China run a huge trade surplus with its exports to the US. Now China wants to force American, European, and Japanese car makers and suppliers to hand over huge amounts of intellectual property that is key to their future competitiveness. Cheeky.

It was supposed to be okay to have lots of US factories shifted to China because we'd still make lots of money off of intellectual property. This is the Chinese way of saying they want it all. Will they also insist on owning the mines and farms that produce raw materials and farm products that they import?

So will the US Congress stand idly by while the Chinese implement this policy? I'm expecting complaints but no substantial policy responses.

Share |      By Randall Parker at 2010 September 25 03:05 PM  China

Mike M said at September 26, 2010 10:51 AM:

This is really a decision for the auto industry to make. Will they take the bigger short term profit by handing over proprietary business secrets to the Chinese or will they look at their bigger picture and tell the Chinese"No"? Currently, the upper hand we have on the Chinese, with respect to industry, is our technological prowess and ability to innovate. The Chinese have more workers and can produce the stuff for less, but after a century of communist rule, the average Chinese is better at following rules and doing things the way it has always been done than creating something new or different. The automakers should tell the Chinese government to take a hike and move their plants to other locations with cheap labor. The problem we have in the US is wages that are too high for the market because unions and politicians are in bed with each other. US workers are (or were), on average, more productive that many low wage foreign workers - but NOT to the extent of the current wage difference. Allow the free market to return that wage difference to its proper equilibrium and these jobs will return to the US.

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