The China Technology Transfer Control Act of 2019 aims to limit export of technology and intellectual property (IP) to China. Individuals and firms will need a waiver to provide Chinese firms or nationals with technology.
The bill includes three main provisions: to control the export of US technology covered by the bill, to restrict exchanges of infringing products within the US, and to set forth a list of Chinese products that could threaten the US economy or be used to carry out human rights violations.
Some of the domains of science and engineering subject to this bill include civic aircraft, medical equipment, semiconductors, quantum computing, artificial intelligence (AI), and robotics. These domains are among the top US export industries challenged by Made in China 2025, an initiative to upgrade Chinese manufacturing from low-cost to innovation-driven products that could compete with industrialized economies. In addition, the adversarial relationship between China and the US as it relates to AI development has led to escalated fears that China, with its heavy investment in AI, might win a perceived "arms race."
The bill focuses on concerns related to intellectual property transfer. The 2017 IP Commission on the Theft of American Intellectual Property estimated that up to $600 billion dollars annually are lost by American firms due to Chinese infringement of their IP. In addition to these illegal infringements are lawful but forced technology transfers, which represent the target of this bill. The Chinese policy known as Trade-Technology-for-Market, in fact, requires foreign firms to enter into joint ventures with Chinese state-owned enterprises if they want to sell their products in China. Many companies have accepted the deal and shared their strategic technology. They considered that the size and growth of the Chinese market outweighed the risk of nurturing potential competitors. Requiring a license makes the transfer costlier, potentially swaying firms’ foreign investment decisions.
The bill also mentions national security concerns. Senator Josh Hawley (R-MO), sponsor of this bill, claims that “once China has the technology, it invariably finds its way to the Chinese military.” He explains that Chinese firms’ strong ties to their government transforms an economic issue into national security.