Donald Trump fires warning shots at China on patents

Washington: President Donald Trump said on Wednesday the United States was considering a big “fine” as part of a probe into China’s alleged theft of intellectual property, the clearest indication yet that his administration will take retaliatory trade action against China.

In an interview with Reuters, Mr Trump and his economic adviser Gary Cohn said China had forced US companies to transfer their intellectual property to China as a cost of doing business there.

The US has started a trade investigation into the issue, and Mr Cohn said the US Trade Representative would be making recommendations about it soon. “We have a very big intellectual property potential fine going, which is going to come out soon,” Mr Trump said in the interview.

While Mr Trump did not specify what he meant by a “fine” against China, the 1974 trade law that authorised an investigation into China’s alleged theft of US intellectual property allows him to impose retaliatory tariffs on Chinese goods or other trade sanctions until China changes its policies.

Mr Trump said the damages could be high, without elaborating on how the numbers were reached or how the costs would be imposed. “We’re talking about big damages. We’re talking about numbers that you haven’t even thought about,” Mr Trump said.

US businesses say they lose hundreds of billions of dollars in technology and millions of jobs to Chinese firms which have stolen ideas and software or forced them to turn over intellectual property as part of the price of doing business in China.

The president said he wanted the US to have a good relationship with China, but Beijing needed to treat the US fairly.

Mr Trump said he would be announcing some kind of action against China over trade and said he would discuss the issue during his State of the Union address to the US Congress on January 30.

Asked about the potential for a trade war depending on US action over steel, aluminum and solar panels, Mr Trump said he hoped a trade war would not ensue. “I don’t think so, I hope not. But if there is, there is,” he said.

In Beijing, foreign ministry spokesman Lu Kang said there were no laws in China to force foreign investors to transfer technology, but acknowledged such things may happen as part of “market behavior” between companies working with each other.

“There is absolutely no government meddling in these actions,” Mr Kang told on Thursday. “At the same time, I want to stress that China will resolutely protect its legitimate rights,” he added, without elaborating.

Jeffrey Schott, a senior fellow at the Peterson Institute for International Economics, said the penalties under Section 301 of the Trade Act of 1974, which authorised the investigation into China’s intellectual property practices, would probably include a package of both tariffs and restrictions on Chinese investment in the US. “I suspect the US measures will involve restrictions in areas where we don’t have WTO obligations,” Mr Schott said.