Limitations of the New Intellectual Property Reforms

Though reforms in IP remain a strong demand of the Trump administration, there exists a significant gap in the Chinese understanding of US requirements and the actual reforms being undertaken by the Chinese government towards that end.

Beijing Intellectual Property Court

Kuldeep Saini, Research Intern, Institute of Chinese Studies, Delhi

One of the major catalyst for the ongoing trade war between China and the United States is the question of Intellectual Property rights (IPR) protection to foreign firms in China. Even after months of discussions and negotiations, an agreement seems elusive. China recently imposed tariffs worth US$60 billion in retaliation to the tariff hike that had been imposed on Chinese goods by the US. The investigation report submitted by United States Trade Representative (USTR) Robert Lighthizer on 22nd March 2018 cited Section 301 of the US Trade Act of 1974[1] to discuss China’s engagement in policy of transfer and theft of Intellectual Property (IP) technology from foreign firms. Ever since, China has committed to enhance its IP protocols by 2020 through the attainment of high levels of IP regulations on utilisation, administration, protection and creation.

The latest step in this regard are the amendments made to the Trademark Law of the People’s Republic of China (PRC) on 23 April 2019 at the 10th session of the Standing Committee of the 13th National People’s Congress (NPC). Though reforms in IP remain a strong demand of the Trump administration, there exists a significant gap in the Chinese understanding of US requirements and the actual reforms being undertaken by the Chinese government towards that end.

This article discusses the constraints faced by the Chinese Government in deescalating the ongoing trade war with the US despite the it having undertaken three major intellectual property reforms. A discussion of the three reforms undertaken by the Chinese government follows.

First, the measures governing the transfer of intellectual property rights overseas were issued on 18 March 2018 by the State Council’s General Office. These reforms state the complete opposite of what the world understood by Trump’s claim of IP theft by China. The changes mandate the reduction in IP related theft by putting the onus on US firms that are in a merger with domestic Chinese companies. They fulfil the purpose of implementing the regulations and setting forth the procedures for overseas transfer of intellectual property for the foreign companies having mergers with the domestic companies. However, while China’s State Intellectual Property Office (SIPO) claims transfer of more than USD 4 billion intellectual properties from China, the numbers fail to reflect the home conditions for foreign companies. These structural changes fail to focus on the internal regulations of IP in China while considering the export of technology as a priority concern for the Chinese government.

The significant change is the involvement of relevant governmental departments like Forestry and Ministry of Commerce (MOFCOM) and departments looking at technology and agriculture in a more orderly and legal manner. This increases the processing time in receiving the patent rights. As of 2017, the total numbers of patent applications received in China were 1.2 million out of which only 3,26,000 were approved. These reforms further discourage the trade incentives of foreign companies to establish themselves in the Chinese market.

Second, the establishment of the appellate-level intellectual property tribunal on 1 January 2019 by the Supreme People’s Court of China (SPC) reflects the concrete structural steps undertaken to strengthen the IP protection laws. According to Zhou Qiang (Chief Justice of SPC) there has been an increase of 41.8 per cent in the IP cases resolved in 2018 and the new IP court will add to these numbers. The major point of contention in the first quarter of the year highlights the lack of resources, enlisting of powers, persistence and professionalism in handling the IP cases of foreign companies. Another concern with the new IP court as stated is the unknown statistics about the IP cases of foreign firms that are currently under review. This creates an asymmetry of information for scholars and other countries attempting to analyse the efficiency of China’s IP Court.

The verdict of the first case in IP Court came out in just two trials embodying the idea of “protecting innovation innovatively”. However, the speed at which the decision was made led the foreign companies to fear that the verdict was pre-decided. This also raises the question of which court’s verdict has the final say in the IP matters as these cases are still being directed to the earlier SPC and not to the new IP Court. The development of a national level appeals court might prove to be insufficient to tackle the current situation for international businesses fear that their proprietary technology could be stolen at a regional level.

Third, the reforms in the Trademark Law and Anti-Unfair Competition Law issued on 23 April 2019 did not follow the usual process for public comments. The primary concern regarding these positive changes is whether they will be followed by the necessary laws on transparency of the enforcing and implementing agencies like National Intellectual Property Administration (CNIPA) that still awaits additional clarifications related to administrative procedure regulations. This concern arises due to the inability of IP related cases that involve technical, confidential or business information that are not reported on public databases. It is hard for foreign companies to comply with the requirements raised by the new NPC reforms resulting in the current slowdown of foreign related cases. The reforms further fail to restrict the fraudulent activities such as claims of trademarks (TM) with bad faith and no commercial usage. The use of language in the recent reform of Article 4 highlights the need for commercial use of the trademark while applying. Thus, the US government and firms see these reforms as a state encouragement for violating international intellectual property rights.

Overall, it can be accepted that China is firmly aiming to be the hub of technological innovation. But with the escalation of trade war with US (increasing tariffs to 25 per cent) has added heavy pressure on the Chinese government to negotiate the opening of the Chinese economy with effective protection to foreign technology. However, one has to agree that the current reforms fail to address the major US concern with respect to forceful technology transfers. The Chinese government needs to accommodate the international guidelines of relaxing contractual norms with respect to foreign companies in order to prevent the slowdown of its economy due to trade war.

[1] Section 301 authorizes the US President to take all appropriate action, including retaliation, to obtain the removal of any act, policy, or practice of a foreign government that violates an international trade agreement. Section 301 cases can be self-initiated by the (USTR). Thus, Trump initiated the tariff imposition on China.

Wang Huning: China’s Amit Shah

Jabin T. Jacob, PhD, Fellow, Institute of Chinese Studies

If Shah’s job is to help Modi do the electoral math and draw up strategies to win elections, it is Wang’s job to help create the narrative that legitimizes Xi Jinping in power in an authoritarian system.

As the National People’s Congress in China cleared a constitutional amendment on Sunday allowing President Xi Jinping to remain president for life, here is a look at Xi’s closest confidante and politburo member Wang Huning, who is also known to be the brain behind President Xi.

Wang has been speechwriter and ideologue to three successive General Secretaries of the CPC –- Jiang Zemin, Hu Jintao and now Xi. Many key concepts for these three leaders have been fashioned and refined under Wang’s watch in the Party’s Central Policy Research Office since 2002 and later as a member of the Central Secretariat.

Indeed, one might wonder if China’s – and President Xi Jinping’s — slow turn towards a more assertive stance has not been influenced also by Wang’s personal ideological proclivities conveyed through the mouths of China’s leaders.

In practical terms, Wang Huning is to Xi Jinping what Amit Shah is to Narendra Modi. If Shah’s job is to help Modi do the electoral math and draw up strategies to win elections, it is Wang’s job to help create the narrative that legitimises Xi Jinping in power in an authoritarian system Continue reading “Wang Huning: China’s Amit Shah”

Term Limits Off for Xi: Some Reflections for India

Jabin T. Jacob, PhD, Fellow, Institute of Chinese Studies

When China’s National People’s Congress – the rough equivalent of India’s Lok Sabha, but toothless – meets in the coming week it has to deal with a proposal by the ruling Communist Party of China to amend the state constitution to remove term limits for the President of the state. Coming from where it does, this is pretty much a direct order to the NPC to remove the term limits.

Removing term limits for the President, imposed in 1982, is a roundabout way of saying that the norm of two terms for the CPC General Secretary – Xi’s more powerful avatar – too, is not set in stone. Continue reading “Term Limits Off for Xi: Some Reflections for India”

India Becoming a Threat in Chinese Imagination

Hemant Adlakha, professor of Chinese at Jawaharlal Nehru University, New Delhi and Honorary Fellow, Institute of Chinese Studies (ICS), Delhi.

As the new year gets underway, and Chinese foreign policy analysts join their counterparts around the world in assessing the events of 2017, the emerging international relations (IR) discourse in Beijing is quite a revelation — at least to the Japanese and Indian strategic affairs community.

While most Chinese believe Japan to be the second biggest threat to China’s “peaceful rise,” according to a few Chinese experts, the rising global profile of India, especially under the “right-wing” nationalist Prime Minister Narendra Modi and his Bharatiya Janata Party (BJP), has gone unacknowledged. Continue reading “India Becoming a Threat in Chinese Imagination”

Fluffy Ambassadors: China’s Panda Diplomacy

Preethi Amaresh, Research Officer, Chennai Centre for China Studies (C3S)

The giant panda has proven itself to be an instrument of foreign affairs and its use as a soft power tool has played a part in International relations. Pandas are considered to be a symbol of peace for China. China’s policy of sending pandas as diplomatic gifts was revitalized in 1941 when Beijing sent two pandas to the Bronx Zoo as a “thank you” gift on the eve of the United States entering World War II. This stimulated the relationship between countries, which in turn increased China’s soft power in the panda-receiving country. Mao Zedong, the founding father of the People’s Republic of China, often engaged in panda diplomacy in the 1950s, sending the bears as gifts to North Korea and the Soviet Union.

According to one theory, the movement of pandas from China to another country means that the other country accepts the extension of “China” on its territory. It all began in 1941 where Soong Mei-Ling (First lady of the People’s Republic of China) sent the first batch of pandas as gifts to the U.S. In 1949, after the foundation of the People’s Republic of China, more giant pandas were shipped abroad. One well-known example is when the Chinese government presented two pandas to U.S President Richard Nixon during his visit to China in 1982, which turned out to be an enormous diplomatic success with respect to China’s establishment of relations with the U.S. Continue reading “Fluffy Ambassadors: China’s Panda Diplomacy”

Nepal’s Views on the Doklam Standoff

Avadhi Patni, Research Intern, Institute of Chinese Studies, Delhi

The Doklam standoff between India and China has caused security, economic as well as political concerns for other countries of the South Asian region. This article explains general views and opinions of Nepal on the Doklam standoff. Nepal has signed a Treaty of Peace and Friendship with both India (Ministry of External Affairs 1950) and China (Friedrich Ebert Stiftung 1960). It has two tri-junction points with India and China and its dependency on both the countries raises security as well as economic concerns for Kathmandu.

One tri-junction point between Nepal, China and India is at Lipulekh in western Nepal and the other is at Jhinsang Chuli in eastern Nepal. Concerns for Nepal started in 2015 when India and China signed a bilateral agreement to increase trade through Lipulekh but without any consultation with Nepal. This tri-junction point is considered crucial by Nepal for developing it as an economic bridge between India and China. Following this event was the 2015-2016 India-Nepal border blockade. These incidents have created a popular opinion in Nepal about India being at fault in the current standoff in Doklam (Baral 2017).

A statement by Gopal Khanal, the foreign policy advisor to the ex-Prime Minister K.P. Sharma Oli, Continue reading “Nepal’s Views on the Doklam Standoff”

Opening Doors Southwards: China’s Increasing Presence in Nepal

Aakriti Vinayak, Research Intern, Institute of Chinese Studies, Delhi  

China is making its influence keenly felt in Nepal today. China is using different strategies from road connectivity, hydroelectric projects to using soft power as an approach to forge linkages with Nepal. China’s concentrated effort to use soft power diplomacy in Nepal – with heavy investments in religion, education and tourism – has been a success on the high tables and between the government elites, relations have been institutionalised. One sees a prospective future for Nepal where there is an attempt to tilt more and more towards China – on almost every front – economic, cultural and regional. When Nepalese president Bidya Bhandari released the Nepalese edition of the book, Governance of China by Chinese president Xi Jinping, Upendra Gautam the General Secretary of China Nepal Study Centre said that the event befittingly heralds Nepal and China relations into the 21st century kinship where soft power plays a paramount role (Gautam 2016).

Under former Nepalese prime minister Prachanda, China started using Buddhism as a tool of soft power by Continue reading “Opening Doors Southwards: China’s Increasing Presence in Nepal”

In the Wake of Doklam: India-China Relations Entering a New Phase

Jabin T. Jacob, PhD, Fellow, Institute of Chinese Studies

This article was originally published as,‘भारत-चीन संबंध नये दौर में, in Rashtriya Sahara, 29 July 2017. The original English version follows below the Hindi text.

भारत के राष्ट्रीय सुरक्षा सलाहकार अजित डोभाल बीजिंग में ब्रिक्स देशों के राष्ट्रीय सुरक्षा सलाहकारों की बैठक में शिरकत करने चीन पहुंच चुके हैं। सभी निगाहें इस तरफ हैं कि क्या भारत और चीन इस मौके पर भूटान के डोकलाम क्षेत्र में बने तनाव को समाप्त करने में सफल होंगे। लेकिन दोनों देशों के आधिकारिक बयानों पर गौर करें तो लगता है कि चीन किसी सूरत पीछे हटने को तैयार नहीं है। न केवल इतना बल्कि वह भारत के खिलाफ तीखे बयान भी दे रहा है। मांग कर रहा है कि उसके क्षेत्र, जिसे वह अपना होने का दावा कर रहा है, से भारत अपने सैनिकों को पीछे हटाए।

लेकिन इस मामले से जुड़े तय बेहद सरल-सादा हैं।

Continue reading “In the Wake of Doklam: India-China Relations Entering a New Phase”

Bhutan: the ‘Missing’ Piece of the Puzzle

Jabin T. Jacob, PhD, Fellow, Institute of Chinese Studies

In the latest faceoff between Indian and Chinese troops in the Doklam area, the role and place of Bhutan has been easily overlooked. It is the Bhutanese after all that are contending with Chinese over the area and it is they who invited the Indians to take up cudgels on their behalf against the Chinese.

Bhutan is, in many respects, probably India’s only genuine ally in the region and this too, is largely the result of that country’s unique political history and development. The Bhutanese monarchy has played a key role in nurturing a close and beneficial relationship with India and India has in large measure reciprocated. While a tiny country, Bhutan has always been favoured with fairly senior and always competent Indian ambassadors in its capital and maintains the Indian Military Training Team in support of the Bhutanese army. Also worth remembering is the fact that it was to Bhutan that Indian Prime Minister Narendra Modi made his first official foreign visit after taking office.

That said, India should simply count itself lucky that it has managed to maintain a special place for itself in Bhutan’s international affairs for such a long time despite the vagaries of international politics. Continue reading “Bhutan: the ‘Missing’ Piece of the Puzzle”

Doklam: Understanding Chinese Actions in Bhutan

Jabin T. Jacob, PhD, Fellow, Institute of Chinese Studies

Following the latest confrontation between China and India in the Doklam area of Bhutan, there is clearly an edge to the repeated Chinese calls to India to ‘immediately pull back’ Indian troops to their side of the boundary.

The Chinese have stressed that this ‘is the precondition for any meaningful talks between the two sides aiming at resolving the issue’.

What should Indians make of this and what should we look out for? Continue reading “Doklam: Understanding Chinese Actions in Bhutan”