Why Trump and Xi Should Strike a Deal on Technology

China often ends up hurting its domestic industry by demanding too much from foreign players.

If China is such a powerhouse of intellectual-property theft, why doesn’t Beijing do it any better?

Take the auto industry. This would seem a sector ripe for forced technology transfer, industrial espionage and all the other sharp practices causing such tension in China’s trade relationship with the U.S.

China is the world’s biggest producer and consumer of vehicles, and foreign companies wanting to manufacture there for decades have been forced to invest in joint ventures with state-owned local partners.

Carmakers are in a constant arms race to innovate: Five of the world’s top research and development bills worldwide belong to Volkswagen AG, Daimler AG, Toyota Motor Corp., BMW AG, and Honda Motor Co. Dominating the emerging electric-vehicle industry is a key objective of the Made in China 2025 industrial policy that has drawn so much ire from Washington.

And yet the country is almost a footnote in international auto trade. Export earnings in 2017 came to just $7.18 billion – smaller than Belgium, Slovakia, Spain and Hungary.

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