INDIGENOUS INNOVATION - MINISTRY CLAIMS MEASURES

C O N F I D E N T I A L BEIJING 003420 SIPDIS STATE FOR EAP/CM - WKLEIN, SFLATT STATE FOR EEB/CIP - SFLYNN, FSAEED USTR FOR AWINTER, TWINELAND, JGRIER, JMCHALE COMMERCE FOR ITA - IKASOFF, NMELCHER, JWU DOJ FOR CCIPS - MUBOSE, SCHEMTOB FBI FOR LBRYANT STATE FOR WHITE HOUSE OSTP AMBASSADOR RUSSEL NSC FOR MHATHAWAY E.O. 12958: DECL: 12/22/2019 TAGS: ECON ETRD PGOV EINV CH SUBJECT: INDIGENOUS INNOVATION - MINISTRY CLAIMS MEASURES INTENDED TO THWART PIRACY REF: A. STATE 124680 ¶B. BEIJING 3379 ¶C. BEIJING 3296 ¶D. BEIJING 3209 ¶E. BEIJING 3395 Classified By: Minister Counselor for Economic Affairs William Weinstei n. Reasons 1.4 (b/d) ¶1. (SBU) Econ Minister Counselor (EmbEcon) delivered ref A demarche to Ministry of Commerce (MOFCOM) Director General for American and Oceanic Affairs He Ning December 22 regarding Circular 618 that creates a national accreditation system for indigenous innovation. EmbEcon stressed the Circular discriminated against products produced by Foreign Invested Enterprises (FIEs) and noted its inconsistency with China's stated intention to join the WTO's Government Procurement Agreement. The United States understands and supports China's goal of promoting innovation, he said, as is evidenced by the many US-China research and development projects underway. FIEs have made significant investments in China to produce for the Chinese market. The Circular, however, undermines those efforts and could discourage foreign investors. EmbEcon urged He to delay implementation of the Circular pending consultations. ¶2. (C) DG He noted US concerns and stated he would "duly convey" them to counterparts at the Ministry of Science and Technology (MOST),the Ministry of Finance (MOF) and the National Development and Reform Committee (NDRC). Speaking off the record, He said he did not believe the measures called into doubt Chinese intentions to join the GPA, arguing that when China does join, these measures would be eliminated. ¶3. (C) DG He stated he believes the Circular was put forth "in part" to encourage innovation and to put a stop to the piracy of intellectual property. Chinese industry needs an incentive to "stop stealing everyone else's IP and develop their own." GOLDBERG