China is a unique case study about technology transfer. While most developing countries have had trouble attracting sophisticated foreign direct investment in the past 200 years, China’s market size is large enough that it can impose rules on firms that seek to enter the Chinese market.

Some of these rules related to the sharing of technology/ownership structure. For example, when foreign firms can enter China only when they establish a joint venture with a Chinese company. The Chinese provide capital/land, the foreigners bring technology. This can be seen as “forced technology transfer.” At this point there are no international rules that guide which conditions countries can impose on foreign investors (in fact there are many such conditions in first world countries, too).

The problem arises, however, if the joint venture leads to misappropriation of foreign technology. For example, if one year after the joint venture has been established, the foreign company finds an exact copy of its product on the market produced by a rogue Chinese firm. Note that this is an intellectual property rights issue, not a “forced technology transfer issue;” the two are is often confused. Technology sharing in a joint venture is voluntary — foreign companies can choose not to enter. Stealing technology is a crime.

Econofact has a great discussion of the issue (based on the 2018 PIIE Brief by Lee Branstetter: “China’s Forced Technology Transfer Problem — And What to Do About It.” which I summarize in edited form:

• The problem of protection and enforcement of intellectual property rights in China is a longstanding one — and a concern for current and previous U.S. administrations. Weak intellectual property enforcement. Studies by the current and previous U.S. administrations have tried to quantify the financial losses that these practices impose on owners of U.S. intellectual property. The wide-ranging estimates have indicated that losses could be measured in the ten of billions — perhaps even hundreds of billions — of dollars (see for instance U.S. Trade Representative 2018, U.S. International Trade Commission 2011, and Commission on the Theft of American Intellectual Property 2017). These estimates mostly reflect the value of intellectual property believed to be infringed by Chinese entities, due to weak enforcement of intellectual property rights (see here).
• There are plenty of cases when multinationals based in the U.S. or Japan or Europe will voluntarily choose to transfer technology to other firms — even other firms that they do not control. For instance, if a firm has a supplier providing a critical input, it is in the firm’s interest to make sure that that input is of high quality. If it has technology that can help the supplier be more reliable, to produce a higher quality product, or a higher-performing product, it has a strong incentive to provide that technology.
• First World countries (and their corporations) prefer to let transacting parties work out the degree of technology transfer, without (Chinese) government interference).  That would be a key tenant of economic imperialism: let the advanced country/firm decide how to enter developing markets, vs letting the developing market decide how best to manage entry for its market benefit. The issues is even more preposterous since the first world countries, especially the US, have government rules to its own benefit that prohibit the transfer of certain technologies. The “forced technology transfer” issue in reverse, so to say.