Taizhou Port, China. Photo by Yang Bo / China News Service / VCG / Getty

For decades, western companies have griped that Beijing is forcing them to hand over tech secrets and source code as a price of access to the Chinese market. Now they have a White House prepared to act forcefully to stop it — starting tomorrow, Axios' Jonathan Swan reports — but the fear is a costly tit-for-tat trade war.

The big picture: President Trump plans to announce tentative tariffs, allow a comment period for industry and other players, then enact the sanctions, report Bloomberg's Andrew Mayeda and Jennifer Jacobs. But China is drawing up a reprisal list that includes soybeans, sorghum and live hogs, report the WSJ's Lingling Wei, Yoko Kubota and Liza Lin.

In a March 18 letter, a broad section of U.S. companies and trade associations urged Trump not to proceed with the tariffs, but to find another route to the same objectives.

The background: For Beijing, the demand for tech secrets is part of its pathway to an advanced economy in order to keep delivering economic growth to the Chinese people, says Mary Lovely, an economics professor at Syracuse University. "Political stability is the key," she tells Axios.

  • This is not something new: Starting in the 1930s, the Soviets, under Stalin, developed their industrial base by inviting American and German companies to build steel mills, railroads and dams, then kicked them out.
  • In the Chinese version of the squeeze, Beijing began to demand tech secrets under Deng Xiaoping in the early 1980s.

Josh Kallmer, senior vice president of global policy at the Information Technology Industry Council, says the U.S. solution should be carried out cooperatively with Europe and Japan.

"We want to have Chinese cease requiring the transfer of intellectual property from our companies as a condition for doing business in China."
— Josh Kallmer

One solution is to mirror Chinese practice — say to demand that Huawei, as a price of doing business in the U.S., form a joint venture with a U.S. company and transfer its source code, said James Andrew Lewis, a tech and China expert at the Center for Strategic and International Studies.

"The Chinese do fear reciprocity. When you mention it, you can just see them go rigid."
— James Andrew Lewis

A problem is that this is more of less a bluff — "we would be turning over nine times as much as they would," Lewis says.

Another potential solution was proposed in November by Texas Sen. Jon Cornyn and California Sen. Diane Feinstein. They introduced a bill under which certain tech transfers would undergo greater scrutiny by the Committee on Foreign Investment.

"Whatever we do, we are playing catchup," Lewis said, since technology for commercial planes, cars, batteries and other goods has already been turned into exportable products by the Chinese.

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Hurricane Zeta has killed at least one person after a downed power line electrocuted a 55-year-old in Louisiana as the storm moved into Alabama overnight.

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Taiwan reaches a record 200 days with no local coronavirus cases

Catholics go through containment protocols including body-temperature measurement and hands-sanitisation before entering the Saint Christopher Parish Church, Taipei City, Taiwan, in July. Photo: Ceng Shou Yi/NurPhoto via Getty Images

Taiwan on Thursday marked no locally transmitted coronavirus cases for 200 days, as the island of 23 million people's total number of infections reported stands at 550 and the COVID-19 death toll at seven.

Why it matters: Nowhere else in the world has reached such a milestone. While COVID-19 cases surge across the U.S. and Europe, Taiwan's last locally transmitted case was on April 12. Experts credit tightly regulated travel, early border closure, "rigorous contact tracing, technology-enforced quarantine and universal mask wearing," along with the island state's previous experience with the SARS virus, per Bloomberg.

Go deeper: As Taiwan's profile rises, so does risk of conflict with China

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