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 or U.S. investors and their investments or IPR. Chinese regulations, rules, and other measures frequently call for technology transfer and, in certain cases, appear to include criteria requiring that certain IPR is developed in China, or are owned by or licensed, in some cases exclusively, to a Chinese party. Such government intervention, including imposed conditions or incentives, may distort licensing and other private business arrangements, resulting in commercially suboptimal outcomes for the firms involved and for innovation.

Sustained U.S.-China engagement through the JCCT, the U.S.-China S&ED and high-level government engagement has resulted in important Chinese commitments, including now-President Xi Jinping's 2012 commitment "that technology transfer and technological cooperation shall be decided by businesses independently and will not be used by the Chinese government as a pre-condition for market access," and China's 2014 JCCT commitments that China must "treat intellectual property rights owned or developed in other countries the same as domestically owned or developed intellectual property rights," and that "enterprises are free to base technology transfer decisions on business and market considerations, and are free to independently negotiate and decide whether and under what circumstances to assign or license intellectual property rights to affiliated or unaffiliated enterprises." In addition, at the 2012 JCCT, China "reaffirmed that technology transfer and technology cooperation are the autonomous decisions of enterprises" and pledged further that "[i]f departmental or local documents contain language inconsistent with the above commitment, China will correct them in a timely manner." At the 2013 JCCT, China committed not to implement rules or finalize a draft catalogue containing indigenous innovation criteria for the procurement of vehicles for official use that are inconsistent with China's 2012 commitment. The United States looks forward to China's full implementation of its commitments, and the revision of measures as needed to ensure that they are consistent with such commitments, including with respect to ICT and elements of the High and New Technology Enterprise tax incentive, such as requirements that beneficiaries license core IPR exclusively to a party in China and make 60 percent of their global R&D expenditures in China.

Patent-Related and Other Policies

IPR and Technological Standards

The growing importance of IPR and technological standards in China heightens U.S. concerns regarding a range of Chinese government policies and practices. Whereas open, voluntary, and consensus-based standards best promote economic development, efficiency and innovation, standards development bodies in China reportedly often deny membership or participation rights to foreign parties based on opaque and exclusionary practices, and effectively prevent foreign parties from participating in the standard setting process. In some cases, a firm's ability to participate may be conditioned upon a requirement to act through a joint venture in which the 41