China circumvents blockchain protection, only decoupling solves coercive IP theft.

There are two means through which this transfer of technology is facilitated. The first involves coercion applied to American companies wishing to establish business ties with Chinese companies. Two experts affiliated with the Carnegie Endowment for International Peace outline a typical arrangement that allows for pressure to be applied to foreign firms:

[I]n some sectors China is accused to demanding technology transfers in exchange for market access by requiring foreign investors to form joint ventures with Chinese firms. Although China denies any coercion (after all, foreign firms can simply walk away), many foreign firms feel that the sheer size and attractiveness of the Chinese market give domestic firms excessive bargaining power [Huang & Smith, 2019].

The “bargain” that is presented places Western business interests in the uncomfortable position of surrendering their long-term interests in maintaining their IP protections or waiving them in order to obtain access to world’s largest consumer market. Then again, perhaps this is simply the price that one must pay when doing business in a country organized according to totalitarian politics.

The fact that the Chinese Communist Party is responsible for managing each of the proposed partnerships virtually erases the prospects of an individual American corporation reversing the power of the bargaining positions. The idea that a company could afford to decline the lucrative rewards of accessing the Chinese consumer market to hold onto its IP is theoretically possible but practically inconceivable; besides, all the company’s international competitors will have to accede to those same demands. Therefore, it is left to the government of the United States to leverage political power if there is to be any hope of rearranging the fundamentals of the presently unbalanced trade relations. There are four primary means through which the U.S. government has attempted to do so: lawsuits, trade restrictions, concessions, and strategic decoupling. These means will be discussed in the following sections, with the two assertive approaches first and the accommodationist positions next. Broadly, the assertive strategies demonstrate a willingness to fight for a presence in the Chinese market, a proactive stance. Alternatively, the accommodationist position is a passive, defensive approach. Such a posture encourages compromise by Chinese officials at best or obligates U.S. business interests to mitigate any potential harms resulting from proposed trade by prohibiting some exchanges altogether in more extreme cases.