Economist Larry Summers said Wednesday that Chinese companies’ leadership in some technologies are not the result of theft from the U.S., rebutting the premise behind President Donald Trump’s trade actions against China.
“You ask me where China's technological progress is coming from. It's coming from terrific entrepreneurs who are getting the benefit of huge government investments in basic science. It's coming from an educational system that's privileging excellence, concentrating on science and technology,” said Summers, former Treasury secretary under Bill Clinton and an ex-economic advisor to Barack Obama. “That's where their leadership is coming from, not from taking a stake in some U.S. company.”
Trump has repeatedly said the U.S. needs to take action to make sure Chinese companies are not stealing American intellectual property though forced joint ventures.
The White House said Wednesday the government will rely on the newly strengthened Committee on Foreign Investment in the United States to deal with concerns about intellectual property theft. Reports earlier this week suggested that the administration would look to block companies with 25 percent or more of Chinese ownership from buying certain U.S. tech-related firms.
The Chinese investment measures, unveiled on Wednesday, were less restrictive than proposals floated earlier in the week, giving a big boost to Wall Street where traders and investors were concern about the issue leading to a trade war with China.
"We will have the necessary tools to protect investments, whether it's China or anybody else," Treasury Secretary Steve Mnuchin told CNBC shortly after the announcement. "We are not singling out China, but we will protect technology transfer to China as we will to other important areas."
In response to the Trump administration's move, Summers said in a “Squawk on the Street" interview, "The real approach to maintaining technological leadership is through leading technologically, not through trying to hold China down.”