The pace of forced tech transfers in exchange for market access is on the rise in China especially in “cutting edge” industries.

In a significant development, a European business lobby has disclosed, the number of cases of European firms forced to transfer technology to its Chinese partners are on the rise despite Beijing’s attempt to do the ostrich act by saying the problem does not exist.

It went on to add, its outlook on the country’s regulatory environment is “bleak”.

Since long China’s trading partners have complained that they are compelled to hand over their prized technology to their Chinese partners in exchange for market access to China – the world’s second-largest economy.

The United States is forcing China to address the problem and the issue is at the core of its many concerns in the ongoing trade war.

On Monday, the European Union Chamber of Commerce in China stated, results from its annual survey showed that 20% of members reported being compelled to transfer technology for market access; this is up from 10% 2 years ago.

Nearly 25% of those who had earlier reported such transfers stated the practice still continues, while another 39% said the transfers had occurred less than two years ago.

“Unfortunately, our members have reported that compelled technology transfers not only persist, but that they happen at double the rate of two years ago,” said European Chamber Vice President Charlotte Roule at a news briefing on the survey. “It might be due to a number of reasons… Either way, it is unacceptable that this practice continues in a market as mature and innovative as China”.

She went on to add, the practice of forced technology transfer is even prevalent in certain “cutting edge” industries where the number of cases are in fact much higher, such as 30% in chemicals and petroleum, 28% in medical devices, and 27% in pharmaceuticals.

On Saturday, in a classic case of an ostrich act, the People’s Daily, China’s top Communist Party newspaper reported that Washington’s complaints on the issue were “fabricated from thin air”.

In the escalating trade war with the U.S., China has tried to pressure the EU on standing with it against Washington, however, the European Union, the world’s largest trade bloc, has largely rebuffed those efforts.

Although the EU has very generously provided China unfettered market access to its markets, Beijing is taking its sweet time over granting market access to EU firms in China.

According to the members of the European business lobby group, the regulatory environment prevalent in China has a stale “bleak outlook” with 72% of members saying they expected obstacles to increase or stay the same in the coming five years, even as the Chinese government pays lip service in its vows to continue opening its economy and bringing about economic reforms.