Listen to this article
Hu Jintao, China?s president, said on Tuesday the protection of intellectual property rights was ?essential? for China?s development and its ability to build an economy based on innovation rather than low-cost manufacturing.
Mr Hu made his comments after Microsoft?s chairman, Bill Gates, gave him a tour of the software giant?s prototype ?home of the future? at the company?s Seattle headquarters.
In comments certain to delight the US company, he said after the tour: ?Bill Gates is a friend of China, and I am a friend of Microsoft.?
Microsoft has been unable to build a substantial business in China, or at least one to match the market?s potential, because of rampant software piracy. An estimated nine out of ten users of its operating systems in China are using illegal copies.
In a court case last year, an outgoing Microsoft vice-president, Kai-fu Lee claimed that Mr Gates had once flew into a rage and complained that the Chinese people and the Beijing government had destroyed his company. Mr Gates denied making such comments.
China has long had laws compatible with global IPR rules but their enforcement has been patchy and at times non-existent.
Under heavy pressure from the US government, China has announced a series of measures in recent weeks in an attempt to ensure that computers in China are sold pre-loaded with licensed software.
Although the directives do not specify that the software should be that of Microsoft, the decision has the potential to benefit the Seattle company and allow it to begin building a more solid foundation in China.
In inpromptu remarks to reporters after the Microsoft tour, with Mr Gates standing by his side, Mr Hu said IPR protection was indispensable if China was to continue to open to the wider world.
?[IPR protection] is necessary to create a favourable investment environment, good and fast development, and for China?s own innovative capability,? he said.
?We take very seriously our promises to enforce our laws on this issue.?
It is unusual for the Chinese president, who operates in a highly-controlled environment, to respond to questions from reporters.
The security surrounding his visit has been at least equal to that of the kind that envelops a US president when travelling overseas, although Mr Hu does not face the same kind of terrorist threats that George W Bush does.
The Chinese delegation, with the help of their US hosts, went to great lengths to ensure that Mr Hu was not exposed to small bands of protesters from Falun Gong, a religious sect subject to severe repression in China.
Mr Hu dined at Mr Gates? Seattle home on Tuesday night with just over 100 guests hosted by Christine Gregoire, the governor of Washington state.
The first group of guests, including Brad Smith, Microsoft?s senior vice president and general counsel, Howard Schultz, Starbucks? chief executive officer and Henry Kissinger, were greeted by Melinda Gates.
Mr Gates gave Mr Hu a tour of his house.
Welcoming the guests, Mr Gates said: ?Melinda and I are honoured to welcome you into our home. It is a sign of our respect for you, Mr President, and the great fondness of the American people for the people of China.?
The menu included smoked Guinea fowl with hazelnuts, spring radish and Granny Smith apples, filet of beef with Walla Walla sweet onions, Washington-grown asparagus, a choice of celeriac puree and chervil glace or Alaskan halibut and spot prawns with spring vegetables, fingerling potatoes and smoked tomato-infused olive oil.
For dessert, guests were offered rhubarb brown butter almond cake.
Get alerts on Mergers & Acquisitions when a new story is published