If the law goes forward, it might allay some of the US' concerns. That's not guaranteed, though, and it's not certain how this law would work in practice. Would the encouragement foster transfers when they make sense, or would it amount to pressure that makes life uncomfortable for companies if they don't hand over their tech secrets?

There may be some economic incentives to loosen up, though. While China wants to boost its technological independence, it's also facing uncertainty as its economy and productivity slow down. As with its relaxed car manufacturing rules, China is hoping that increased foreign tech investments could foster economic growth. The trade war is only one piece in a larger puzzle, albeit an important one.