Chinese Intellectual Property Theft Fuels CCP’s Economy and Military

China has reaped the benefits of foreign IP theft for decades.

A Huawei reception employee walks by a display for facial recognition cameras at the company's Bantian campus in Shenzhen, China, on April 26, 2019. Kevin Frayer/Getty Images

Commentary

Chinese communist theft of foreign intellectual property (IP) continues to make news—artificial intelligence (AI), dual-use STEM technologies, and much, much more.

There are growing concerns about Chinese economic espionage and other mechanisms employed by the Chinese Communist Party (CCP) to acquire advanced technologies with dual civilian and military uses, including AI, next-generation telecommunications, advanced software systems, and electronic surveillance technologies.

According to the FBI, the Chinese regime is “the world’s principal infringer of intellectual property,” costing the United States as much as $600 billion annually in pirated software, theft of trade secrets, and other illicit technology transfers.

The various mechanisms by which the regime acquires foreign IP are diverse, subtle, and insidious, and have significantly evolved since the Shanghai Communiqué—which was signed by U.S. President Richard Nixon and Chinese Premier Zhou Enlai on Feb. 27, 1972—initiated the so-called opening of China to foreign business investment.

The last 50 years have seen an exponential increase in Chinese cyber espionage, technical exchange programs (especially among universities and high-tech companies), direct economic espionage by Chinese nationals at U.S. and other foreign companies, and various U.S.–China and other joint ventures that facilitate tech transfer.

Chinese business regulations were intentionally written from the beginning to facilitate IP acquisition as part of the process of opening up the Chinese economy to the world, a topic about which Chinese leader Xi Jinping regularly speaks. (Oddly, despite the perennial promises from Xi and his predecessors to “open China,” the job never seems to get done!)

Joint ventures were sold as a price of entry under the original 1979 Sino-Foreign Equity Joint Venture Law as a win-win for all parties, with foreign firms such as Foxconn, Volkswagen, Apple, Tesla, and many others gaining cheap labor access to the so-called huge Chinese market while Chinese companies obtained foreign intellectual property without the need for substantial research and development expense.

The reality has been substantial copyright piracy, reverse engineering, and trademark counterfeiting by Chinese companies, with a myriad of rules and regulations that prevent full access to Chinese consumers. All of these contribute directly to the CCP’s long-term goals of achieving self-sufficiency and global leadership in key industries. Examples include:

• A Chinese national’s prosecution for conspiring to steal sensitive military information, including the designs for the F-22 and F-35, for the Chinese military. There is widespread speculation that China’s Chengdu J-20 “Mighty Dragon” and the upcoming Shenyang FC-31 stealth fighters are believed to incorporate design elements that may have been stolen from American and possibly Russian fighter programs.
• Huawei’s egregious theft of telecommunications trade secrets, including its multi-year efforts to steal trade secrets related to T-Mobile’s “Tappy” robot.
• The Harbin Z-20, a Chinese medium-lift utility helicopter, which was almost certainly reverse-engineered from a semi-stealth Sikorsky UH-60 Black Hawk helicopter used by U.S. Navy SEALS in the Bin Laden raid in 2011, which was shot down and provided to China by Pakistan.

The CCP employs a wide range of legal and regulatory tactics to pressure foreign companies into transferring technology to their Chinese partners or to deter them from pursuing cases of theft. These tactics include poaching technical talent, offering state subsidies, engaging in bribery, committing patent infringement, exploiting antitrust laws, and leveraging the regime’s complex court system.

With increasing bipartisan interest in Chinese belligerence in the South China Sea, Taiwan Strait, and elsewhere around the world, particularly new deployments of advanced military capabilities, the U.S. government continues to blacklist Chinese tech companies to minimize unauthorized technology transfer to Chinese companies with connections to the People’s Liberation Army (PLA). There are increasing concerns that stolen foreign intellectual property is being used to rapidly modernize the PLA, particularly in areas such as anti-ship missiles, electronic warfare, SIGINT systems, and antisubmarine capabilities.

For example, as noted on the U.S. Commerce Department website last month, the Bureau of Industry and Security (BIS) added more than 70 Chinese companies to its Entity List in order to restrict the CCP’s “ability to acquire and develop high-performance and exascale computing capabilities [and] quantum technologies, for military applications,” as well as to “impede China’s development of its hypersonic weapons program.”

In another shocking example, the Daily Caller News Foundation reported last month that the Defense Department and the Energy Department “funded more than 100 research projects using Chinese government supercomputers sanctioned by the U.S. for collaborating with China’s military” in at least one of five sanctioned Chinese supercomputer centers in Beijing, Changsha, Guangzhou, Shenzhen and Tianjin.

The problem with such shared research is that those Chinese facilities are heavily involved in weaponizing basic research for military uses. “[These joint projects] risk transferring sensitive U.S. algorithms and models that could significantly enhance China’s capabilities in critical areas such as nuclear simulation and hypersonic weaponry,” L.J. Eads, a former U.S. Air Force intelligence analyst, told the publication.

U.S.–China competition in AI technologies has also been making headlines, with the surprise introduction by Chinese company DeepSeek of its AI model, R1, on Jan. 20, 2025. It’s noteworthy that the U.S. Justice Department’s website reported that a Chinese national was indicted in March 2024 on “four counts of theft of trade secrets in connection with an alleged plan to steal from Google LLC (Google) proprietary information related to artificial intelligence (AI) technology.”

Will we ever know if the 500-odd confidential files containing AI trade secrets stolen from Google were the primary reason that DeepSeek was able to field its R1 model in the first place?

Concluding Thoughts

IP and technology theft by Chinese entities is ongoing and pervasive. China understands the benefits of short-circuiting development costs by incorporating stolen IP and patented technologies. The U.S. Congress is increasingly motivated to stem that flow through real actions and diplomatic pressure.

In an effort to put lipstick on a pig and address increasing foreign concerns about IP theft by Chinese companies and citizens, Beijing replaced the 1979 Sino-Foreign Equity Joint Venture Law (amended in 1990) with the Foreign Investment Law (FIL), which took effect on Jan. 1, 2020. The problem is selective enforcement, as is always the case with laws and courts in communist countries, and the CCP has ZERO incentives to tamp down on theft of foreign IP.

Views expressed in this article are opinions of the author and do not necessarily reflect the views of The Epoch Times.