Chinese communist theft of foreign intellectual property continues to make news (artificial intelligence, dual-use STEM technologies, and much, much more). There are growing concerns expressed about Chinese economic espionage and other mechanisms employed by the CCP to acquire advanced technologies that dual civilian and military uses, including artificial intelligence, next-generation telecommunications, advanced software systems, and electronic surveillance technologies. According to the FBI, “China is the world’s principal infringer of intellectual property,” costing the US as much as $600 billion annually in pirated software, theft of trade secrets, and other illicit technology transfers.
The various mechanisms by which the ChiComs acquire foreign IP are diverse, subtle, and insidious and have evolved greatly since the Shanghai Communiqué, which was signed by U.S. President Richard Nixon and China’s Premier Zhou Enlai on February 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 hi-tech companies), direct economic espionage by Chinese nationals at US and other foreign companies, and various US-China and other joint ventures that facilitate tech transfer.
Chinese business regulations were purposely written from the beginning to facilitate IP acquisition as part of the process for “opening the Chinese economy” about which Chinese leader Xi Jinping regularly pontificates. [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 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 firms with a myriad of rules and regulations that prevent full access to Chinese consumers, all of which contributes directly to China’s long-term goals of obtaining self-sufficiency and global leadership in key industries. Examples include:
- Huawei’s egregious theft of telecommunications trade secrets (refer to a US DoJ indictment here).
- 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. As reported here, there is widespread speculation that “China’s Chengdu J-20 ‘Mighty Dragon’ and the forthcoming Shenyang FC-31 stealth fighters are widely believed to incorporate stolen design elements from American and likely Russian fighter programs.”
- Huawei’s multi-year efforts to steal trade secrets related to T-Mobile’s “Tappy” robot (a proprietary device that “simulated humans rapidly using mobile phones to test for problems and glitches before they hit the market”).
- The Harbin Z-20, a Chinese medium-lift utility helicopter, was almost certainly reverse engineered from a semi-stealth modded Sikorsky UH-60 ‘Black Hawk’ helicopter used by US Navy SEALS in the Bin Laden raid in 2011 that was shot down and provided to China by Pakistan, as discussed here.
It should be noted that the Chinese government uses every legal and regulatory lever in its arsenal, including poaching technical talent, government subsidies, bribery, patent infringement, antitrust laws, outright theft, and the Byzantine Chinese court system, to pressure foreign companies to transfer technology to their Chinese “partners” or to not pursue cases of theft.
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 US government continues to blacklist Chinese tech companies to minimize unauthorized technology transfer to Chinese companies with connections to the People’s Liberation Army. There are increasing concerns that stolen foreign IP is being used to rapidly modernize the PLA, especially anti-ship missiles, electronic warfare and SIGINT systems, and antisubmarine capabilities.
For example, as noted an official US Dept of Commerce website last month, the Bureau of Industry and Security (BIS) added nearly 80 Chinese companies to the Entities 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 DoD and the Dept of Energy “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,” according to a US Air Force intelligence analyst quoted in the article.
US-China competition in artificial intelligence technologies has been making the news, too, with the surprise introduction by Chinese firm DeepSeek of its AI model called R1 on 20 January 2025. The US Justice Dept’s official 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. The communists understand the benefits of short-circuiting development costs by incorporating stolen IP and patented technologies. The US 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 intellectual property theft by Chinese companies and citizens, the Chinese government replaced 1979 Sino-Foreign Equity Joint Venture Law (amended in 1990) with the Foreign Investment Law (FIL) effective January 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 theft.
The end.
This article originally appeared in Stu Cvrk’s Substack. Reprinted here with permission
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