On Capitol Hill, China Themes Increasingly Center On Trade Theft, Espionage, IP Violations

How did China become a near peer competitor with the U.S. on everything from computers to AI platforms to space? Theft and IP violations. Over the last week, two hearings on China have basically drawn this same conclusion – China’s rise can also be attributed to stealing Western ideas. The House Select Committee on the CCP discussed this in regard to AI. And the Senate Judiciary Committee discussed it in regard to basically everything – be it deep fryers or fighter planes.

“The very last case I argued before the U.S. Supreme Court was a case called Global Tech Appliances versus SEB (2011), and it dealt with Chinese IP theft,” said Sen. Ted Cruz (R-TX) during last week’s Senate hearing titled “China’s Ongoing Theft of U.S. Innovation.” His client was a French housewares manufacturer with a U.S. patent on a deep fryer. “A Chinese company purchased the deep fryer in Hong Kong, disassembled it, reverse engineered it, and then marketed it in the U.S. and sold the same deep fryer that flagrantly infringed on that patent, and made millions of dollars as a result. This is a pattern that is far-reaching, and the consequences for our economy are massive. The consequences for our national security, if anything, are even greater.”

Some examples were given by Committee members. Their outcomes may sound ridiculous to the China amateurs out there:

INEOS, a chemicals company with an R&D facility in Illinois. They developed a chemical used as a key building block in hundreds of applications across the medical, aerospace, environmental, and military sectors. SINOPEC, a Chinese oil refiner, stole INEOS’ trade secrets and began manufacturing this chemical. INEOS sued in the Chinese court system. The companies reached a settlement whereas they agreed to jointly produce the chemical. Soon after, engineers working on the joint venture left to create a competing company in China using INEOS technology. Today, INEOS is under real financial pressure. S&P cut its credit rating in February 2026 and said a sustained recovery is not expected before 2028. Its bonds are junk status.
American Superconductor, a Massachusetts company, faced a multi-billion-dollar theft of its intellectual property by an employee in a subsidiary working in Serbia. He sold intel to a Chinese wind turbine manufacturer named Sinovel. When discovered, Sinovel paid a $59 million fine, but it got to keep the stolen software and continue to sell it. Meanwhile, American Superconductor had to fund its own litigation across multiple jurisdictions for years, hemorrhaging revenue, fighting to survive, all the while competing against its own products.
Hytera Communications, a Chinese two-way radio maker, has paid massive fines and damages for IP theft from Motorola Solutions. In March 2026, a U.S. federal judge fined Hytera $50 million for conspiring to steal trade secrets after it pleaded guilty in 2025, with a plea cap of $60 million total criminal penalties.

There are a few ways China games the openness of the U.S. system. One is through academia, with post-doc research scientists placed in the U.S. This risk is real, even if small. Another is via forced joint ventures for U.S. companies that want to set up shop in mainland China. This policy has been relaxed over the years and some companies in some sectors are allowed their own independent operations. Car companies, for example, all needed to have JVs to operate in China. Those JVs have not been unwound. China, of course, is becoming an automotive powerhouse, especially in the EV space.

Ranking Member Richard Durbin (D-IL) asked one of the witnesses about Chinese researchers working at American universities. “Do you believe we can still invite students to come study in the United States into some of these critical areas without compromising our national security?,” he said.

Tom Lyons, an ex-CIA officer and now founder of 2430 Group, said he does not recommend outright bans on Chinese students, “but we need way more due diligence. I think the design problem that we’re facing is how do we distinguish between those who are a resource and those who are a risk to our country.”

All three witnesses were hawkish on China; no one really played the devil’s advocate except for maybe on a handful of issues – one in particular was ByteDance’s deep fake AI video generator, Seedance, whereas Chinese creators were using likenesses of American celebrities. Maybe there Beijing could be counted as an ally to protect copyrights, one witness said. But on balance, the China theft and IP violations were seen as a tough nut to crack.

Detection is one of the biggest issues, said Lyons. “We’ve all talked about the numbers of IP theft from the IP Commission. That’s 2017 numbers: $600 billion. I think that’s woefully underreporting,” he said.

Germany did a study a couple of years ago focused on data theft writ large, including from economic espionage. Their numbers were about $300 billion for an economy one-sixth the size of the U.S. economy. “So by that number, we’re about $1.5 trillion of economic espionage,” Lyons said.

Theft is not just about lost profits. It also changes the battlefield.

“Let’s walk through what stolen innovation looks like in practice,” said Cruz. Behind him were pictures of what looked like nearly identical fighter planes.

“Look at the F-35, the cornerstone of America’s air dominance. Now look at China’s J-35. It may be possible that two independently developed fighters might naturally converge on similar shapes. But criminal convictions speak louder than theories,” said Cruz.

Su Bin, a Chinese national, pleaded guilty in a United States federal court to stealing F-35 technical data and selling it to Beijing back in 2014.

“That’s not a coincidence. To me, that’s a conviction. When America spends decades innovating, but China copies us in years and steals from it, that is not competition. That is China being a parasite,” Cruz said.

Lyons said he believes trade and IP theft is mostly occurring in energy markets, telecommunications technologies, new types of solar panels, and transport logistics. “When you step back, what we’re seeing is a desire to dominate the industries that win wars,” he said.

Sen. Ashley Moody (R-FL) said we seem “oblivious” here at home to all the theft of trade secrets and IP violations taking place.

“What really keeps me up at night is we often, as a government at least, seem oblivious to the fact that many of the people that are coming in and stealing the very information, whether that’s military information design or whether that’s commercial or research at our universities, we are inviting here with the red carpet rolled out,” she said. “We’re doing this with nations that actually have laws on the books that require their citizens to spy on us and gather intelligence and report back if demanded by their home state. This is very concerning to me. When I mention this to other lawmakers, many of them have no idea. We’ve done nothing in Congress to prevent that. At the same time we’re trying to strengthen and put more resources into bringing jobs back into our own country. I think it’s negligent.”