China's theft of U.S. intellectual property tops $600 billion a year, ex-CIA officer says

Timed to the Beijing summit, Tom Lyons, co-founder of the 2430 Group, spoke about China's espionage and trade practices. The firm advises private companies on how to counter Beijing's theft of intellectual property.

Lyons, who testified before the Senate Judiciary Committee in April, said China takes more than $600 billion in intellectual property from U.S. companies each year. He added that the real figure is likely higher because most firms never detect the theft and many that do choose not to report it for fear of damage to their reputation or stock price.

When companies do sue, litigation costs can reach millions of dollars, Lyons said. Even if they win, they cannot collect damages because China does not enforce U.S. court judgments.

China's goal is not limited to stealing from individual firms, he said. The country seeks to take entire industries. President Xi Jinping directs state investment into chosen sectors, Lyons said, and the Communist Party requires every employee in Chinese companies to report to the Ministry of State Security.

Lyons cited the case of Linwei Ding, a Google engineer convicted of economic espionage for stealing proprietary AI chip designs. Ding used the stolen information to help his China-based company compete against Google, Lyons said.

Over the past 25 years, China's theft has damaged or eliminated U.S. industries including steel, telecommunications, solar power and semiconductors, Lyons told the committee. He said U.S. companies face China's Ministry of State Security without adequate support from the federal government.

Lyons called for several changes. He said the Justice Department should help cover litigation costs and let companies share in fines and penalties collected from foreign spies. He urged Congress to raise penalties for economic espionage so that stealing intellectual property costs more than developing it. He also recommended designating foreign groups that work for Chinese intelligence as state-sponsored economic espionage organizations and prosecuting anyone who accepts payment from them.

Lyons said the United States needs stronger coordination between the White House, Congress and the intelligence community to protect private industry from Beijing's campaign.