The FDD urged President Donald Trump to concentrate on the People’s Republic of China’s state-owned enterprises (SOEs), highlighting that the strategic use of these SOEs by the PRC poses a significant threat to American economic sovereignty and security. Beyond cyber intrusions, these Chinese SOEs have an extensive history of intellectual property theft to bolster their technological capabilities.
The Chinese Communist Party (CCP) reportedly steals up to US$600 billion annually in intellectual property, aiming to undermine U.S. economic and technological leadership by targeting private enterprises. In December 2024, state-sponsored hackers breached the U.S. Treasury, while earlier cyber incidents involved the Volt Typhoon group infiltrating critical infrastructure. Such attacks underscore the CCP’s relentless cyber espionage campaign against U.S. governmental and commercial entities.
Additionally, Chinese SOEs have a history of IP theft, exemplified by the Aviation Industry Corporation of China stealing designs from U.S. aerospace firms. The CCP also employs legal and financial pressure to intimidate foreign companies, increasing risks for U.S. businesses.
“The CCP’s tactics extend beyond corporate espionage. Beijing frequently uses legal and financial pressure to intimidate foreign companies, as evidenced by the recent crackdown on Western consulting firms operating in China. These actions deter businesses from challenging SOEs and highlight the escalating risks for U.S. enterprises,” Isaac Harris, retired Navy Commander and served as an adjunct fellow at the Foundation for Defense of Democracies (FDD) and CEO of Prime Services and Consulting, Mark Montgomery senior fellow and senior director at FDD’s Center on Cyber and Technology Innovation, and Patrick Jenevein CEO of Pointe Bello, wrote in an FDD post.
They identified that the Biden administration focused on dialogue and de-escalation. “Dismissing compounding evidence that the CCP has no interest in either, Biden’s team failed to adopt an effective counter-strategy. Yet the reality is clear: the innovation and competitiveness of American companies, which developed the technology that helped win the Cold War, are under attack.”
Recognizing that the Trump administration, building on its prior interactions with China’s economic statecraft, has a historic opportunity—indeed, an obligation—to expose CCP malicious activities. “President Trump must augment U.S. defenses and support U.S. businesses as they work to protect U.S. jobs and strategic industries. By adopting a comprehensive strategy that addresses both systemic and tactical elements of CCP economic aggression, President Trump can shield U.S. businesses and secure their leadership in global innovation. The stakes are clear: inaction risks ceding the future of economic and technological dominance to an adversary intent on rewriting the rules.”
The authors mentioned that the CCP is executing a campaign to develop its comprehensive national power while simultaneously undermining U.S. economic strengths. “Beijing leverages all elements of state power—from its intelligence apparatus to academic institutions, judicial system, military, and state-owned enterprises (SOEs)—to advance its strategic goals. The U.S. government’s failure to recognize this interconnected strategy leaves American businesses to face the full weight of the world’s second-largest economy on their own.”
Current measures fall short because they target specific actions or entities rather than addressing the structural advantages of PRC SOEs. They leave U.S. businesses vulnerable to ongoing assault and fail to counter the CCP’s integrated approach.
The FDD noted that the present administration has the chance to implement a comprehensive strategy to tackle the underlying causes of economic aggression by the PRC. It can strengthen government support for legal action by providing detailed reports on PRC-based businesses that exploit state resources to undermine competitors. Highlight practices controlled by the CCP, such as intellectual property theft, contract breaches, and unethical behavior. Support judicial cases involving CCP-controlled entities that pose national security threats by filing amicus briefs.
The post also called for revealing CCP misconduct by declassifying and sharing information that documents CCP corruption and economic wrongdoing. A dedicated ‘PRC Malign Economic Activity Report’ could complement the Department of Defense’s annual Chinese Military Power Report, offering a clearer understanding of the economic threats posed by PRC SOEs. It also proposed strengthening trade enforcement to hold PRC SOEs accountable for unfair practices and implementing automatic sanctions, tariffs, and penalties for intellectual property theft and other violations. These mechanisms should be streamlined and coordinated across agencies to ensure prompt action.
The post also suggested developing specialized insurance markets to cover legal defenses, arbitrary detentions of employees, and asset seizure claims. These funds would assist U.S. businesses in navigating predatory actions by PRC SOEs and mitigate financial risks.
They called for enhanced scrutiny of PRC-based acquisitions and partnerships through the Committee on Foreign Investment in the U.S. They also put forward providing additional resources and provisions that allow authorities to revisit approvals based on previously unknown or undesirable behaviors, to potentially ensure compliance and enable asset seizures when violations occur.
In December, the Cyber Readiness Institute (CRI), FDD, and Microsoft published an interim report with findings from Phase 1 of its rollout of the Cyber Readiness Program for small and medium-sized water and wastewater utilities nationwide. It also details ongoing adjustments to the CRI Certified Cyber Coach approach using the Cyber Readiness Program and outlines the strategy for Phase 2.
