A high-profile criminal trial against Chinese telecom giant Huawei Technologies opened in Brooklyn federal court last week, highlighting China’s state-sponsored intellectual property (IP) theft.
Huawei is one of the largest information technology companies in China and globally, selling products such as smartphones, telecommunications equipment, and AI chips. Its founder, Ren Zhengfei, once served in the People’s Liberation Army, which has led to close ties with the Chinese government and military. A 2012 report from the U.S. House Permanent Select Committee on Intelligence warned that using equipment from Huawei and another Chinese company, ZTE, in U.S. networks could allow Chinese intelligence to spy or disrupt critical communications through hidden bugs or backdoors.
The case now being considered by Judge Ann Donnelly started with a 2018 probe into whether Huawei had breached U.S. sanctions by transporting telecom equipment and carrying out related business via Iran. Meng Wanzhou, Huawei’s chief financial officer and Ren’s daughter, was arrested in Vancouver on a U.S. warrant and faced extradition to the United States. Chinese intelligence was reportedly ordered to prevent Meng’s extradition for fear she might disclose sensitive information. Shortly after her arrest, China detained the former Canadian diplomat Michael Kovrig and the businessman Michael Spavor on espionage charges.
In 2021, the U.S., Canada, and China reached an agreement under which Meng returned to China on the basis of a deferred-prosecution agreement, and the two Canadians were released. In a statement of facts, Meng acknowledged that she had made material misrepresentations to a bank about Huawei’s Iran-connected subsidiary, Skycom; her individual charges were subsequently dropped. In June 2026, Judge Donnelly ruled that these admissions could be used against the company.
Huawei is now charged in a complaint with 12 counts, including racketeering conspiracy, conspiracy to steal trade secrets, and bank and wire fraud for giving false information to banks such as HSBC and Citi about its business in Iran.
On Sept. 9, when giving his opening remarks, DOJ trial attorney Taylor Stout referred to Huawei’s business model as “theft, lies, cover-up.” He described the company as a criminal enterprise that, between 1999 and 2020 — that is, over about 20 years — stole from U.S. companies and misused the U.S. financial system to take control of the telecom industry. Among the companies allegedly affected were Cisco, because its router operating system source code was the target, and T-Mobile. To support his claim, Stout mentioned an instance in which a Huawei employee took photographs inside a T-Mobile robotic device and placed a key component in his backpack.
Brian Heberlig, Huawei’s lawyer, said the case was one of “competition, not conspiracy,” and that occasional employee misconduct does not constitute a corporate racketeering scheme. The judge instructed the jury that neither China nor the Communist Party is being tried. That instruction is right for a criminal courtroom, but it does not resolve the broader policy issue since it is well known that the main responsibility for China’s IP theft lies with the Chinese Communist Party (CCP).
Chinese laws, such as the 2017 National Intelligence Law, allow companies and individuals to be required to assist in intelligence activities. For years, Beijing has combined the acquisition of legitimate technology with acts such as IP theft, forced transfer, and hacking, then passed the stolen IP to certain state-owned enterprises or so-called private Chinese companies, giving them an unfair edge in the global market. The case of Huawei’s growth in wireless equipment is the one most frequently cited. Reports have long linked Chinese intrusions into Nortel, Canada’s leading telecommunications company, to Huawei’s ability to sell comparable equipment at a lower price as Nortel collapsed.
Huawei’s rapid rise shows how Chinese companies have come to dominate key industries such as electric vehicles and AI chips. While these Chinese companies do innovate, their early success was often supported by a systematic, state-backed campaign of IP theft. By gaining market share through these methods, they could then invest in research and development, creating new products and services that secured their place in the market.
China’s widespread theft of American intellectual property has caused serious economic damage to the United States. A 2017 report by the Commission on the Theft of American Intellectual Property estimated that Chinese IP theft costs the U.S. between $225 billion and $600 billion annually, a figure that likely fails to account for undetected theft.
The method now has a new target. Recently, the U.S. government accused six Chinese AI companies, including DeepSeek and Moonshot, of carrying out industrial-scale “distillation” from U.S. models developed by companies such as Anthropic, OpenAI, Google, and xAI, likely with the Chinese government’s knowledge. Distillation, which involves training smaller AI models on the outputs of more sophisticated ones, is not the same as direct intellectual property theft. Yet it is another way to benefit from someone else’s research without asking for permission or paying adequate compensation.
President Trump is due to meet Xi Jinping later this month. Intellectual-property theft should be high on that agenda. Trump must insist on no further easing of export or investment rules while industrial-scale theft of U.S. models and manufacturing know-how continues. The court can try a company. Only governments can decide whether the system that company grew up in remains cost-free.
