Protection of rights in China is one of the cornerstones of trade problems between the United States and China. However, in order to understand the scope of the problem, it is necessary to understand the importance of IPR to the U.S. economy in general and to U.S. businesses in particular. First of all, “IPRs are legal rights granted by governments to encourage innovation and creative production. …may take forms such as patents, trade secrets, copyrights, trademarks or geographical indications. The highly innovative American economy relies heavily on new technologies because they ensure economic growth, increased productivity, substantial employment and increased wages. For decades, about 75 percent of U.S. economic growth has been driven by intellectual property-intensive industries. These industries also significantly and positively affect the amount of exports and imports. Protecting intellectual property is therefore crucial to maintaining the United States' competitive advantage. The operation of major U.S. industries such as automotive, aerospace, computing, semiconductor, and biotechnology depends on reliable patent protection, as does writing copy for software development. Say no to plagiarism. Get a tailor-made essay on “Why Violent Video Games Should Not Be Banned”? Get an original essay. And retail can be a good example of how other but IP-intensive industries can also benefit from effective IPR protection since they sell branded products. In 2014, intellectual property-intensive industries contributed about $800 billion in exports and $1,340 in imports to the U.S. economy, representing about 70 percent of total U.S. trade. United that year. Another source of contribution to the U.S. economy is the flow of fees and royalties as payment for the use of U.S. intellectual property (1-2). However, not all countries follow the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) which sets out the basic principles of IPR protection. Since technological protection is crucial to the U.S. economy, the Office of the United States Trade Representative (USTR) recently conducted an analysis and released the 2018 Special 301 Report. In it, it defines which countries are included in the categories of the Watch List or Priority Watch List, meaning they do not benefit from strong IPR protection (2018 Special Report 301, 6). China is among 11 other countries that fall under the priority monitoring list. (Special Report 301 2018, 9). And that's no surprise. The USTR cited several concerns regarding China "...including the theft of trade secrets, online piracy and counterfeiting, manufacturing and exporting large quantities of counterfeit products, transfer requirements of technology imposed as a condition of access to the Chinese market, the compulsory application of unfavorable measures. conditions to foreign intellectual property licensors, and requirements for intellectual property ownership and location of research and development” (Special Report 301 of 2018, 5). Not only the US government, but also US companies doing business in China, are veryconcerned about the weakness of IPRs. Businesses are suffering significant losses due to Chinese counterfeiting, piracy and economic cyberespionage. It is important that China targets industries that have been defined as strategic to its economy and steel secrets and technologies to ensure that the transition to the innovation economy is realized. However, it is precisely these industries that are the core of American competitiveness, so China not only causes revenue losses for American companies, but also eradicates the future competitiveness of American companies. The problem is not that China is not willing to take steps to strengthen IPR protection, but that it is part of the system that encourages local companies to acquire the necessary technology at all costs from American companies or foreign countries, then to support national champions in the redevelopment and implementation of these technologies at the local level 44). Today, China is the country that most violates the IPRs of American companies. As an example, nearly 90% of all counterfeit products crossing the U.S. border actually come from China and Hong Kong. Along with other foreign brands, Americans also buy their own brands without knowing they are counterfeit . Not only American customers, but also American companies face the consequences of weak IPR protection in China. When investing in China, U.S. companies must first assess the risks of losing their trade secrets, as this could seriously affect their operations. All these actions are part of industrial policies encouraging Chinese companies to achieve their goals at all costs. The weak IPR protection of US companies in China leads to abuse of the system and theft of intellectual property. According to the 2017 USCBC Member Survey, there are four main types of intellectual property theft that are of concern to U.S. business representatives in China. Companies are also concerned about the theft of trademarks and trade secrets. Second and third place go to patent and copyright infringement, respectively (2017 USCBC, 10). In order to understand in more detail the impact of IPR infringement on the operations, revenues and future development of US companies, it is necessary to take a closer look at all types separately. The theft of trade secrets from U.S. companies may be the most damaging type of IPR violation that businesses face. the owner has adopted measures to maintain its confidentiality. Industrial theft has recently come under increased scrutiny due to growing economic cyberespionage against U.S. companies from China. This topic will be discussed in more detail in the next chapter. However, traditional espionage also takes the form of physical thefts of hard drives, temporary placement of employees in the rival company, bribing the rival's employees for trade secrets, monitoring phone calls, etc. However, due to the increasing complexity of international operations and multiple options for configuring the entire production chain, the number of stakeholders with which U.S. companies interact is also increasing. Therefore, each additional step in the production chain shared with other partners carries a risk of trade secret theft. This issue is particularly relevant in a country like China, as IPR protection is weak. .