Rights protection in China is one of the pillars of trade issues between the United States and China. However, to understand/grasp the scope of the issue you need to understand how important IPR is to the US economy in general and to American businesses in particular. First, “IPRs are legal rights granted by governments to encourage innovation and creative production. …can take forms such as patents, trade secrets, copyrights, trademarks or geographical indications.” The highly innovative economy of the United States relies heavily on new technologies as they ensure economic growth, increased productivity, substantial increases in employment and wages. For decades, approximately 75% of US economic growth has been ensured by intellectual property-intensive industries. These industries also significantly positively influence the amount of exports and imports. Therefore, intellectual property protection is critical to sustaining the United States' competitive advantage. The functioning of major U.S. industries such as automotive, aerospace, information technology, semiconductor, and biotechnology depends on reliable patent protection as well as copywriting for software development. Say no to plagiarism. Get a tailor-made essay on "Why Violent Video Games Shouldn't 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 IP rights protection as they trade in trademarked goods. In 2014, intellectual property-intensive industries contributed approximately $800 billion in exports and $1,340 in imports to the U.S. economy, representing approximately 70 percent of total U.S. trade that year. Another source of contribution to the US economy is the flow of fees and royalties as payment for the use of US intellectual property (1-2). However, not all countries follow the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) which defines the fundamental principles of protection of intellectual property rights. Because protecting technology is critical to the U.S. economy, the Office of the United States Trade Representative (USTR) recently conducted an analysis and released 2018 Special Report 301. Here it defines the countries that are included in the Watch categories list or Priority Watch List, meaning they lack strong intellectual property rights protection (2018 Special Report 301, 6). China is among 11 other countries that fall on the Priority Watch List. (Special Report 301 of 2018, 9). And this is no surprise. The USTR cited several concerns regarding China “…including those related to the theft of trade secrets, online piracy and counterfeiting, the large-volume production and export of counterfeit goods, technology transfer requirements imposed as a condition for access the Chinese market, the mandatory application of unfavorable terms to foreign intellectual property licensors, ownership of intellectual property, and localization requirements for research and development” (Special Report 301 of 2018, 5). Not only the US government, but also American companies operating in China are highly concerned about weak intellectual property rights. Businesses suffer significant losses due to counterfeiting, piracy andof Chinese economic cyber espionage. Importantly, China targets sectors defined as strategic for its economy and hides secrets and technologies to ensure that the transition to an innovation economy is achieved. However, these very industries are the core of US competitiveness, so China is not only causing revenue losses to US companies, but also eradicating the future competitiveness of US companies. The problem is not that China is unwilling to take measures to impose stronger IPR protection, but this is part of the system that encourages local companies to acquire the necessary technology from the United States or other foreign companies at any cost and subsequently supports national champions in the redevelopment and implementation of these technologies at local level 44). Today, China is the country that violates the intellectual property rights of American companies the most. For example, nearly 90% of all counterfeit goods that cross the U.S. border actually come from China and Hong Kong. In addition to other foreign brands, Americans also purchase their own without knowing they are counterfeit. Not only US customers, but also US companies are facing the consequences of China's weak protection of intellectual property rights. When investing in China, US companies should first evaluate the risks of losing their trade secrets as this could severely affect their operations. All these actions are part of industrial policies that encourage Chinese companies to achieve goals at any cost. Weak protection of US companies' intellectual property rights in China leads to abuse of the system and intellectual property theft. According to the 2017 USCBC member survey, there are four main types of intellectual property theft that American business representatives fear operating in China. Companies are equally concerned about theft of trademarks and trade secrets. Second and third place go to patent and copyright infringement, respectively (USCBC 2017, 10). To understand in more detail the impact of intellectual property rights infringement on the operations, revenues and future development of US companies, it is necessary to take a closer look at each type separately. The theft of trade secrets from US companies may be the most damaging type of intellectual property rights infringement that companies face. the owner has adopted measures to maintain confidentiality". Industrial theft has received a lot of attention recently due to growing economic cyberespionage against US companies from China. This topic will be covered in more depth in the next chapter. However, traditional espionage also occurs in the form of physical theft of hard drives, temporary placement of employees at the rival company, bribery of the rival's employees for trade secrets, surveillance of phone calls, and so on. However, due to the increasing complexity of international operations and the multiple configuration options of the entire production chain, the number of parts with which US companies interact is also increasing. Therefore, every additional step in the production chain shared with other partners carries the risk of trade secret theft. Especially this problem is more relevant in a country like China because the protection of intellectual property rights is weak. Trade secret theft is estimated by the Commission on the Theft of American Intellectual Property .