When I read about our "Trade" with china etc etc I sometimes think I'm in a 1960's zwilight zone episode where I have awoken in a parrallel universe and everything is topsy turvey.
This works too.
If only it was just trade. We've located all sorts of factories for US designed products there. In order to build a product, you need bills of material, assembly instructions, drawings and specs for all the parts, test software, fault trees for trouble shooting, and knowledgeable locals who understand the product deeply enough to be able to keep things running when is dark O'clock here in the states. In other words, you essentially need to give the Chinese who are running the plant the crown jewells. OF course, reverse engineering it all is a no brainer. We're not just talking cheap fans and christmas lights. We're talking jet engines, mainframe computer parts (the parts, of course, make up the whole), disk drives, lasers, and all but the highest end of the highest end stuff. Even for things that are proscribed by Export Control lists you can get exemptions. Plus, the gov ain't got diddly for enforcement or auditing so violations are happening, undiscovered, left and right. But it gets worse....
These days, the new fad is R&D in China. You see, of course, it is much cheaper to hire a new grad MSEE or PhD from a PRC university than one here in the states going to school on an F1 visa. Plus, if you set up a design center over there, when you hire, there will be no Feds poking around making sure that you created export control agreement with them or that they aren't active duty PLA. In fact, since they will be the ones doing the designing, on CAD tools located there, modelling it on mainframes located there (some of them not even American ones, but Chinese or Russian ones) and what not, there really is no concept of export control of the intellectual property. Because it WAS already exported the moment it was created! Imagine it all, US corporations funding the immediate creation of advanced intellectual property in the PRC!
In the most "advanced" incarnation of this model, you lay off most of the techies in the states, or at very least, completely overload them. That way, what you end up with is a situation where the only guy who really knows and understands the design is a Red Communist - who may well be active PLA. Cool, eh?