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Trump administration charges Chinese companies with spying on U.S.

How China trade war could hit your wallet

WASHINGTON - The Justice Department on Thursday charged companies in China and Taiwan, along with three individuals, with stealing trade secrets from a U.S. semiconductor company, a move that could heighten tensions with Beijing as the countries battle over trade issues.

U.S. officials says the defendants, including a Chinese-owned company singled out this week by the Trump administration, targeted Idaho-based Micron over a technology it produces that stores memory in electronics. The Trump administration this week imposed restrictions on technology exports to one of the indicted companies, Fujian Jinhua Integrated Circuit Co.

"The United States is standing up to the deliberate systematic and complicated threat posed to us around the world and in particular by the communist regime in China, which is notorious around the world for intellectual property theft," U.S. Attorney General Jeff Sessions said in a press conference to announce the indictments, calling the alleged theft from Micron a "brazen scheme."

The  accused individuals face up to 15 years in prison and $5 million in fines, while the companies could incur up to $20 billion in financial penalties, Sessions added.

The administration has characterized China, along with Russia, as a strategic competitor of the United States. The U.S. has taken an increasingly tough and confrontational stance toward what it characterizes as China's "predatory" economic policies. Secretary of State Mike Pompeo set the tone in a June speech where he accused China of an "unprecedented level of larceny" of intellectual property.

Tensions over trade in particular have exacerbated relations between the two world powers. President Donald Trump has slapped tariffs on $250 billion in Chinese products in an effort to narrow the U.S. trade deficit with China. Those steps are also motivated by suspicions of China's plan to transform itself into a global leader in robotics, artificial intelligence and other technology industries. China has retaliated with tariff hikes on $110 billion of American products.

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The tensions have extended into security issues. China has strongly criticized U.S. arms sales to Taiwan, and the U.S. has renewed its criticism of Beijing's island-building in the disputed South China Sea. Trump has opened up a new line of criticism in recent weeks, accusing China of meddling in U.S. elections but without presenting substantive evidence of interference.

In a tweet Thursday, Trump said he had spoken with China President Xi Jinping. Trump said the two talked about many topics, but mostly about trade. He said U.S.-China discussions on trade are "moving along nicely" with a meeting being scheduled at the G-20 summit in Argentina, which begins late this month.

But the tough rhetoric used to announce the indictments today could hinder efforts to reach agreement on trade.

"Chinese espionage against the U.S. has been increasing and has been increasing rapidly," Sessions said. "We are here today to say enough is enough. We are not going to take it anymore. It is unacceptable. It is time for China to join the community of lawful nations."

Michael Hirson, an analyst with the Eurasia Group, thinks the U.S. and China face major hurdles in easing their trade conflict.

"Sessions' announcement today of an indictment of Fujian Jianhua Integrated Circuit Co. is another demonstration of the Trump administration's government-wide strategy to counter China virtually across the board, but especially in areas related to technology," Hirson said in a note.