PRC Lawfare Expands to U.S. Courts — Now Is Not the Time to Dismantle U.S. Tech

The Chinese Communist Party (CCP) is learning how to use American courts to undermine U.S. national security. Specifically, Beijing is working through the courts to block executive branch actions that harm its interests. Just as troubling, regulatory agencies like the Federal Trade Commission (FTC) and, as we see playing out this week, the Department of Justice (DOJ) are initiating actions that undermine America’s edge in high-tech fields because the regulators fail to recognize the national security implications of their interventions.

Lawfare, the use of legal systems as a tool of conflict, can take many forms — weaponizing international law or, as in this case, exploiting another country’s judiciary. Beijing has mastered this approach, deploying its corporate champions like TikTok and Hesai to wage legal battles within the U.S. court system. American companies have no similar opportunity to challenge Chinese actions in People’s Republic of China (PRC) courts, where no independent judiciary exists. As a result, numerous U.S. companies have lost intellectual property to Chinese partners with no recourse.

Consider TikTok, the social media giant owned by PRC-based ByteDance. After losing its lobbying battle in Washington, where a divestiture of TikTok was ordered on national security grounds, the company pivoted to lawfare. With a lobbying and legal team of extraordinary firepower, including scores of former U.S. government officials and legislators, TikTok is now challenging the divestiture in U.S. courts, determined to overturn the law and preserve the company’s foothold in the American market.

Hesai, a lidar (a laser used to measure ranges) technology firm that supports China’s self-driving vehicle industry, has adopted a similar strategy. After being placed on the Department of Defense’s 1260H list — which identifies companies participating in the PRC’s civil-military fusion strategy and is considered a warning signal for future sanctions — Hesai responded by suing the U.S. government.

This use of lawfare complements the CCP’s investments in state-owned enterprises and Chinese military companies, creating favorable economic conditions that support the development of “national champions.” Western companies, with little to no similar U.S. government support, are forced to compete on an unlevel playing field.   

Instead, American technology companies face relentless scrutiny from U.S. courts and regulators. This helps to ensure vigorous competition and protect consumers but can harm U.S. interests when courts and regulators fail to see the national security implications of their work. Federal agencies like the FTC and DOJ are increasingly pursuing extreme scenarios, including the breakup of Google and Amazon and forcing companies to expose their AI models to competitors, including foreign ones.

This dynamic poses a critical threat. The American tech sector has evolved into a cornerstone of U.S. national security, giving the country an edge over the CCP in key technologies like artificial intelligence. Beijing, which recently earmarked over $50 billion for science and technology development, is sprinting to close that gap, prioritizing advancements in AI and other critical fields. Yet as Chinese tech giants race forward, American firms are hampered by regulatory headwinds at home, including but not limited to the DOJ’s most recent pursuit of dismantling Google’s search capabilities.

If the most successful U.S. tech companies are forced to dismantle or give up proprietary technologies, the long-term consequences for U.S. national security would be dire. Smaller, fragmented companies will struggle to compete globally, particularly against well-supported Chinese rivals. Without the scale and resources of tech giants, America will find itself at a disadvantage in the technology race that increasingly defines global power dynamics.

To avoid this fate, U.S. policymakers must confront the CCP’s lawfare campaign head-on. This starts with educating judges about Beijing’s strategic use of legal challenges and the broader geopolitical implications of these cases. The integrity of the American judicial system is vital but so is ensuring that it is not exploited to erode U.S. national security.

Additionally, lawmakers must legislate a more supportive approach to the tech sector’s role in safeguarding national interests, one that incorporates national security experts in the debate. Market competition and consumer safety are essential, but they cannot come at the expense of security. Striking the right balance will require more sophisticated policymaking, including security proofing, but the stakes are too high to get this wrong.

The United States cannot afford to be complacent. In the era of great power competition, lawfare is a weapon the CCP has learned to wield effectively. America must respond accordingly or risk losing ground in the very courts that should be defending its interests.

RADM (Ret.) Mark Montgomery is senior director of the Center on Cyber and Technology Innovation (CCTI) at the Foundation for Defense of Democracies (FDD. For more analysis from the author and FDD, please subscribe HERE. Follow Mark on X @MarkCMontgomery. Follow FDD on X @FDD. FDD is a Washington, DC-based, nonpartisan research institute focused on national security and foreign policy.