U.S. sanctions on Chinese firms spark Beijing protest

On Oct. 19, 2026 the U.S. State Department designated five Chinese entities under the Protecting American Intellectual Property Act. The list includes Shanghai Zhisuan Technology Co. Ltd. and four MiraclePlus-linked entities: Qiji Chuangtan Beijing Investment Management Co. Ltd., Beijing Qiji Chuangtan Phase I Venture Capital Center LP, Beijing Qiji Chuangtan Phase II Venture Capital Center LP, and Beijing Qiji Chuangtan Zhiyuan Enterprise Management Center LP.

The designations were imposed on the grounds that Shanghai Zhisuan "has knowingly engaged in, or benefitted from, significant theft of trade secrets of United States persons" occurring on or after Jan. 5, 2023. The action places both the operating company and its associated investment platforms under the same sanctions framework.

Under PAIPA, the measures can include freezing U.S.-based assets of the named entities and imposing banking and investment restrictions. These restrictions can limit access to loans from U.S. financial institutions and curb new U.S. investment, tightening the entities’ links to the U.S. financial system.

Shanghai Zhisuan is tied to former Google engineer Linwei Ding, who was convicted on Jan. 29, 2026 of theft of trade secrets related to Google’s AI infrastructure. The criminal case centered on the misappropriation of AI trade secrets, elevating concerns about protection of cutting-edge technology.

Following his conviction, a judge later dismissed economic espionage counts, and Ding was sentenced to roughly 12 months in prison. The sanctions extend the consequences of the case beyond the individual conviction to companies and investment vehicles seen as connected to the alleged misuse of stolen intellectual property.

MiraclePlus, which provided seed financing to Shanghai Zhisuan through several affiliated funds, is among the entities now facing U.S. restrictions. The designations underscore U.S. efforts to reach not only operating companies but also financial backers associated with disputed technology transfers.

On Oct. 20, 2026 China’s Ministry of Commerce issued a statement expressing strong opposition to the U.S. move. The ministry said it was "firmly opposed" to the sanctions and described them as measures that "severely harms the legitimate rights and interests" of Chinese businesses.

Beijing urged the United States to "correct its erroneous practice" and warned that China would take "necessary measures" in response, without specifying what steps might follow. The language reflects a formal diplomatic protest and frames the U.S. designations as unjustified.

The exchange adds a new point of friction to U.S.-China relations, this time centered on intellectual property protection and emerging AI technologies. With sanctions aimed at both a technology firm and its financial backers, and a sharp rebuttal from Beijing, the episode highlights how disputes over trade secrets are feeding into broader economic and political tensions.