The Trump administration has urged the US companies to ensure that their technologies do not power a truly "Orwellian surveillance state" and American principles are not sacrificed for prosperity, in a reference to China, the world's second largest economy.
The US accuses China of massive theft of its technology and violation of intellectual property, an allegation Beijing denies.
Secretary of State Mike Pompeo, in a major policy speech in Silicon Valley that was directed at China, said: "I'm not here to demand that you get out of China. In fact, it's just the opposite. We want American companies to get rich doing business there. We want you to grow jobs here in America and build your companies successfully".
"We want to create conditions so that you can do so on a level-playing field, in the spirit of respect between our two nations. Indeed, that's the whole point of President Trump's trade talks," Pompeo said in his address to the Silicon Valley Leadership Group: 'Technology and the China Security Challenge' on Monday.
"At the same time, we need to make sure that our companies don't do deals that strengthen a competitor's military or tighten the regime's grip of repression in parts of that country. We need to make sure American technology doesn't power a truly Orwellian surveillance state. We need to make sure American principles aren't sacrificed for prosperity," the Secretary of State said.
He told the industry that China's rampant theft of intellectual property is real and that it is not just a problem for the particular company affected.
"Because that capacity to invest and create and protect those property rights underpins the entire innovation economy that we have here in the United States," the top American diplomat said.
"As we stand here today, there are about a thousand open intellectual property cases with the FBI, nearly all of them somehow connected to China. But it's the application of that property that is just as troubling. There's a reason so many hackers and thieves like the APT 10 group ? are connected to the Chinese Ministry of State Security.
"Under Xi Jinping, the CCP has prioritised something called 'military-civil fusion'. Many of you will know this. It's a technical term but a very simple idea. Under Chinese law, Chinese companies and researchers must I repeat, must under penalty of law, share technology with the Chinese military," Pompeo said.
The goal is to ensure that the People's Liberation Army has military dominance. And the PLA's core mission is to sustain the Chinese Communist Party's grip on power that same Chinese Communist Party that has led China in an increasingly authoritarian direction and one that is increasingly repressive as well. It runs completely at odds with the tolerant views that are held here in this area and all across America, he said.
"So, even if the Chinese Communist Party gives assurances about your technology being confined to peaceful uses, you should know there is enormous risk, risk to America's national security as well. This is a real problem, given that many of our most innovative companies have formed partnerships with the Chinese government and companies that are linked to it," Pompeo added.