You’re asking why Chinese companies aren’t stealing from each other?

How do you know they’re not?

Nothing happens in China without State approval so maybe the penalties for encroaching on a State backed entity are quite severe?

He's saying the opposite:

1. Chinese companies steal IP from each other all the time.

2. The Chinese economy is growing quickly and Chinese companies are out-innovating their US competitors in many segments.

And the question then is: do strong IP protections actually benefit innovation? Because China seems to be a counterexample.