I think the typical rhetoric of "China is bad because it steals innovation!" is usually misplaced. From China's perspective, there is nothing wrong with "stealing innovation," as this model has helped grow China's economy and lift millions out of poverty over the past few decades. The diffusion of information does not produce the same "value" as the production of information itself, but from China's perspective this diffusion certainly has its own value if it boosts the growth of native industry (which can one day hopefully enable China to produce more value from its own production of information).
From the American perspective, I think we tend to ascribe more value to hanging on to our innovation than is actually there. Hanging on to innovation will always provide a temporary advantage. The value of innovation is also dependent on the cost of preventing diffusion of the products of innovation. If the results of innovation are so valuable, companies should do more to prevent the outward flow of information, by locking up information systems and trying to hold on to as much of the involved human capital as possible. However, we do not do that as much as we should because there are other forms of "value" we can get by not locking up our innovation and human capital. In previous decades, Japan, Korea, and Taiwan have all followed practices similar to what China does today. The growth of native industries may have hurt America's ability to compete in these markets (and even in America itself), yet companies like Sony, Samsung and others have brought value directly to American consumers and encourage more innovation now that they actively compete with American companies in the innovation game.
To coin a proverb, "There is nothing wrong with stealing innovation until you steal the life from that which creates it."
China, culturally, does not innovate or foster the mindset of problem solving or collaboration that is visible in highly innovative - honestly innovative - environments. That's why, anecdotally speaking, several major science journals do not accept papers from Chinese higher education facilities, due to having to deal with far too many retractions. I'm only a bystander to this issue, but I know it's real and will take generations to correct.
I thought it was more like "there is nothing wrong with stealing innovation until its your own innovation that is stolen." As China climbs the tech ladder and have more to lose than win by stealing, I'm sure they'll become believers in IP.
There is already some bias in CS conferences with respect to Chinese submissions, which is why in blind review we take great care to "hide" our nationality (I'm not Chinese, but work in China and publish paper with Chinese). It really isn't fair, since there is some really good research going on in China, but it gets drowned out by a few bad apples.
From the American perspective, I think we tend to ascribe more value to hanging on to our innovation than is actually there. Hanging on to innovation will always provide a temporary advantage. The value of innovation is also dependent on the cost of preventing diffusion of the products of innovation. If the results of innovation are so valuable, companies should do more to prevent the outward flow of information, by locking up information systems and trying to hold on to as much of the involved human capital as possible. However, we do not do that as much as we should because there are other forms of "value" we can get by not locking up our innovation and human capital. In previous decades, Japan, Korea, and Taiwan have all followed practices similar to what China does today. The growth of native industries may have hurt America's ability to compete in these markets (and even in America itself), yet companies like Sony, Samsung and others have brought value directly to American consumers and encourage more innovation now that they actively compete with American companies in the innovation game.