There's also the internal versus external market. Chinese are not stealing IP for the sake of making the same stuff but with cheaper labor. Whether you get the IP by buying or stealing, building something new on top of that IP is still creative innovation, and they do a lot of that. In fact, not respecting western IP with all its associated innovation-stopping practices lets them iterate at a pace not seen in the West.

See e.g. some of the stuff Bunnie wrote here: https://www.bunniestudios.com/blog/?cat=20, starting with: https://www.bunniestudios.com/blog/?page_id=3107.