The U.S. Trade Representative wrote in its annual report to Congress about China's fulfillment of trade obligations that China must make "critical changes" to its intellectual property laws. The Trade Representative wrote "counterfeiting and piracy remain at unacceptably high levels and continue to cause serious harm to U.S. businesses across many sectors of the economy."

In particular, China is home to "rampant piracy online, which is increasingly becoming the predominant mechanism for copyright piracy." It's estimated that 99 percent of all music downloads in China are illegal, and streaming websites allow Internet users in China to access illegal content easily.

These issues have been raised by the U.S. before, but change has been slow in coming. According to the report, "One major weakness is China's chronic underutilization of deterrent criminal remedies."

The two countries will continue to work together to address intellectual property crimes, but the U.S. has made it known that it is "prepared to take other types of action on these issues when bilateral discussions fail to resolve key issues." This may include dispute settlement at the World Trade Organization.