The administration said today that it was launching a "Section 301" investigation.
Foreign companies have long complained about Beijing's failure to protect know-how and patents, and in some cases forcing firms to share information with domestic partners as the price for doing business in the massive Chinese market.
The new intellectual property inquiry joins numerous investigations launched by Washington into Chinese trade practices, notably those concerning steel and aluminium and their national security consequences, which the Trump administration began earlier this year.
"There is no victor in a trade war", she further emphasized. "For too long, this wealth has been drained from our country while Washington has done nothing-they never have done anything about it. Washington will turn a blind eye no longer".
The probe will likely further complicate the US relationship with China, the country's largest trading partner.
However, the start of a United States inquiry will not immediately result in open confrontation.
USA administration officials have claimed that China's "theft" of intellectual property could be worth as much as $600 billion.More news: Grieving Uber boss 'driven out by investor'
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The investigation was initiated after President Donald Trump signed an executive memorandum Monday, giving Lighthizer one year to look into China's trade policies and determine whether an investigation was necessary.
Secondly, the Chinese government's acts, policies and practices reportedly deprive USA companies of the ability to set market-based terms in licensing and other technology-related negotiations with Chinese companies and undermine USA companies' control over their technology in China.
Last week, Washington announced preliminary sanctions against Chinese imports of aluminium foil. The provision gives the President broad authority to impose tariffs on foreign goods, though such unilateral action has rarely been used since the creation of the World Trade Organisation in 1995, according to trade experts.
"If the USA side ignores the facts, and disrespects multilateral trade principles in taking actions that harms both sides' trade interests, China will absolutely not sit by and watch, will inevitably adopt all appropriate measures, and resolutely safeguard China's lawful rights", the statement added.
The investigation also comes amid heightened tensions between the USA and North Korea, and Trump's efforts to pressure China to take a harder line against Pyongyang's development of intercontinental ballistic missiles and nuclear weapons.
China said it would halt iron, iron ore and seafood imports from North Korea starting on Tuesday, in accordance with new United Nations sanctions that Beijing voted to approve.
China is America's largest trading partner, with annual trade in goods and services worth about $663 billion.