No, it is true that China, in reality, still faces serious problems in the realm of intellectual property protection. China maintains a very high rate of piracy for CDs, audiocassettes and computer software.
However, due to local protectionism and due to the lack of truly independent enforcement authorities, infringers of intellectual property are often not prosecuted or punished. Often, fines imposed on infringers are ridiculously low, far too low to deter further infringing activities.
China certainly needs to step up intellectual property protection, for instance by giving more power and independence to enforcement authorities. Counterfeiting does not only harm intellectual property owners, but also consumers. Furthermore, there are an increasing number of innovative Chinese companies that also suffer from the illegal copying of their products. Therefore, effective intellectual property protection is in the best interest of the Chinese economy as a whole.