It is unclear what impact the Bush administration's steps to crack down on China have had.

Two trade cases filed in April that address protections for intellectual property rights are winding their way through the machinery of the WTO and might force China, if found to be in the wrong, to either reform its policies or face retaliatory tariffs. However, Beijing also loathes being seen as bullied by the U.S.

Jon W. Dudas, undersecretary for intellectual property rights at the Commerce Department and head of the U.S. Patent Office, acknowledged that Chinese officials, while not entirely mum on the subject, have been less willing to have discussions about how to fight counterfeiting.

"By filing the WTO suit, it now puts it into a litigious situation of China versus the U.S., the U.S. versus China," said Lyle Vander Schaaf, a Washington-based intellectual property law expert and attorney at Bryan Cave. "This is such a massive problem, the counterfeiting issue, it grows as China develops. They are making progress in shutting things down, but as the economy develops, the demand for counterfeiting increases. Nike is not selling Nike shoes in China because [Chinese consumers] are buying the knockoffs."

Part of the challenge is to persuade local authorities in China to crack down on factories accused of counterfeiting because their owners often have standing in the community and their operations are sources of employment, he said.

"There is oftentimes a lack of will power on the part of local officials in China to administer seizure orders," said Vander Schaaf.

In October, the USTR's Schwab joined forces with the European Union and six other trading partners to begin negotiations for an anticounterfeiting trade agreement that might ultimately help the bloc present a united front against China.

As illegal businesses go, though, counterfeiting is more profitable than the drug trade and carries milder punishments if caught. Crooks spending $3 to $5 to bring goods into the U.S. market can turn around and resell them for $20, or more in the cases of watches and handbags, said Roxanne Elings, a Greenberg Traurig attorney.

"If you're consistent and you have a program, usually within three years you can see a difference," said Elings of Web-based operations. "You'll never eradicate counterfeiting, but you can control it and you can reduce it. But you have to be systematic."