It's both. Governments correctly realized that you don't outsource technologies that are critical to your defense toolchain, which is why Boeing still makes planes in Everett and not in China. The oversight was not realizing the extent to which all technologies feed into one another. Eventually, you're trying to get electromagnetic launchers working on your aircraft carriers, and you're discovering that you don't have that capability, because administrations 30 years ago let electronics manufacturing go to China. So not only do you not have the capability of doing the thing that you wanted to do, but your adversary has reached a level of electronics manufacturing that your country never achieved.

It's treason if you or I leak secrets to China, and I'd argue that it would also be treason if Lockheed or Boeing wanted to make jets vital to US military interests in China. But if you sell public assets that are subsequently bought by the Chinese, or you move manufacturing that feeds the logistical supply chain, and subsequently erode local capability, that's apparently fine.

The market will always seek to maximize profits, but it's on the government to actually bat for its own sovereign interests. It's that second part that has been lacking, hence why I said in my previous post that this stuff was given away. It didn't need to be stolen.