He's saying they've been transgressing in ways, like human rights violations (social credit and the Uyghurs in Xinjiang are a couple examples), undermining demo

He's saying they've been transgressing in ways, like human rights violations (social credit and the Uyghurs in Xinjiang are a couple examples), undermining democracy outside of its own government (undermining Hong Kong's contractual right to independent democratic process, etc.), violating intellectual property, cyberespionage against US companies like Google, etc., which we would have likely already have punished if it weren't economically inconvenient to do so to this particular state, and that that's an unfortunate reason to allow foul play.