The reality is 99% of this hardware is built in China and they all copy each other's designs without regard to intellectual property.
True. But can they export patent-infringing hardware to the West?
If the speedup was 2000% and all the hardware was made in the USA where patents are strongly enforced might be relevant but a minor 20% optimization is nothing we should be hard forking to avoid. Irrelevant - many design advances in ASIC, widely copied, have yielded far more than 20% boosts and Bitcoin has managed to survive.
20% isn't minor. It will be the difference between being able to mine profitably or not.
There is a physical limit to how fast hardware can mine. Hardware which is allowed to skip repeating part of the hashing process will be able to mine faster and cheaper than hardware that cannot. Eventually the faster hardware will be profitable and the slower hardware will be uneconomical to run.
Bitcoin was designed to allow anyone to be able to mine it. A mining environment where one entity is able to mine 20% faster than all the others because they are using government power to cripple the competition doesn't work out well for Bitcoin as a whole.