The speech comes as the USA and China engage in an escalating trade dispute, after Washington imposed tariffs on Chinese imports and Beijing retaliated with its own taxes on American goods.
Speaking at the conservative think tank the Hudson Institute, Pence said that "the Dragonfly app. will strengthen Communist Party censorship and compromise the privacy of Chinese customers".
Chinese Defense Ministry spokesman Wu Qian defended the naval maneuver on Tuesday, accusing the United States of threatening China's sovereignty and safety by repeatedly sending warships to disputed areas of the South China Sea.
Pence pointed to Trump's tough line on Beijing, particularly Trump's decision to impose $250 billion in tariffs on goods coming from the country.
US intelligence agencies assess that Russian Federation interfered in the 2016 presidential election to boost Trump over his Democratic rival Hillary Clinton through hacking and releasing sensitive documents and social media manipulation.
"It's using wedge issues, like trade tariffs, to advance Beijing's political influence", he was to say, adding that the goal is to shift Americans' perception of Chinese policies by mobilizing "covert actors, front groups and propaganda outlets".
Bloomberg Businessweek cited 17 unnamed intelligence and company sources as saying that Chinese spies had placed computer chips inside equipment used by about 30 companies, as well as multiple USA government agencies, which would give Beijing secret access to internal networks.
Pence said Chinese security agencies have masterminded the "wholesale theft of American technology", including military blueprints, and warned Washington would continue to take action.
Pence also said China had deployed anti-ship and anti-air missiles on artificial islands in the disputed South China Sea, despite promises not to militarise them.
Meanwhile, earlier this year, the Trump administration banned government employees from buying tech from Chinese tech firms, Huawei and ZTE.
He warned Beijing that the U.S. "will not be intimidated" and "will not stand down".
Pence also denounced Beijing's crackdown on minority Muslims in the Xinjiang region.
Pence accused China of using its economic power to bully smaller countries and said it had threatened the stability of the Taiwan Strait by pressuring three Latin American countries to sever ties with Taipei and recognise Beijing. We will not stand down'.
"The more open tone of confrontation from Pence will strengthen the perception in China that the ultimate United States objective in the [trade] dispute is to contain China's rise", the group's analysts led by Asia director, Michael Hirson, wrote.
China has said Xinjiang faces a serious threat from Islamist militants and separatists who plot attacks and stir up tensions.
- Amy Schumer, Emily Ratajkowski among more than 300 arrested at Kavanaugh protest
- Trump says too soon to talk with China on trade
- U.S. withdraws from international accords, says U.N
- India vs West Indies | Prithvi Shaw scores century in Test debut
- Suge Knight's son claims Tupac is alive and living in Malaysia
- Supreme Court refuses to stop deportation of 7 Rohingya Muslims
- Melania Trump Meets Paramount Chief of Oguaa
- Juventus forward Cristaino Ronaldo omitted from Portugal national team amid rape allegations
- What you need to know about today's presidential cellphone alert
- Ford's lawyers blast FBI's Kavanaugh probe as 'stain' on justice