I hear in the news stories about companies being highjacked by hackers, where the hackers encrypt said companies' data and demand a ransom. If that is possible, then wouldn't it be possible for US backed hackers to do the same to the Chinese backed organizations that stole American IP?

It seems ineffective to just publicly indict Chinese hackers that are in China. The indictments are public, so the likelihood that said hackers come to the US are nill. Seems more effective to erase the trade secrets, or any other data, from these organizations.