That distinction shouldn't need to be made in the first place - it's pretty blindingly obvious to anyone with basic thinking skills that "the government of a county" and "the people/nationalities/culture of a county" are two totally different things.
Even American county dwellers, who tend to be less educated, can understand this pretty easily - most of them identify as being "Americans", but are still critical of their government (and associated politicians).
The CCP has invested a lot of energy into making the people of China conflate these two concepts. The party IS China and the two are inseparable according to the CCP.
This is where the topic becomes contentious and not so black and white. The CCP has successfully influenced millions of people into doing its bidding abroad. And the CCP is fully aware of the West's strong aversion to racism in any form, and has been able to weaponise it.
Relevant reading: Silent Invasion: China's influence in Australia (2018)
As an American of Chinese descent, I honestly have very real concerns about my own safety in the next decade or two going forward. Japanese internment camps happened not too long ago, they can happen again. Or worse.
Even if it weren't government sanctioned, violence against us is still on the rise[1].
The issue is called out-group homogeneity bias: https://en.wikipedia.org/wiki/Out-group_homogeneity
How does it surprise people these days?
China had 20 years of relatively good relationships with US, and the world's biggest spy service.
Take a look at Russia, a supposed ally of Beijing. Annually, there are dozens, and dozens of people who are given life for espionage for China. And those are only cases which go public.
Russia is a closed, militarist society, with secret police sticking its nose into everything.
USA is an open country, with open borders, immigration system, freedom to do whatever business you want, and an open society, with a few million people strong entrepreneur class exuberant at the opportunity of doing business even with a place like China.
It is rational to believe that there are way more than just a few random communists who got into your biggest companies, and much likely that there been a many decades long concerted infiltration, and recruitment campaign. This is just what those guys do.
For example, a former "student activist" from Maoist Kharagpur is now running one very big Californian Internet company.
What's wrong with someone openly having opinions different from yours? If they were really a threat to the US, then they would remain as inconspicuous as possible.