How the U.S. DOJ’s ‘China Initiative’ impacts Chinese-American scientists and researchers

Foreign Affairs

Catherine X. Pan-Giordano is a partner at the international law firm Dorsey & Whitney LLP, which has a task force to advise clients regarding the U.S. Department of Justice’s “China Initiative.”

U.S. Department of Justice team including Jeff Sessions hold a press briefing in 2018 to announce a new initiative targeting scientists and researchers with ties to China
U.S. Attorney General Jeff Sessions announces a criminal law enforcement action involving China; and a new Department of Justice initiative focusing on "China’s continued economic criminal activity" during a news conference at the Justice Department in Washington, U.S., November 1, 2018. REUTERS/Jonathan Ernst

What is the China Initiative, and why is it important for Chinese and Chinese American businesses and researchers to know? In this sponsored post, SupChina COO Bob Guterma interviewed Pan-Giordano to find out.

Bob Guterma: Let’s begin with a general policy discussion. What is the Department of Justice’s (DOJ) “China Initiative?

Pan-Giordano: On November 1, 2018, the Department of Justice launched its “China Initiative” to confront China’s national security threats and to protect U.S. technology. Under the China Initiative, the DOJ has been prioritizing U.S. government enforcement actions against Chinese companies and persons doing business in the U.S. or partnering with U.S. companies and universities. The DOJ has also been focusing on individual researchers and scientists with ties to China.

What has happened under the China Initiative?

Under the China Initiative, the DOJ has:

  • Investigated and prosecuted Chinese persons for trade secret theft cases.
  • Targeted individuals, universities, and companies for transferring technology to China.
  • Engaged U.S. universities in identifying and monitoring persons and companies with ties to China.
  • Aggressively used existing laws and authorities to scrutinize persons seeking to obtain U.S. companies’ IP. These existing laws and authorities include the False Claims Act, Foreign Corrupt Practices Act, Foreign Agent Registration Act, Foreign Investment Risk Review Modernization Act, NIH and DOD grant rules, university ethics rules and conflicts of interest policy, and export control laws.

There is a long list of enforcement actions by the DOJ under the China Initiative.  Here are a few recent examples:

  • Criminal charges against Huawei for trade secrets theft and violation of U.S. sanctions on Iran. Ms. Meng Wanzhou, Huawei’s CFO and the daughter of the company’s founder, was arrested by the Canadian government based on the U.S. government’s request for extradition. She was indicted by the DOJ on criminal charges of trade secrets theft.
  • Indictment against a Chinese American engineer formerly employed by GE and his Chinese business partner with charges of economic espionage and trade secret theft.
  • In February 2020, renowned Harvard University Professor Charles Lieber, then chair of the university’s Department of Chemistry and Chemical Biology, was arrested and charged criminally with making a materially false and fraudulent statement about his involvement in the “Thousand Talents” program and affiliation with Wuhan University of Technology in China.

Which U.S. government agencies are involved in these cases?

DOJ, FBI, NIH, DOD, DOE, and other federal agencies that provide grants to support scientific research.

I understand that, as of March 2020,NIH has contacted 84 institutions regarding 180 scientists who it suspects of hiding outside activities or funding. It has referred 27 of them for federal investigation. The FBI has been looking at thousands of potential cases as of February.

What are the Chinese “Thousand Talents” or “Changjiang Scholars” programs?

These programs aim to reverse China’s brain drain to the West by offering elite scientists premier salaries and lab facilities to go to work in China. The talent programs are administered by Chinese universities. Typically, a scientist in the U.S. would submit an application and sign a three-year contract, which requires the scientist to work in China for a certain period of time every year. Some higher-level Thousand Talents programs require longer time spent in China and a second lab; other programs require less time in China.

The contract typically also requires a scientist to provide guidance to lab research and students in China, and to recruit other talents for the Chinese university. The payment under a three-year contract is generally about 500,000 RMB (equivalent of about $70,300), plus reimbursement of expenses, such as travel and hotel. There may be additional payments, according to how much time a scientist actually works at the Chinese university. It sometimes has other perks, such as housing, medical care, jobs for spouses, and schools for children. As of 2017, the Thousand Talents Program succeeded in attracting 7,000 scientists.

What effect has the DOJ’s China Initiative created? How is it contributing to Sinophobia in the U.S.?

In my experience, the China Initiative has created the following effects:

  • It has had a chilling effect on scientific collaboration.
  • It has created fear and distraction among the scientific community.
  • Universities and scientists are shying away from collaborating with Chinese institutions and shying away from recruiting Chinese researchers and graduate students.
  • It also has had the unintended effect of driving some Chinese-American scientists to return to China, costing the U.S. intellectual firepower. For example, it is reported that University of Florida researcher Dr. Weihong Tan left Florida because of a government investigation, and developed a coronavirus test kit that can be used both in clinical and non-clinical settings, such as airports.

The desired effect of the China Initiative is to protect U.S. technology and preserve the U.S.’s leading status in science and technology. However, the actual execution of the China Initiative became increasingly heavy-handed, and it oftentimes placed blame entirely on individual faculty members and scientists. Among the scientists who we have talked to and worked with around the country, the vast majority of them did not steal intellectual property or commit espionage; they simply did not understand the complicated and sometimes confusing disclosure rules, and they oftentimes did not receive sufficient training and support from the universities and research labs where they worked.

Researchers need education and proper training so that they can put together proper bio sketches and conflicts of interest disclosures in their grant applications. Universities bear its own share of responsibility for the disclosure issues, because they are supposed to stand behind the accuracy of the information supplied to the federal grant-making agencies. Until recently, many universities were lax in training, doing the due diligence and enforcing disclosure rules.

What kind of impact, if any, do you think Sinophobia is having on American society? How is that impacting our current fight against COVID-19?

Again, it has a chilling effect on cross-border collaboration in many fields, including medicine and healthcare. Diseases know no borders. From a timing perspective, it is unwise. You have to stop the bleeding first before pointing fingers.

It is oftentimes counterproductive and destructive, as Sinophobia does not solve any problem we are facing as a nation. We need to unite as many people as we can and encourage people to cooperate with each other to weather this storm.

Practical Advice

Pan-Giordano: Regardless of whether you agree with the underlying reasoning and policy behind the China Initiative, this is the reality we live in. Therefore, I want to offer some practical advice to those who may be impacted by the China Initiative, and to those who may have family members, friends, and colleagues who are impacted.

Guterma: What should you do if you are asked by your employer regarding your China ties?

  • Do an internet search (in English and Chinese) to see what the internet is saying about you.
  • Open your passport to look at your visa stamps and travel records; look at your calendar for travel logs.
  • Think about all the foreign positions you have held, whether current or past, whether honorary or substantive. Apply a zero-dollar threshold.
  • Engage your own legal counsel. Your employer’s lawyer is not your lawyer. Even worse, they can be adverse to you.
  • In most cases, scientists had no intent to mislead, and you have to preserve that status. As soon as there is evidence showing you had the intent to mislead, whether it is deleting emails or asking colleagues to cover up for you, you start to mislead. That gets you into trouble. As white-collar criminal defense lawyers always say, “It is not the crime; it is the cover up!”
  • Professors typically do not have an employment contract but an appointment letter. However, remember, before you can be terminated, you may exercise your rights to a hearing before a faculty panel as well as peer discussions.

What should you do if you are being asked by the FBI?

  • All of the above suggestions still apply.
  • Ask whether you are a target of the investigation or a witness.
  • Ask which agents from which unit(s) will be interviewing you.
  • Engage your own counsel.
  • Do not walk into an FBI interview without the preparation and protection of your own counsel.

What if you have received foreign income and did not pay tax in the U.S.?

This is a complicated subject. In short, you need to amend your tax filings to correct the mistakes and follow a foreign bank account reporting program to get clean, pay interest and penalty. In addition to all the legal benefits, you will sleep better at night if you take these corrective steps.

Any other advice to Chinese American scientists?

I have some quick dos and don’ts to share:

Do

  • Use a calendar and visa history to refresh your memory.
  • Understand what the internet is saying about you.
  • Express a cooperative attitude.
  • Talk to your own lawyer.
  • Tell your lawyer all the good and the bad, especially the bad.

Don’t

  • Delete emails.
  • Panic talk to your colleagues and friends.
  • Cover up.
  • Try to handle an investigation without a lawyer. This is not a good DYI project.
  • Forget to pay U.S. tax on Chinese income or report your Chinese bank accounts.

Do you think the investigation will slow down during and after the current global pandemic?

According to federal prosecutors, the coronavirus pandemic has not significantly hindered any government enforcement efforts under the China Initiative.  In my view, a more hostile U.S. approach is likely to emerge during and after the pandemic, given the current tension between the two countries.