Congressional reports, pending measures signal changes in U.S. higher education landscape amid concerns over Chinese influence

In a significant development for U.S. higher education, Congressional reports and pending measures are signaling potential changes aimed at addressing concerns over Chinese influence in research environments.

The proposals, arising from the U.S.-China Economic and Security Review Commission’s 2023 Annual Report, underscore worries about the Chinese government’s exploitation of open research spaces to evade export controls and national security laws. The suggested measures range from restricting access to research to enhancing government oversight of collaborations with Chinese institutions, posing potential transformative impacts on colleges and universities in the coming year.

Recommendations, regulations

Numerous recommendations outlined in the reports and pending measures underscore concerns regarding the Chinese Government’s exploitation of open research environments in the United States to evade export controls and other national security laws.

In response to these concerns, Congressional proposals aim to restrict access to research, enhance US Government supervision of collaborations with Chinese research institutions, and intensify enforcement efforts. These proposed measures have the potential to bring significant changes affecting colleges and universities in the upcoming year.

US colleges and universities are subject to various laws designed to safeguard national security, such as export controls governed by the Commerce Department’s Export Administration Regulations and the State Department’s International Traffic in Arms Regulations. 

These regulations mandate licenses for the export, re-export, and in-country transfers of specific physical items, software, and technology.

These laws also encompass sanctions managed by the Treasury Department’s Office of Foreign Assets Control and additional national security controls. These measures have the potential to limit the participation of foreign entities and individuals in research environments.

These laws primarily address foreign funding, awards, and various methods through which foreign interests may exert influence and control over research conducted by US colleges and universities.

In November, the US-China Economic and Security Review Commission issued its 2023 Annual Report to Congress, suggesting several modifications to Section 117 of the Higher Education Act of 1965.

This law mandates US colleges and universities receiving federal funding to report foreign ownership and control, as well as gifts and contracts from foreign sources, to the Department of Education.

Modifications to Section 117

Proposed modifications to Section 117 encompass the following:

• Mandate the Department of Education to share disclosed information with federal law enforcement, intelligence, and other pertinent agencies.
• Instruct the Department of Education to scrutinize gifts and contracts from China and Hong Kong received by US educational institutions in the past decade. Evaluate the adequacy of the existing reporting threshold for gifts and contracts valued at $250,000 or more per calendar year under Section 117.
• Mandate institutions to submit supplemental reports for correcting inaccuracies or changes in previously disclosed information under Section 117. Additionally, call for the establishment of penalties for late reporting by agencies.
• Create an interagency group tasked with developing a public database to help colleges and universities identify connections between potential Chinese partners and Chinese government agencies of concern.

The Commission suggested Congress amend the Foreign Investment Risk Review Modernization Act of 2018 to broaden the jurisdiction of the Committee on Foreign Investment in the United States for reviewing transactions involving foreign individuals or entities that include research contracts.

FIUS, an interagency committee, possesses authority to investigate, suspend, and address acquisitions of US businesses by foreign entities. Additionally, CFIUS can request a presidential order to block or reverse a transaction under its review.

Recommended additional actions from Congress

The report recommends additional actions for Congress, including:

• Oversee the enforcement of Section 117 and mandate colleges and universities to apply the “know-your-customer” (or donor) rule to US non-profit entities that route foreign gifts and contracts.
• Pass a law to forbid US entities from participating in research partnerships with Chinese entities engaged in military and defense research and development, including those listed on OFAC’s Chinese Military-Industrial Complex Companies and the Commerce Department’s Military End Users registers.
• Mandate universities receiving federal grants for basic research to conduct risk-based security reviews and fully adopt National Security Program Memorandum 33. NSPM-33 directs funding agencies to demand disclosure of conflicts of interest from recipients of US Government funds for research and development. It also requires institutions receiving federal science and engineering support exceeding $50 million per year to certify the implementation of a research security program, encompassing cybersecurity, foreign travel security, export controls, and insider threat training.
• Require US research institutions engaged in collaborations with foreign adversary entities in critical and emerging technologies to secure an export license before utilizing any export-controlled item with a “clear and distinct national security nexus.”
• Enhance the authority of CFIUS to scrutinize transactions involving defense-funded university-affiliated research centers, national laboratories, military facilities, acknowledged intelligence sites, and critical infrastructure sites.
• Broaden the scope of “critical technology” within FIRRMA to encompass technologies facilitating those identified on the White House Office of Science and Technology Policy’s Critical and Emerging Technology List. This expansion would mandate foreign acquisitions involving critical technologies to undergo a mandatory pre-closing filing with CFIUS.

Bills to mitigate risks associated with China

Several bills aimed at mitigating risks associated with China are still pending. Notably, these bills encompass:

• The DETERRENT Act (H.R. 5933), passed by the House and sponsored by Republican lawmakers, aims to amend Section 117. The bill proposes lowering the reporting threshold to zero for foreign countries and entities of concern, setting it at $50,000 for all other countries. It also seeks to prohibit contracts with foreign countries or entities of concern, with China, Iran, North Korea, and Russia presently defined as foreign countries of concern. Entities of concern include those on OFAC’s list of Specially Designated Nationals and Blocked Persons, entities violating US export controls, and those owned or controlled by the listed foreign countries.
  
• The Protect America’s Innovation and Economic Security from CCP Act (H.R.1398) and a Republican-led amendment to the proposed Commerce, Justice, Science, and Related Agencies Appropriations Act (H.R. 5893) aim to revive the Justice Department’s discontinued “China Initiative.” The initiative, launched during the Trump administration, targeted trade secret theft and economic espionage benefiting the Chinese Government.

The Congressional reports, senators’ letter, and previous efforts addressing China-related national security risks in 2023 may generate heightened public scrutiny. However, there is concern that this scrutiny could lead to anti-Asian sentiment, potentially hindering the recruitment of top international talent crucial for the foundation of US national security.

The Congressional Research Service has noted a consistent increase in the enrollment of foreign students in Master’s and Doctorate programs in Science, Technology, Engineering, or Mathematics in the United States since the 1980s. Foreign students significantly contribute to the total number of STEM Master’s and Doctorate degrees awarded by US colleges and universities.

Recent data from the Open Doors Report on International Educational Exchange, sponsored by the State Department, reveals that 27 percent of all international students at US colleges and universities during the 2022/23 academic year were from China. Of these Chinese students, over half pursued STEM fields, with more than half involved in graduate-level study. A considerable number of these students choose to remain in the United States after completing their studies.

Importance of cooperation in the field of higher education

The China-US Higher Education Dialogue, held in New York in September, reiterated the importance of cooperation in the field of higher education and regarded educational ties as a significant pillar in the China-US bilateral relationship.

The discussion focused on understanding existing problems and proposing pathways for addressing future challenges. The joint statement emphasized that the two sides engaged in frank and honest conversations about areas of concern in each country.

The joint statement highlighted that the dialogue resulted in consensus, particularly in cultural communication and collaboration between higher education institutions.

Both parties affirmed their commitments to support the two-way flow of students, teachers, scholars, researchers, and administrative staff members from universities.