Research for sale: How Chinese money flows to American universities

American universities sign contracts around the world to sell their research and training expertise, and some of their most lucrative agreements have been with companies based in China. (Image: Pixabay)
American universities sign contracts around the world to sell their research and training expertise, and some of their most lucrative agreements have been with companies based in China. (Image: Pixabay)

Summary

Many U.S. colleges have lucrative contracts with companies based in China, despite deepening rivalries between the countries.

Chinese companies are feeling a cold shoulder in the U.S.—except at universities, where they are welcomed as customers.

American universities sign contracts around the world to sell their research and training expertise, and some of their most lucrative agreements have been with companies based in China. The decadeslong trade thrives despite a deepening U.S.-China rivalry and rising sensitivities about Beijing’s influence on American campuses.

Nearly 200 U.S. colleges and universities held contracts with Chinese businesses, valued at $2.32 billion, between 2012 and 2024, according to a review by The Wall Street Journal of disclosures made to the Education Department. The Journal tallied roughly 2,900 contracts.

The extensive trade in American expertise presents a quandary for universities and policymakers in Washington: Where’s the line between fostering academic research and empowering a U.S. rival?

“It seems clear that when the Chinese contract with U.S. universities they are getting a capability they can’t get anywhere else," said Daniel Currell, a Trump administration Education Department official who has tracked foreign influence in higher education. “The big question is, what [contracts] should be legal, what should be legal and disclosable, and what should be illegal?" he added.

In some cases, an American university whose identity is tied to a bedrock local industry—think cars and the University of Michigan, or the University of Florida and citrus—does research on behalf of a Chinese challenger in that same sector. All three of China’s major government-owned oil companies have funded contracts for $100,000 or more at the University of Texas at Austin, which the school describes only as “research activity."

U.S. universities earn money from virtually every nation in the form of tuition, gifts and contracts. In the Journal analysis, Qatar provided more non-tuition money into U.S. universities than any other country, followed by the U.K., Germany and China.

Gifts draw more publicity because they are often large-dollar amounts from individuals that confer, say, naming rights for new buildings. But overall, the contract world involves far more money.

The Journal found that the aggregate value of university contracts attributed to China over roughly the past decade was 2.5 times reported Chinese donations, in line with the flows from other countries. China remains the largest source of foreign students on American campuses and their spending, including tuition, is a far bigger share of most university budgets than contracts and gifts.

Universities are required to report any foreign gift or contract worth $250,000 or more to the Education Department, though the rule historically wasn’t vigorously enforced and the agency has alleged billions have gone unreported. Journal reporting also found instances of double-counting and other data errors.

Calls are growing on Capitol Hill to vet Chinese contracts with U.S. schools for national-security risks.

Aiding U.S rivals

The Journal made public-records requests to major public universities in all 50 states for details of their contracts with entities in China. The disclosures reveal how contracts cut across industries where Beijing has subsidized and otherwise supported Chinese enterprises, from medicine and agriculture to manufacturing and even the arts.

Schools say the practice of matching Chinese funding with American expertise often serves the public good, like developing new cancer treatments. Yet, to critics, the Communist Party’s control over China’s business sector can taint even those pursuits.

That’s the conundrum facing the U.S. universities that have entered contracts with Shanghai-based WuXi AppTec. Known in China as the Huawei Technologies of pharma, AppTec is a biotech conglomerate globally recognized for medical breakthroughs and manufacturing therapies approved by the Food and Drug Administration. But like Huawei, China’s now-blacklisted maker of advanced telecommunications gear, it is now dogged by concerns in Washington its innovations could be abused by Beijing.

Both AppTec and Huawei have had contracts with U.S. universities, the Journal found. The companies say they are private enterprises and reject suggestions they take directions from China’s government or pose national-security risks to the U.S.

The University of Arizona valued three AppTec contracts it reported for 2022 collectively around $1.5 million. Among them is an agreement in which a services arm of AppTec, on behalf of another Chinese drugmaker, agreed to pay the university’s hospital $36,977 for each subject enrolled in trials of a drug designed to treat tumors.

The medicine has FDA approval for treatment during the trial of certain rare cancers.

Now, out of concern Beijing could harness commercial biological discoveries for military purposes, members of Congress want the government to classify AppTec an “adversary biotech company of concern," which would make it virtually untouchable as a partner for U.S. organizations that get federal dollars, including many hospitals and universities.

“WuXi AppTec and [its sister company] WuXi Biologics are rapidly becoming a global pharmaceutical and research-services giant that threatens U.S. intellectual property and national security," read a February letter signed by four members of a House committee on China to U.S. government agencies requesting the new classification.

AppTec said the legislative effort targeting it is “misguided" and “without a fair and transparent review of the facts." Arizona spokeswoman Pam Scott said by email, “We have not been notified of any security concerns."

Calling Cfius

In early 2018, the University of Washington announced that it would create one of the world’s first academic centers dedicated to virtual and augmented reality. The university credited the center’s $6 million funding equally to Facebook, Google and Huawei.

After the Trump White House made it illegal for Americans to do many types of business with Huawei in May 2019, the university announced that federal regulations meant it could no longer enter into transactions with the Chinese company.

The school reported over $5.5 million from Huawei across the years 2018, 2019 and 2021, and a spokesman said the latter entry represented a final payment in a contract that began before 2019. A Huawei logo appears in a welcome video on the homepage of the university’s Reality Lab, which the spokesman said is an “accurate and transparent" acknowledgement of Huawei’s founding participation in the lab.

Huawei didn’t respond to questions about its contracts at U.S. universities, including Washington.

“There has not until recently been much concern about what’s going on at universities," said Aaron Friedberg, a U.S.-China Economic and Security Review Commission member.

The commission, which advises Congress, now urges legislation to treat Chinese contracts with universities like foreign-funded acquisitions, subject to national-security screening through an interagency panel known as the Committee on Foreign Investment in the United States, or Cfius. The concern, Friedberg said, is that contracts represent “just one of the many avenues of access into our R&D technology establishment."

Pilot Program

A number of contracts identified by the Journal provided China with specialized training it lacks.

For instance, China has few small planes or public airstrips needed for pilot training, so for over a decade major Chinese airlines such as Air China paid the University of North Dakota millions annually to get their recruits licensed to fly. Between October 2018 and July 2022 alone, North Dakota records detail contracts worth over $37 million from four Chinese carriers.

Student pilots at North Dakota’s aerospace academy racked up their required 250 flight training hours from airstrips a few miles from Grand Forks Air Force Base, a control center for military drones and satellites.

North Dakota declined to discuss its work with China’s airlines, though university publications have said some 30% of Air China pilots trained there and that their presence was a financial shot in the arm for the capital-intensive aerospace school. The Chinese airlines didn’t respond to questions.

Among foreign funders of U.S. schools, China raises particular complications, says Ian Oxnevad, a senior fellow at the National Association of Scholars, who argues U.S. universities don’t need China’s money and should be alert that its military can make use of seemingly civilian commercial applications. “There’s an ethical imperative to research," he said.

For years, a prominent type of university contract involved Chinese-language training on U.S. campuses under the rubric Confucius Institutes, such as the around-$540,000 reported by the University of Oklahoma for 2019. After evidence piled up of the Beijing-funded institutes’ close ties to China’s diplomatic missions, most closed, including Oklahoma’s.

Some of the biggest-value China contracts feature franchise-type arrangements for overseas satellite campuses. New York University, which the Education Department database shows has been the largest single recipient of Chinese funding, reported two contracts totalling over $46.5 million for 2021 alone for its Shanghai branch.

The Juilliard School has disclosed over $133 million in such funding over more than a decade for its Tianjin Juilliard School near Beijing, appointed with some 120 Steinway pianos.

Motor City

Successive American administrations have accused the Chinese Communist Party of treating U.S. campuses as beachheads to further its agenda. The Federal Bureau of Investigation and other agencies warn that China’s state has encouraged theft of technological secrets at universities, spread pro-Beijing propaganda, stifled campus debate and harassed students.

Beijing dismisses such characterizations. Its officials say ethnic Chinese students and professors have been unfairly targeted in the U.S., including on American campuses, and urged the U.S. to be mindful of its reputation for academic freedom. The Chinese Embassy in Washington didn’t respond to detailed questions about the university contracts.

In the shadow of Detroit’s auto industry, the University of Michigan said it has had around $1 million in contracts from DiDi Global, a Chinese ride-sharing company built on government money that forced Uber out of the market.

The university said DiDi funding supported a range of engineering research, from evaluating devices for monitoring a driver’s health and operational safety to using a vehicle fleet to track air pollution, including eight peer-reviewed scientific papers that made the findings public. One study, based on a year’s worth of data from DiDi, examined how empty cabs affect overall traffic.

“International engagement is a foundational element of successful research," university spokesman Rick Fitzgerald said in a statement.

Among the arrangements disclosed by the University of Minnesota to the Journal, a pair of small Chinese equipment makers have paid $50,000 annually for membership in its Center for Filtration Research alongside industry titans such as 3M and Boeing. When one of the Chinese members, Guangxi Watyuan Filtration System, launched an initial public offering, it told investors the Minnesota connection allowed it to “enjoy the latest achievements of world-class R&D institutions in the filter industry."

Minnesota, like many schools, said any research generated from a Chinese contract is made public.

Orange Pickle

Florida oranges long ago got squeezed out of the Chinese market by aggressive Chinese growers and protectionist policies such as a 56% import tariff. Yet China does have a taste for Florida’s orange know-how.

Anxious about a tree infection called greening that makes fruit taste acidic, scientists in China turned to the University of Florida, which has researched citrus diseases for more than a century. A disclosure from the school showed that contracts worth about $1.8 million with China’s Institute of Navel Orange at Gannan Normal University supported work by a Florida authority on tree genetics who has made advances against citrus diseases, Nian Wang.

University spokeswoman Chris Vivian said the contracts reflect the university’s responsibilities to the agricultural community. The university’s work studies wild citrus germplasms in China that are resistant and tolerant of greening, and local collaboration is necessary because under Chinese law that material can’t be shipped overseas, she said. Wang declined to comment. Emails to several people at China’s orange institute went unanswered.

Florida orange grower Dan Richey, president of Vero Beach, Fla.-based Riverfront Packing, stresses that the global citrus industry is desperate for a greening cure, but also says the university’s deal smacks of a potential Chinese “intellectual-property grab." Almost 25 years ago, Richey toted a crate of Florida oranges to Beijing amid hopes its market would open up to U.S. growers, only to see the opportunity fizzle. He says he remains distrustful of Chinese intentions.

Future Florida-China collaborations are now in doubt after Gov. Ron DeSantis last year signed a law that could bar state-funded universities from entering contracts with partners from China, Russia, Iran and four other nations. The governor’s office said he aimed “to root out Chinese influence in Florida’s education system." The university declined to comment on the law or address its impact on the orange research.

Rosie Ettenheim and Zhao Yueling contributed to this article.

Write to James T. Areddy at James.Areddy@wsj.com

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