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Higher ed should disclose China financial ties or lose federal dollars: analysis

Chinese influence on American higher education must be monitored with laws that have teeth

American colleges and universities should lose their federal funding if they fail to disclose major financial dealings with the Chinese Communist Party.

I agree with this thesis, put forth by Robert Eitel and Paul Moore in a Feb. 14 article on RealClearEducation. Higher education’s negligence in making its dealings with the CCP transparent violates the law and puts the public at risk.

The American public has an interest in knowing whether universities have had major financial dealings with China and its Communist Party. When the Chinese Communist Party gives a lot of money to American universities, it may obtain national security information and dangerous technology from its American university authors or sources, which it could use in nefarious ways.

Eitel is a former Department of Education official under the Trump administration and co-founder and president of Defense of Freedom Institute for Policy Studies, a conservative nonprofit that advocates for school choice, defending civil rights and limiting the power of the federal government and government sector unions in education, among other issues.

The Higher Education Act of 1965, a federal law, already requires most postsecondary institutions to regularly report donations and contracts worth $250,000 or more from foreign entities, Eitel and Moore wrote. However, colleges and universities often flout this rule.

They get away with it because the Department of Education can only enforce the law by sending letters or referring the school to the Department of Justice to file a civil complaint.

“This is not a law that demands exacting compliance,” Eitel and Moore argued.

Instead, to reduce the risk of harmful foreign influence, particularly from the CCP, Congress should “tie a school’s eligibility to participate in federal student loan, grant and work-study programs to its compliance with these reporting and disclosure requirements,” Eitel and Moore argued. Congress should also instruct the Department of Education to “limit, suspend, or terminate an institution’s participation in these federal programs when that institution fails to make its required disclosures.”

These reforms could be enacted if Congress simply voted to make some small changes to the Higher Education Act, the authors wrote.

“Compliance would follow quickly,” because student loans and grants are a huge source of revenue.

The Education Department Office of Federal Student Aid paid out over $110 billion dollars in loans, grants, and work-study funds to nearly 10 million students at over 5,500 postsecondary institutions in fiscal year 2022 alone, Eitel and Moore wrote.

“In return for this largesse, and in view of the national security threat and risk of technology theft posed by China, it is not asking too much for taxpayers to know which institutions have derived revenue from China-sourced gifts and contracts, as well as the financial value of those ties,” they stated.

That seems reasonable.

Congress modified federal law to monitor financial foreign influence more than three decades ago

“Over 30 years ago, Congress enacted Section 117 of the Higher Education Act of 1965 (HEA) in light of concerns about the growing financial relationship between U.S. universities and foreign sources,” according to the U.S. Department of Education website, last modified in July 2022.

“Congress balanced academic freedom and national security by mandating financial transparency through required reporting of contracts with and gifts from a foreign source that, alone or combined, are valued at $250,000 or more in a calendar year,” the website stated.

The U.S. Department of State and humanitarian organizations across the political spectrum have long documented innumerable human rights abuses and other atrocities committed by the Chinese Communist Party.

“The human rights situation across China continued to deteriorate,” Amnesty International stated in a representative report on China in 2021.

“Human rights lawyers and activists reported harassment and intimidation; unfair trials; arbitrary, incommunicado and lengthy detention; and torture and other ill-treatment for simply exercising their right to freedom of expression and other human rights. The government continued a campaign of political indoctrination, arbitrary mass detention, torture and forced cultural assimilation against Muslims living in Xinjiang.”

These abuses and many others could be facilitated by the CCP stealing or otherwise obtaining American intelligence and technology through financial influence.

CCP theft ‘is not a rumor or a baseless accusation,’ FBI director said

“The Chinese Communist Party’s theft of sensitive information and technology isn’t a rumor or a baseless accusation,” FBI Director Christopher Wray said in a Nov. 2020 news release about the U.S. Department of Justice’s China Initiative, which the Biden administration discontinued last year.

“It’s very real, and it’s part of a coordinated campaign by the Chinese government, which the China Initiative is helping to disrupt. The FBI opens a new China-related counterintelligence case nearly every 10 hours.”

Investigations undertaken by the Education Department in 2020 found that “these institutions [universities] have provided an unprecedented level of access to foreign governments and their instrumentalities,” according to an Oct. 2020 report cited by Eitel and Moore.

Simply put, American universities need to follow the law and disclose financial gifts and contracts. This is especially urgent following the demise of the China Initiative, and it wouldn’t be that hard.

“Protecting American security by requiring compliance with Section 117’s simple requirements in order to be institutionally eligible for federal financial aid is a relatively easy ask of thoroughly capable, and often financially sophisticated, higher-ed institutions,” Eitel and Moore wrote.

If colleges and universities refuse or try to skirt the law, they should lose their federal investment. Cutting them off might be somewhat more difficult than shooting down a suspected spy balloon, but it would make a much greater difference in countering dangerous influence and espionage by the Chinese Communist Party.

MORE: Former Texas A&M professor admits to hiding ties with China

IMAGE: Chinaspyus.Augusto_Cabral/Shutterstock

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