It was a big opportunity for a small research university. In 2013, Zhao Xin (趙鑫), a prize-winning doctor from the College of William & Mary, landed venture funding to commercialize some of the school’s patented nanotechnology.
Zhao’s start-up rented space nearby, hired local graduates and agreed to fund US$1 million of new research at the Williamsburg, Virginia, campus.
“It was what everyone wants to see — a success story of a university spinout,” says Jason McDevitt, the school’s director of technology transfer.
Six years later, Yick Xin Technology Development Ltd is up and running, but not in Virginia. The company’s research and development and new patent registrations — the lifeblood of any technology start-up — have moved to China.
The planned William & Mary spinout left the US after federal agents hounded its founder, Zhao, for two years, and prosecutors accused him of trying to smuggle a robotic arm from Florida to a university in China that US officials had linked to the nation’s top nuclear weapons lab.
The charges were dismissed in December 2017 — but Zhao, shaken by the ordeal, gave up his US research operations.
The 44-year-old applied physicist’s struggle to clear his name, extricate himself from a persistent undercover sting and overcome a 2016 arrest shows how the US’ heightening cold war with China presents risks for ethnic Chinese scientists working in the US.
He is among a growing number who are leaving behind their families and taking their skills and business opportunities to — where else — China.
“My dream was defeated,” says Zhao, whose crew-cut and boyish face belie the brash candor with which he tells his story. “I came here for freedom and security. Now fear is pushing us back to China.”
A spokeswoman for the US Department of Homeland Security, which led the investigation, disputed any suggestion that the government was unfair to Zhao, noting that he agreed to enter a pretrial diversion program, which included performing 30 hours of community service.
It is rare for federal prosecutors to offer diversion in felony cases like Zhao’s, but in many respects, his case resembles a paperwork problem that got way out of hand.
Like tens of thousands of China’s best and brightest, Zhao came to the US to earn his doctorate and settled down as a permanent US resident, but his plan to monetize his inventions by combining US entrepreneurship with Chinese capital and manufacturing became a casualty of the intense scrutiny US law enforcement officials are applying to Chinese scientists.
Over the past decade, concern has grown steadily in Washington that China “seems determined to steal its way up the economic ladder at our expense,” as FBI Director Christopher Wray put it in an April speech.
While the basis for that concern — China’s efforts to purloin US innovation and know-how — is well-documented, the response has been sweeping: Agencies across the federal government have mobilized against potential Chinese industrial spies, warning companies and universities and anyone else with intellectual property to be particularly vigilant when dealing with Chinese business partners and employees who might be what Wray calls “nontraditional” information collectors.
The US National Institutes of Health (NIH) is even cracking down on biomedical researchers with undisclosed ties to China at such organizations as the renowned MD Anderson Cancer Center in Houston, Texas.
Zhao’s return to China fits an emerging pattern among targeted Chinese scientists and engineers, says Jeremy Wu (胡善慶), a retired US government statistician, adjunct professor at George Washington University and a board member of the Committee of 100, a Chinese American civic group.
“The net effect is we’re pushing top talent away,” he says.
At what cost? The joke in Silicon Valley is that if the feds, in the name of protecting intellectual property, deter Chinese researchers from working in the US, there will not be any intellectual property to protect, says Frank Wu (吳華揚), a law professor at University of California, Hastings College of the Law in San Francisco and president of the Committee of 100.
Like the 2004 film A Day Without a Mexican, which depicts California’s economy grinding to a halt from the sudden disappearance of Latino workers, a significant brain drain of Chinese experts could decimate many of the US’ most celebrated enterprises.
Inventors with Chinese last names account for one out of every 10 new patents in the US today, up from less than 2 percent in 1975, according to William Kerr, a professor at Harvard Business School and author of The Gift of Global Talent, published by Stanford University Press last year.
While China lost more than 50,000 inventors to emigration from 2002 to 2011, the US welcomed a net gain of more than 190,000, as measured by patent registrations, according to data compiled by the World Intellectual Property Organization, an arm of the UN.
“Beyond just their own inventions, ethnic Chinese are integrated throughout our whole scientific establishment, including start-ups,” Kerr says. “If you damage that ecosystem, it’s going to harm a lot of very productive relationships that will be hard to rebuild.”
China has tried to lure overseas scientists for years. Government initiatives, such as the Thousand Talents and Changjiang Scholar programs, offer funding to experts to work at least part time in China.
A 2018 report by the US National Intelligence Council called such efforts a thinly veiled way “to facilitate the legal and illicit transfer of US technology, intellectual property and knowhow’’ to China.
The FBI and other federal agencies have targeted the programs’ recruits for special scrutiny — with some unintended fallout.
“By cracking down so aggressively, we’re pushing them into China’s arms,” says Zhao’s attorney, Peter Zeidenberg of Arent Fox in Washington, a former federal prosecutor who has become the go-to defense lawyer for Chinese researchers facing suspicions of disloyalty.
At least five Zeidenberg clients have returned to China in the past year or so, and others are considering going back “as a prophylactic measure,” he says.
Wang Chunzai (王春在), another Zeidenberg client, was once the US National Oceanic and Atmospheric Administration’s (NOAA) most prolific climate scientist. A world-renowned expert on the interplay of global warming and hurricanes, Wang won top NOAA awards for research and science in 2012 and 2013 respectively.
In 2017, he was indicted on eight federal felony counts of fraud and supplementing his NOAA income — for accepting US$2,100 over three years as a Changjiang Scholar at China’s Ocean University.
He resigned from NOAA and took a job in China, leaving his wife and kids in Florida. Last year, he took a deal and pleaded guilty to a single count of moonlighting.
He was sentenced to time served, the four days he spent in custody after his arrest.
From the bench, US District Judge Cecilia Altonaga said Wang had made “certain mistakes,” but expressed regret that he was prosecuted instead of receiving pretrial diversion.
She told him: “I wish you and your family the best of luck as you redo your life’s work and do that in China, while still understanding that you are a citizen of this country.”
In May, Emory University in Atlanta fired a husband-and-wife team of neuroscientists for allegedly failing to disclose all of their research relationships in China.
The couple, Li Shihua (李世華) and Li Xiao-jiang (李曉江), both US citizens, had a lab at Emory with 15 researchers focused on neurodegenerative disorders such as Alzheimer’s disease.
For the past two years, Li Xiao-jiang also ran a lab at Jinan University in southern China, where he conducted experiments on monkeys to develop gene therapies for Huntington’s disease.
Such large-animal studies are controversial in the US and hard to get funded, but “are very valuable for developing drugs because monkeys have similar brains to humans,” says Christopher Ross, director of neurobiology at Johns Hopkins University School of Medicine in Baltimore, who collaborated on several papers with the couple.
“The removal of the Lis’ Huntington disease research in the US is a substantial loss,” he said.
The couple, both tenured professors, were fired without notice. Emory immediately closed their lab and seized their data and computer devices. Four Chinese postdoctoral researchers were given 30 days to leave the US.
Li Xiao-jiang says he disclosed all his research connections in China on his published papers, his CV and his grant filings.
“Everyone knew I was working in China,” he says.
Ross says the couple’s firing, based on the sole allegation of failing to fully disclose their China ties, “seems highly disproportionate and raises questions about university procedures and academic freedom.”
Holly Korschun, an Emory spokeswoman, declined to comment on the Lis’ case.
Emory issued a written statement that did not name the couple, but said two faculty members with NIH grants had failed to fully disclose foreign sources of funding and the extent of their research in China.
It noted that Emory “takes very seriously its obligation to be a good steward of federal research dollars,” as well as to comply with all disclosure requirements.
Forced to abort several promising studies at Emory, the Lis have now moved all their work to China.
They will be sorely missed in the US, says Diane Merry, a neuroscientist at Thomas Jefferson University in Philadelphia.
“Doctors Li and Li helped shape the field through their engagement and support of other scientists, providing critical thinking and judgment to guide future research,” Merry says. “Their commitment to finding a cure for these diseases is unparalleled.”
Zhao got his master’s degree in China and moved to William & Mary in 2000. After earning his doctorate in 2006, he spent seven years as a materials scientist at the US Department of Energy’s Jefferson Lab in Newport News, Virginia.
In 2012, he won the top energy prize from World Technology Network, an inventors’ group, for developing a so-called graphene supercapacitor — a paper-thin sheet of nanomaterial that can store hundreds of times more energy than conventional lithium-ion batteries and charge in just seconds.
The following year, Zhao cofounded a company to commercialize the idea with backing from a wealthy family in Shenzhen.
Zhao, who was determined to stay in Virginia with his family, negotiated patent licenses and a research deal with William & Mary, which owned the patents dating from Zhao’s doctoral research.
His plan was to hone the basic technology and work with product developers in the US, while manufacturing the raw graphene nanomaterial in Shenzhen.
The trouble started when it came time to assemble the factory in China. In 2016, Zhao purchased a US$30,000 robotic arm called a load lock from Hine Automation LLC in St Petersburg, Florida.
The device, commonly used in the chip-making industry, transfers wafers in and out of a vacuum chamber for processing.
Zhao asked Hine Automation to ship the equipment to a professor at William & Mary’s sister university in Chengdu, the University of Electronic Science and Technology of China (UESTC).
Zhao had hired the professor as a consultant to combine the load lock with the process chamber as part of the professor’s research at his UESTC lab.
Hine Automation had a problem. Its chief executive officer, Scott Craver, informed Zhao in March 2016 that the machine could not be shipped to UESTC without a license because the university was on the US Department of Commerce’s list of entities subject to export controls. (In 2010, the US had designated UESTC an “alias” of the China Academy of Engineering and Physics, which manages China’s nuclear weapons program.)
Zhao asked that it be shipped instead to the professor’s home for assembly, saying in an e-mail to Hine Automation that it would be “finally used and located in Shenzhen,” which is about 2,700km away from UESTC.
Three weeks later, Zhao got a telephone call from a man identifying himself as David Mills.
Craver had given Zhao a heads-up that Mills might be calling, assuring Zhao that Mills could be trusted to help resolve the export problem, Zhao says in an interview. (Craver did not respond to e-mailed questions for this story.)
According to a transcript of their phone conversation, Mills offered to change the paperwork so that his name would appear as the load lock’s buyer and UESTC would no longer be identified as the machine’s destination.
“I guarantee we will not be sending there anymore,” he told Mills. “That is not the real location. That is like the transit stop.”
Mills, it would later emerge, was a pseudonym for an undercover federal agent. In the audio recordings turned over by the government, he was unrelenting with Zhao.
“I’m never going to make any record or any documentation of the first address,” he told Zhao. “We’re going to hide that, do you understand?”
“There’s nothing to hide,” Zhao replied, “because I will give you another address like Shenzhen. It’ll be thousand miles away from the city, so that definitely ...” Mills cut him off.
“But you need to understand,” Mills interjected, “in order for me to do this safely and to feel comfortable, it’s very important to me that you never make any mention that you and I discussed the other address.”
“I understand,” Zhao responded. “I want to be clear… That address no longer exists anymore, and forget about it. That’s just a past misunderstanding.”
At that point, “the government should have ended the investigation right then and there, as soon as they hung up,” says Zeidenberg, whose career as a federal prosecutor spanned 17 years.
However, the case was just beginning.
Zhao says he ultimately instructed Hine Automation to ship the load lock to one of his cofounder’s trading companies in Hong Kong for storage, until the factory was ready in Shenzhen.
Unbeknownst to Zhao, the equipment was detained at Tampa International Airport.
In Hong Kong, an export-control officer for the Commerce Department visited the new address and found a cramped, one-room office of a company that sold fabric, ribbon and string for toys and Christmas decorations.
The load lock “absolutely would not be used” at that address, the officer wrote.
Zhao flew to Hong Kong to explain that his company was leasing additional space nearby to assemble the equipment, apparently adding to the agent’s skepticism.
His report concluded: “There is a risk that this item will still be diverted to a prohibited end user.”
Flying back to Virginia through New York’s John F Kennedy International Airport, Zhao was detained for questioning by Eric Jones, a Tampa-based investigator with Homeland Security’s National Security Group.
Jones seized Zhao’s computer devices. Zhao says Jones said he was searching for child pornography, and promised to return them in a month.
Zeidenberg says Chinese scientists and engineers are often detained and searched at US airports these days while traveling to and from China, as family members watch in panic.
“They frequently use the porn excuse,” he says.
A few weeks later, Zhao spoke again to the pseudonymous David Mills and reiterated that UESTC was never the load lock’s final destination.
“Somehow, there is a mistake,” Zhao said.
He asked if he could just get the machine shipped to Virginia.
Mills invited Zhao to Tampa to meet in person. When Zhao arrived at the Tampa airport on Aug. 16, 2016, Jones arrested him at the gate.
Zhao was flabbergasted to realize “Mills,” who he had taken for some sort of shady freight broker, had set him up.
On their drive to the Pinellas County Jail, Jones sat in the backseat with Zhao and told the handcuffed applied physicist: “Look, there are so many Chinese people working for the Chinese government in the US. If you know anything about Chinese government actions in the US, please let me know,” Zhao says. “This will help you.”
At Zhao’s arraignment, federal prosecutors said he was a suspected spy who might flee the US, with help from his Chinese handlers, if released from custody.
He spent two nights in jail before the judge freed him on bail.
It took another year and US$110,000 in legal fees before the US reluctantly dropped the case.
Zeidenberg says a prosecutor told him that some higher-ups in the US Department of Justice were not happy about that outcome
“These kinds of cases involving Chinese living in the US are a high priority for the government, so even a crap case like this is going to get a lot further than it should,” he says.
Zhao says he has lost faith in the US legal system and does not want to put himself or his staff at risk by trying to build an advanced technology company in both the US and China.
For William & Mary, it was a tangible blow. Gone is the spinout success story and hundreds of thousands of dollars in planned research grants.
“It’s disappointing that circumstances seem to be pushing them away,” McDevitt says.
Zhao is not sure, after everything, how different the US and China really are.
His experience with “David Mills” has convinced him that secret police are lurking on both sides.
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