State Department urges U.S. colleges to sell Chinese stocks
The Trump administration is intensifying its crackdown on Chinese funding and influence in higher education
By Shawna Chen and Andrew Peng
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WASHINGTON — The U.S. opened a new front in its campaign to restrict China’s economic power in higher education on Tuesday, with the Trump administration urging American colleges and universities to divest from potentially billions of dollars of Chinese holdings in their endowments.
In a letter sent to the boards of U.S. colleges and universities and viewed by Bloomberg, the State Department warned that enhanced listing standards could lead “to a wholesale de-listing of PRC [People’s Republic of China] firms from U.S. exchanges by the end of next year.”
Keith Krach, undersecretary for economic growth, energy, and the environment, wrote that “boards of U.S. university endowments would be prudent to divest from People’s Republic of China firms’ stocks.”
“Holding these stocks also runs the high risks associated with PRC companies having to restate financials,” he added
The letter comes amid rising tensions between the two global powers, with the Trump administration escalating anti-China rhetoric, moving to potentially ban Chinese-owned apps from operating in the U.S. and shutting down a Chinese consulate in Houston. China has responded by expelling U.S. journalists and diplomats itself. Some experts, however, say the White House’s increasing actions are a push to emphasize Trump’s image as a strong anti-China candidate in his bid for re-election.
According to a 2019 Bloomberg investigation, Chinese companies gain billions of dollars from U.S. pension funds and college endowments every year. It’s one reason for the soaring success of companies like e-commerce giant Alibaba and artificial-intelligence start-up SenseTime. The Trump administration implicated the latter — along with 27 other Chinese organizations — in China’s human rights abuses last year; the company is now banned from doing business in the U.S.
Zeroing in on Confucius Institutes
The Trump administration also indicated in Tuesday’s letter that the U.S. is accelerating investigations into “illicit PRC funding of research, intellectual property theft and the recruitment of talent,” according to Bloomberg.
Last week, the State Department designated the Confucius Institute U.S. Center as a foreign mission of the Chinese Communist Party, alleging that the entity is “advancing Beijing’s global propaganda and malign influence campaign on U.S. campuses and K-12 classrooms.”
In 2019, the U.S. Department of Education asked Georgetown, Cornell, Texas A&M and Rutgers University to produce years of financial documents and records detailing their ties to Confucius Institutes. The Chinese language and culture organizations, which are funded jointly by the Chinese government and host universities, have long faced criticism due to unsubstantiated espionage fears but have experienced increased scrutiny under the Trump administration — with Confucius Institutes across the country being monitored by the FBI.
Last February, a Senate subcommittee led by Sen. Rob Portman (R-Ohio) found that the Chinese government provided $158 million to establish nearly 100 Confucius Institutes in the U.S. Among them, 70 percent of schools receiving $250,000 or more to host the centers failed to properly report the funding, the panel said.
The University of Maryland became the latest school to shut down its 16-year-old Confucius Institute in January, joining more than a dozen colleges that have chosen to close their centers in the past 24 months rather than risk losing federal grant money. The National Defense Authorization Act signed into law last year prohibits schools that receive Pentagon funding for Chinese language study from hosting an institute.
The ever-widening federal crackdown on Chinese funding and influence in higher education has activists worried that Americans of Chinese descent could become “collateral damage” — either by being racially profiled or inadvertently caught up in law enforcement actions.
In July 2019, the House voted 397–31 to pass an amendment to identify how the privacy and civil liberties of Chinese Americans are affected by counter-espionage efforts.
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