US universities facing toughened rules on foreign funding

US senators overwhelmingly agreed to advance legislation meant to counter China on various economic, political and military fronts, including imposing extensive new financial reporting requirements on US universities.

In a sign of broad concern about China at a moment of otherwise entrenched partisan gridlock in Washington, the measure won approval on a 21-1 vote in the US Senate’s Foreign Relations Committee.

The senators acted despite energetic opposition from US university leaders, who warned that the proposal threatened to grind down academic research collaborations through an unclear set of guidelines for establishing what interactions deserve scrutiny and by what standards.

The bill requires a formal federal review for all foreign contracts and gifts in US higher education that exceed $1 million (£700,000), with limited guidance beyond that.

“The provision establishes a policy mechanism without ever identifying the precise problem it is trying to solve,” the American Council on Education and other major higher education associations said in a letter of protest.

But the top-ranking Republican on the foreign relations panel, James Risch of Idaho, told his colleagues that they would face such dissent as they moved ahead with the initiative, and recommended that they dismiss it.

“Everybody in this room has dealt with college presidents before, and it’s their job to generate as much money as they can for their colleges and universities,” Mr Risch said. “But it is not right to be taking money from the Chinese Communist Party.”

Mr Risch even suggested that US higher education, by having any financial dealings with China, was in effect profiting from “slave labour from the Uighurs”, a minority Muslim population persecuted by China. Given that money is fungible, the senator said, “you can make a very legitimate argument that that money is going into our colleges and universities, which should not be done”.

The senator put particular emphasis on the 300,000 Chinese students at US universities, describing them as part of China’s pattern of having “stolen every single good idea we have”.

“They’re not here studying ancient Greek philosophy; they’re not studying home economics,” Mr Risch said. “They’re studying in all the areas that for decades have built the foundations that we have in America.”

While Democrats unanimously backed the measure, one of them, Chris Murphy of Connecticut, offered a momentary defence of the value to US universities of Chinese students and researchers, cautioning his colleagues not to “cut off our nose to spite our face”.

The Senate action follows Trump administration demands beginning in 2019 requiring US universities to report all contracts and donations from foreign sources of $250,000 or more. Trump officials said the requirement had always existed in law but had been routinely ignored.

Mr Risch predicted that the new bill requiring formal reviews of such transactions would likely win at least 75 votes in the 100-seat Senate, which for years has proven the more difficult half of Congress for finding legislative agreement. The bill would assign those reviews to the Committee on Foreign Investment in the United States, or CFIUS, an existing inter-agency panel that evaluates the national security implications of foreign investments in US companies.

The American Council on Education and the other sector associations warned, however, that neither CFIUS nor US universities were prepared to handle the volume of financial transactions that the bill would direct towards it.

US universities already have existing relationships with federal agencies to scrutinise foreign partnerships as needed, the higher education leaders said. The proposed change, they continued, would waste taxpayer resources while forcing foreign investment away from the US.

“This will hamper the ability of US institutions to invest in research at the very moment when our nation’s competitiveness is facing great challenges,” they said.

paul.basken@timeshighereducation.com