A Year Later, Reports of the China Initiative’s “Death” May Have Been Greatly Exaggerated

Key Takeaways:

• The Department of Justice announced on February 23, 2022, that it would no longer be “grouping cases under the China Initiative rubric,” which many in the press presented as the end of the China Initiative program.
• But as Dechert predicted at the time, a review of the DOJ’s prosecutorial activities over the last year shows that the DOJ has continued to vigorously investigate and prosecute Chinese actors while discontinuing use of the China Initiative terminology.
• The DOJ started the Initiative in 2018 to combat identified threats to the United States from China, including economic espionage and trade secret theft.
• Far from discontinuing its focus on a perceived Chinese threat, the DOJ has simply refocused its efforts away from prosecuting Chinese academics towards more substantial Chinese threats like economic espionage, export control and sanctions violations, and technology theft.
• Thus, Chinese companies and those who do business with them should continue to be vigilant about their compliance obligations.

The Department of Justice announced on February 23, 2022, that it would no longer be grouping cases under the “China Initiative” rubric, citing the “harmful perception” of racial or ethnic bias the use of that nomenclature had potentially created.¹ This led a variety of legal commentators and news organizations to report that the China Initiative was “dead” or “ended.”² But we respectfully disagreed. In our view as reflected in our OnPoint at the time,³ the DOJ would not end its initiative just refocus it. A review of the relevant cases shows that is exactly what the DOJ has done: since the DOJ made its announcement, the DOJ has not stopped investigating prosecuting Chinese actors. Rather, the past year has shown that the DOJ remains committed to combatting suspected economic espionage, trade secret theft, and national security threats from China, while abandoning the Initiative’s name and some of the more technical, regulatory prosecutions that had drawn public criticism.

The Origin & Development of the China Initiative

The Department of Justice launched the China Initiative in 2018 after a series of federal government investigations regarding China’s trade practices, including its alleged efforts to steal American intellectual property.⁴ Then-Attorney General Jeff Sessions announced that “Chinese economic espionage against the United States has been increasing” and “[w]e’re not going to take it anymore.”⁵ Thereafter, then Attorney-General William Barr doubled down on those sentiments, characterizing China as engaging “in an economic blitzkrieg—an aggressive, orchestrated, whole-of-government (indeed, whole-of-society) campaign to seize the commanding heights of the global economy and to surpass the United States as the world’s preeminent superpower.”⁶ Even then-Secretary of State Mike Pompeo publicly stated that “China ripped off our prized intellectual property and trade secrets, costing millions of jobs all across America,” and highlighted the administration’s efforts to combat this threat.⁷ In that atmosphere, the DOJ brought a series of prosecutions targeting both high-profile Chinese companies and previously unknown Chinese individuals, including academics, for offenses ranging from economic espionage, trade secret theft, and fraud to false statements.⁸ These latter prosecutions became a subject of controversy, with critics claiming they constituted racial profiling and slowed innovation by damaging U.S. research institutions’ ability to collaborate with top academics.⁹

After the 2020 election, the China Initiative continued for the first year of President Biden’s administration. Indeed, Attorney General Merrick Garland reaffirmed the DOJ’s commitment to the China Initiative in a Congressional hearing, labeling China a “serious threat to our intellectual property” and “a serious threat with respect to espionage” against which the DOJ has an obligation to protect the nation.¹⁰ In fact, in its 2021 year-end report, the DOJ reported that it brought 15 new cases under the China Initiative rubric in 2021.¹¹ Prosecutions of academics continued as well, although these appeared to be less successful, with more than half of the resolved cases resulting in acquittal or dismissal.¹² For example, the government dismissed charges against MIT Professor Gang Chen in January 2022, admitting that it could no longer meet its burden of proof.¹³

The So-Called “Death” of the China Initiative

In a February 23, 2022 speech, Assistant Attorney General Matthew Olsen announced that the DOJ would no longer be “grouping cases under the China Initiative rubric.”¹⁴ He explained that the DOJ had concluded that use of the China Initiative name had “helped give rise to a harmful perception that the department applies a lower standard to investigate and prosecute criminal conduct related to that country or that we in some way view people with racial, ethnic or familial ties to China differently.”¹⁵ Olsen recognized “concerns from the academic and scientific community” that the China Initiative’s research grant fraud cases had created a “chilling atmosphere for scientists and scholars that damages the scientific enterprise in this country.”¹⁶ He announced that these research grant fraud cases would receive enhanced review prior to the filing of charges, adding that “[w]here individuals voluntarily correct prior material omissions and resolve related administrative inquiries, this will counsel against a criminal prosecution under longstanding department principles of prosecutorial discretion.”¹⁷

The widespread media reaction to the DOJ’s announcement was that the China Initiative was over.¹⁸ The New York Times proclaimed the program’s end and the Washington Post declared it shuttered.¹⁹ But as we stated at the time, AAG Olsen’s remarks actually suggested that the program would continue, while dropping the name and refocusing the mission.²⁰ AAG Olsen specifically agreed with prior comments from the FBI Director Christopher Wray that “the threats from the PRC government are “more brazen [and] more damaging than ever before” and highlighted specific examples, including the “concerted use of espionage, theft of trade secrets, malicious cyber activity, transnational repression, and other tactics.”²¹ The AAG vowed that the DOJ would continue to “be relentless in defending our country from China” and “prioritize and aggressively counter the actions of the PRC government that harm our people and our institutions.”²²

No Death, But Life: DOJ Prosecutions of Chinese Actors Continued in 2022

Less than a month after AAG Olsen announced that the DOJ would be retiring the “China Initiative” name, he was back at the podium to announce “three important cases” that “expose attempts by the government of the People’s Republic of China to suppress dissenting voices within the United States.”²³ The first case charged a Chinese citizen with conspiracy to commit interstate harassment and other offenses based on attempts to disrupt the Congressional campaign of a student leader of the pro-democracy demonstrations in Tiananmen Square in 1989 who had later escaped to the United States.²⁴ The second alleged that a Queens resident had been acting as an agent of the Chinese government since 2015, collecting and reporting information about prominent activists, dissidents, and human rights leaders.²⁵ The third case charged two New York residents and a Chinese citizen with conspiring to discredit pro-democracy dissidents residing in the United States by spying on them and disseminating negative information about them.²⁶ In announcing the charges, AAG Olsen emphasized that the DOJ will “not allow any foreign government to impede their freedom of speech, to deny them the protection of our laws or to threaten their safety or the safety of their families.”²⁷ Similar charges against five individuals with ties to China followed in May 2022,²⁸ and five more were charged in July 2022.²⁹

Notably, in May 2022, the DOJ also filed “the first affirmative civil lawsuit under [the Foreign Agents Registration Act] in more than three decades” to compel a U.S. businessman to register as an agent of the Chinese government.³⁰ The government alleged that, to protect his business interests in China, the businessman had lobbied then-President Trump over the course of several months to cancel the visa of a Chinese citizen who had left the country and sought asylum in the United States.³¹ Announcing the charges, AAG Olsen stated, “Where a foreign government uses an American as its agent to influence policy decisions in the United States, FARA gives the American people a right to know.”³²

In addition to these prosecutions for allegedly promoting Chinese interests in the United States, the DOJ continued to bring cases to protect American. technologies. In April 2022, it charged a Texas man and woman with export control violations in relation to an alleged scheme to defraud a U.S. research and development company.³³ In July 2022, the DOJ charged a Florida man with conspiring with Chinese counterfeiters to traffic in thousands of fraudulent Cisco networking devices.³⁴

Perhaps the most high-profile China-related charges came in October 2022, when Attorney General Merrick Garland, Deputy Attorney General Lisa Monaco, and FBI Director Christopher Wray all joined AAG Olsen to announce charges against thirteen people for alleged plots to advance Chinese interests in the United States.³⁵ Garland stated that “these cases demonstrate… the government of China sought to interfere with the rights and freedoms of individuals in the United States and to undermine our judicial system that protects those rights” and “[t]he Justice Department will not tolerate attempts by any foreign power to undermine the Rule of Law upon which our democracy is based.”³⁶ DAG Monaco also took a hard stance on China, stating that it “seeks to be a major power on the world stage and to challenge the United States in multiple arenas, and today’s cases make clear that Chinese agents will not hesitate to break the law and violate international norms in the process.”³⁷ She cited “a backdrop of malign activity from the People’s Republic of China… that includes espionage, harassment, obstruction of our justice system, and unceasing efforts to steal sensitive U.S. technology.”³⁸

Of course, the merits of the DOJ’s allegations against Chinese actors will be determined in court, and China Initiative prosecutions have fallen apart before.³⁹ But mere existence of these prosecutions—not to mention the strong rhetoric accompanying them—shows that the retirement of the China Initiative name has not been accompanied by a decreased emphasis on combatting perceived Chinese threats. In fact, from the 2022 statistics China-related cases are on the rise, not descent.

Proposed Federal Legislation Intended to Tackle Chinese-Related Criminal Activities

In addition, the China Initiative continues to have high-profile supporters, including Senator Rick Scott of Florida, who recently announced “a package of five national security focused bills to hold Communist China accountable and better protect American families.”⁴⁰ One of these bills, The Protect America’s Innovation And Economic Security from CCP Act, would “codify the China Initiative and reinstate its effort to prevent spying by the Chinese Communist Party on U.S. intellectual property and U.S. academic institution.”⁴¹ As envisioned by the bill, a reinstated China Initiative would “focus on identifying and prosecuting those engaged in trade secret theft, hacking, and economic espionage, as well as protecting our critical infrastructure against external threats through foreign direct investment and supply chain compromises.”⁴² Though it is unclear how much support this legislation could garner, its mere introduction shows the executive and legislative branches’ continued interest in—and focus on—holding accountable those who engage in Chinese-related criminal conduct irrespective of what rubric might be given to those efforts.

Conclusion

Though commentators were quick to proclaim the death of the China Initiative in February 2022, the DOJ has continued to prosecute numerous significant cases focusing on China as a threat to United States interests. Indeed, the DOJ has accelerated its prosecutions of Chinese-related cases. And, the public statements current senior DOJ officials have made regarding China-related charges are as stern as ever. Thus, it appears that we were correct in interpreting the DOJ’s announcement nearly a year ago as a signal that it would focus less on cases against individual Chinese academics and more on larger issues like espionage, export control and sanctions violations, and technology theft. Now, as then, we believe Chinese companies and those who do business with them should scrupulously ensure their compliance with applicable U.S. laws lest they end up in the DOJ’s crosshairs.

Footnotes

1. United States Department of Justice, Assistant Attorney General Matthew Olsen Delivers Remarks on Countering Nation-State Threats (Feb. 23, 2022) [“China Initiative Remarks”].
2. Phelim Kine, DOJ’s China Initiative Is Dead But Racial Profiling Fears Are Still Very Much Alive, Politico (Feb. 24, 2022); Evan Perez, Justice Department ends Trump-era China Initiative following bias concerns, CNN (Feb. 23, 2022); Chris Strohm, DOJ Ends Troubled ‘China Initiative’ After Failures, Criticism, Bloomberg Law (Feb. 23, 2022).
3. Andrew Boutros et al., Department of Justice “China Initiative” Dead in Name, Alive in Substance (Feb. 25, 2022).
4. United States Department of Justice, Information About the Department of Justice’s China Initiative and a Compilation of China-Related Prosecutions Since 2018 (Nov. 19, 2021) [“DOJ Information Sheet”]; Betsy Woodruff Swan, Inside DOJ’s Nationwide Effort to Take on China, Politico (Apr. 7, 2020).
5. United States Department of Justice, Attorney General Jeff Sessions Announces New Initiative to Combat Chinese Economic Espionage (Nov. 1, 2018).
6. United States Department of Justice, Attorney General William P. Barr’s Remarks on China Policy at the Gerald R. Ford Presidential Museum (July 16, 2020).
7. Secretary of State Michael R. Pompeo, Communist China and the Free World’s Future (July 23, 2020).
8. DOJ Information Sheet, supra note 4; Andrew Silver, Scientists in China say US Government Crackdown is Harming Collaborations, Nature (July 8, 2020); United States Department of Justice, The China Initiative: Year-in-Review (2019-20) (Nov. 16, 2020).
9. E.g., Elizabeth Redden, A Retreat from China Collaborations in the Face of U.S. Scrutiny, Inside Higher Ed (Oct. 29, 2021); Jeffrey Mervis, U.S. Scientists Want Congress to Look Into Complaints of Racial Profiling in China Initiative, Science (Feb. 5, 2021).
10. Ryan Lucas, DOJ’s China Initiative Aims to Counter Theft of U.S. Secrets & Technology, NPR (Nov. 4, 2021).
11. DOJ Information Sheet, supra note 4.
12. Eileen Guo et al., The U.S. Crackdown on Chinese Economic Espionage is a Mess. We Have the Data to Show It., MIT Technology Review (Dec. 2, 2021).
13. Ellen Nakashima, Charges Dismissed Against MIT Professor Accused of Hiding Research Ties to China, The Washington Post (Jan. 20, 2022).
14. China Initiative Remarks, supra note 1.
15. Id.
16. Id.
17. Id.
18. See, e.g., supra note 2.
19. Katie Benner, Justice Dept. to End Trump-Era Initiative to Deter Chinese Threats, N.Y. Times (Feb. 23, 2022); Justice Department Shutters China Initiative, Washington Post (Feb. 23, 2022).
20. Boutros et al., supra note 3.
21. China Initiative Remarks, supra note 1.
22. Id.
23. United States Department of Justice, Assistant Attorney General Matthew Olsen Delivers Remarks at Press Conference Announcing Transnational Repression Charges (Mar. 16, 2022).
24. United States v. Lin, 1:22-mj-00251-MMH (E.D.N.Y. March 16, 2022).
25. United States v. Wang, No. 22-MJ-250 (E.D.N.Y. March 8, 2022).
26. United States v. Liu, No. 22-MJ-257 (E.D.N.Y. March 9, 2022).
27. United States Department of Justice, Five Individuals Charged Variously with Stalking, Harassing and Spying on U.S. Residents on Behalf of the PRC Secret Police (Mar. 16, 2022).
28. United States Department of Justice, U.S. Citizen and Four Chinese Intelligence Officers Charged with Spying on Prominent Dissidents, Human Rights Leaders and Pro-Democracy Activists (May 18, 2022).
29. United States Department of Justice, Five Men Indicted for Crimes Related to Transnational Repression Scheme to Silence Critics of the People’s Republic of China Residing in the United States (July 7, 2022).
30. United States v. Wynn, No. 22-1372 (D.D.C. May 17, 2022).
31. Id.
32. United States Department of Justice, Justice Department Sues to Compel a U.S. Businessperson to Register Under the Foreign Agents Registration Act (May 17, 2022).
33. United States Department of Justice, Husband and Wife Arrested for Export Control Violations, Wire Fraud, Tax Fraud and Making False Statements (Apr. 12, 2022).
34. United States Department of Justice, CEO of Dozens of Companies and Entities Charged in Scheme to Traffic an Estimated $1 Billion in Fraudulent and Counterfeit Cisco Networking Equipment (July 8, 2022).
35. Ryan Lucas, U.S. charges 13 in cases that involve alleged plots to advance Chinese interests, NPR (Oct. 24, 2022).
36. United States Department of Justice, Attorney General Merrick B. Garland Delivers Remarks on Malign Schemes in the United States on Behalf of the Government of the People’s Republic of China (Oct. 24, 2022).
37. United States Department of Justice, Deputy Attorney General Lisa O. Monaco Delivers Remarks on Malign Schemes in the United States on Behalf of the Government of the People’s Republic of China (Oct. 24, 2022).
38. Id.
39. See supra notes 12-13.
40. Sen. Rick Scott Announces Legislative Package to Protect Americans, Hold Communist China Accountable (Feb. 16, 2023).
41. Id.; The Protect America’s Innovation And Economic Security from CCP Act.
42. Id.