The US-China Trade Negotiation: A Contract Theory Perspective
Philip K.H. Wong Centre for Chinese Law
The arrest of MIT professor Chen Gang on the 14th of January triggered an outcry from the academic community in the US. Many were shocked by the announcement of charges which related to Chen’s failure to disclose relationships with the People’s Republic of China in the course of applying for grant money as well as his failure to disclose the existence of a Chinese bank account on his 2008 tax return. After this incident, MIT president Rafael Reif felt it necessary to defend MIT’s affiliation with a Chinese university connected to the case and to assure the Chinese and Chinese American community that its contributions were valued by MIT despite the prosecution.
Professor Margaret Lewis on how the US Department of Justice’s “China Initiative” stifles innovation and promotes harmful stereotypes about people of Chinese descent
This incident represents just one case in a wider campaign instituted by the US Department of Justice known as the China Initiative which targets state-backed corporate espionage and trade secret threats emanating from the PRC. On the 26th of January, the Centre for Chinese Law invited professor Margaret Lewis, professor of law at Seton Hall University School of Law, to an online webinar as part of our International Speaker series on China’s Law and Economic Governance to discuss her concerns around the Department of Justice’s prosecution of the China initiative.
“I do think we need to think very carefully [about] when it is appropriate to use harsh criminal punishments for these kinds of violations, particularly when it is a failure to disclose,”
- Professor Margaret Lewis
Many prosections under the China initiative attempt to root out “compromising relationships” by targeting instances in which an individual fails to disclose a relationship with the PRC in the course of their work. Professor Lewis expressed concerns about the use of harsh criminal sanctions in dealing with this behavior as opposed to lighter administrative fines and penalties which she considered to be more appropriate. She went on to say that the excessive use of the criminal law in this area inevitably leads to an over-deterrence amongst academics and leaders of industry who have had to think twice about having any connections with China. She expressed the concern that the over deterrence that comes with the broadly defined China initiative stifles innovation and damages the US’s position as the world’s leader in science and technology. “I do think we need to think very carefully [about] when it is appropriate to use harsh criminal punishments for these kinds of violations, particularly when it is a failure to disclose,” said Professor Lewis.
In our webinar, Professor Lewis discussed the broader implications of Professor Chen Gang’s case and how it illustrates the problems associated with the China initiative. “I think professor Chen’s case really highlights two major concerns with the China initiative,” she said, “we have an over-emphasis on national security and we have an under-emphasis on bias”. In particular, professor Lewis directed the audience to a film released by the FBI titled “The Nevenight Connection”, a fictional short film whose apparent goal was to educate the American public on the dangers of sharing trade secrets with Chinese individuals or entities. Professor Lewis described the film as being filled with tropes about Chinese people and that it was inappropriate for the US government to describe national security threats in this manner.
Moreover, professor Lewis was concerned about the “over-securitization of the US-China relationship - that everything is a national security concern”. She went on to say that the chilling effect created by this environment of over-securitization prevents engagement with China due to concerns that such a relationship may raise red flags in the eyes of the US government and its associated institutions.
In concluding her talk, Professor Lewis offered ways forward for the US government to continue to protect American intellectual property while at the same time avoiding the many pitfalls of the China initiative. She said that the entirety of the US government - not just the Department of Justice - needed to re-evaluate its use of criminal law in protecting intellectual property and national security threats. Moreover, she called for greater participation from experts, including those who understand China in order to develop a clearer picture of the complexities of the Chinese political structure when prosecuting cases related to PRC national security threats. She also mentioned the need for criminologists to participate in order to clearly define the role of deterrence, especially as she saw the China initiative as failing to meet this goal.
Click here to read Professor Lewis' on the China Initiative on supchina.com