Berkeley’s $220M Mistake Exposed in Massive Deal With China
U.C. Berkeley repeatedly neglected to disclose its deal with China to the U.S. government.
Yuichiro Kakutani
U.C. Berkeley has failed to disclose to the U.S. government massive Chinese state funding for a highly sensitive $240 million joint tech venture in China that has been running for the last eight years.
The Californian university has not registered with the U.S. government that it received huge financial support from the city of Shenzhen for a tech project inside China, which also included partnerships with Chinese companies that have since been sanctioned by the U.S. or accused of complicity in human rights abuses.
The university has failed to declare a $220 million investment from the municipal government of Shenzhen to build a research campus in China. A Berkeley spokesperson told The Daily Beast that the university had yet to declare the investment—announced in 2018—because the campus is still under construction. However, a former Department of Education official who used to help manage the department’s foreign gifts and contracts disclosure program said that investment agreements must be disclosed within six months of signing, not when they are fully executed.
Berkeley admitted that it had also failed to disclose to the U.S. government a $19 million contract in 2016 with Tsinghua University, which is controlled by the Chinese government’s Ministry of Education.
The project’s Chinese backers promised lavish funding, state-of-the-art equipment, and smart Ph.D. students for Berkeley academics researching national security-sensitive technologies, according to contract documents exclusively obtained by The Daily Beast. After the project got underway, Berkeley researchers granted Chinese officials private tours of their cutting-edge U.S. semiconductor facilities and gave “priority commercialization rights” for intellectual properties (IP) they produced to Chinese government-backed funds.
A Berkeley spokesman said that Berkeley only pursued fundamental research through TBSI, meaning that all research projects were eventually publicly published and accessible to all; it did not conduct any proprietary research that exclusively benefited a Chinese entity.
Still, Berkeley’s ties to the Chinese government and sanctioned Chinese companies are sure to raise eyebrows in Washington, where U.S. policymakers are increasingly concerned about the outflow of U.S. technology to China, especially those with military applications.
Under the radar
The project is called the Tsinghua-Berkeley Shenzhen Institute (TBSI), a joint research initiative backed by Berkeley and Tsinghua University, a top science school often called “China’s MIT.” The institute’s website shows that dozens of Chinese companies, including Huawei and others sanctioned by the U.S. government, also supported the institute as industrial advisers.
Through TBSI, Berkeley built an unusually close partnership with the Chinese government. Berkeley’s then-vice-chancellor, Patrick Schlesinger, said in 2015 that the “active participation of the Shenzhen municipal government” is an “unusual feature” of TBSI that sets it apart from other U.S. universities, according to meeting minutes obtained by The Daily Beast.
And yet, Berkeley never disclosed a single cent of the financial support it received from Chinese sources to the federal government for TBSI, possibly not complying with a U.S. disclosure law that requires universities to report large donations from foreign sources.
“If the facts are as Berkeley’s documents seem to assert, this is exactly what universities must report,” Dan Currell, a former deputy under secretary at the Department of Education—who has also worked on policy related to foreign influence in U.S. universities—told The Daily Beast. He later added that “the school isn’t complying with a clearly applicable federal statute.”
Memorandum of Agreement between China and UC Berkeley.
Photo Illustration by Luis G. Rendon/The Daily Beast
To this day, TBSI remains one of the most fully realized examples of U.S.-China research collaboration. In the 2021 fiscal year, the institute hosted 586 students from across the world and pumped out more than 130 science and engineering articles. According to its website, at least 20 Berkeley academics participated in TBSI, working alongside dozens of Chinese and international colleagues. At its peak, the institute hosted 18 laboratories located within three research centers, each focused on a research area relevant to national security: data science and IT; environmental science and new energy production; and public health and precision medicine.
Since the early days of the institute, the Chinese government has occupied three out of 11 seats on the governing board, according to a 2015 Berkeley document. Shenzhen’s then-mayor, Xu Qin, attended the 2014 signing ceremony that launched the institute. Tsinghua University President Chen Jining, another attendee of the signing ceremony, explicitly positioned TBSI as a “university-government-industry partnership.” TBSI also has a Party committee, which in 2018 held a seminar to study a speech by Xi Jinping.
While both Berkeley and Tsinghua contributed faculties to TBSI, the Shenzhen government was responsible for the lion’s share of the program’s funding, promising to provide the “necessary financial support” for the institute, according to 2014 contracting documents obtained by The Daily Beast. In the documents, the government said it would cover a wide range of initial expenses, including “costs of equipment, settlement allowances for newly recruited [principal investigators], as well as the cost of all day-to-day operations (ie. salaries of staff, research subsidies, and student scholarships, etc.)”
As part of the promised financial support, the Shenzhen municipal government first promised in 2014 to pitch in $52 million to support the “initial phase of work” for TBSI, according to a 2015 Berkeley document. More than half of the funding was to finance the purchase of new equipment in China “in consultation with Berkeley faculty… effectively adding facilities and equipment to Berkeley’s research capacity.”
In 2018, the Shenzhen government drastically scaled up their monetary support for the project, agreeing to spend at least $220 million to build a massive research campus in Shenzhen with nearly 1.7 million square feet of classroom space and cutting-edge research facilities. Tsinghua University also chipped in $19 million to fund TBSI.
Berkeley has repeatedly failed to disclose any of the above donations to the Department of Education. According to Currell, U.S. law requires all annual foreign donations exceeding $250,000 to be reported to the department, which in turn publicizes the donations to the general public.
A Berkeley spokesman acknowledged that it failed to report to the U.S. government the $19 million contract with Tsinghua University, but said the rules at the time were less clear.
“Like many universities across the country, UC Berkeley did not have a reporting process in place… in 2016, thus the initial sponsored research agreement was not reported. In 2018, due to national security concerns with China and countries of interest, the Department of Education’s reporting process was recertified and all universities were required to start reporting,” he said.
The $19 million—which was spread over five years from 2016—was thus never reported.
He said Berkeley also failed to report a renewal of the TBSI agreement in January 2022, an omission that he blamed on “an issue in the query pulling the data.” The spokesman said Berkeley corrected the error on Feb. 14, 2023, five days after The Daily Beast first reached out for comment for this story.
On the $220-million investment from the Chinese municipal government, the spokesman initially said: “UC Berkeley does not have any ownership of property at Tsinghua, therefore, is not required to report investments made in, or for, the Tsinghua University campus.” He later admitted that “the provision of a facility and/or equipment could qualify as an in-kind contribution and thus require disclosure.”
Still, Berkeley has not declared the foreign investment because the campus is still under construction, according to the spokesman.
However, according to a 2019 Department of Education guidance, universities must report foreign contracts “at the time that the institution ‘enters into’” them. Currell, the former official, noted that the universities must in practice disclose the foreign investments within six months of the research partnership being signed, not when it is implemented.
“Under the rule, whenever they signed the contract is when they had a reporting obligation within six months,” Currell said.
Perks
The Chinese government funding directly benefited Berkeley faculty members, according to a 2015 Berkeley document obtained by The Daily Beast. The government funding benefited them as researchers, as they used the construction of the new campus as an opportunity to “procure equipment that is not presently available at Berkeley, thus extending [their] research capabilities.” It also benefited them as private individuals, as faculty members earned “consulting fees” for working as research advisors.
After the donations from the Chinese state, TBSI and Berkeley researchers gave access to their government patrons.
Throughout the late 2010s, Berkeley officials frequently gave exclusive tours of the Marvell nanofabrication laboratory, a cutting-edge facility used for semiconductor research, to Chinese delegations connected to TBSI. According to a press release, the Chinese visitors “hoped to learn information” from the lab to “build a better lab abroad”—they did not explicitly say their knowledge would be deployed back in China.
These Chinese delegations to the lab went beyond normal academic exchanges between researchers. Multiple senior Chinese officials, including the vice mayor of Shenzhen and the party secretary of Shenzhen, visited the lab, surveying one of the most advanced semiconductor fabrication facilities in the United States.
There is no evidence that Berkeley or its staff broke U.S. export-control laws by organizing private tours to help Chinese individuals build their own cutting-edge semiconductor labs. However, Robert Shaw, an export-control expert at the Middlebury Institute, said the trip would have had to be organized with the utmost care to ensure that China does not get access to controlled U.S. technology.
“That’s a tough thing, a facility tour like that,” Shaw said. “That’s something that has to be organized very carefully. They need to be extremely careful about what’s visible in there [to the visitors].”
The Chinese government also gained access to some IPs created through research at Berkeley. Shenzhen Waranty Asset Management, a state-owned enterprise controlled by the Chinese government, served as an industrial sponsor for the $19 million grant from Tsinghua University, according to Berkeley’s spokesman. In exchange for the financial support, a Waranty-owned angel investment fund received “priority commercialization rights” for intellectual properties produced by TBSI, according to its LinkedIn page.
The Berkeley spokesman explained that Waranty as the industrial sponsor got “first right to negotiate a license to IP arising under the sponsored research agreement,” an arrangement that he said was the same as those given to other industrial sponsors at American universities. The spokesman said that Waranty did not exercise their licensing rights and the three inventions that came out of the sponsored research were “dedicated to the public.”
The Berkeley spokesman emphasized to The Daily Beast that all TBSI-related research projects were “fundamental research that is openly and publicly published for the benefit of the entire scientific community,” rather than proprietary research that exclusively benefited Chinese entities. He also added that the university does not license IPs to foreign entities that are under sanctions or export control by the U.S. government.
“U.C. Berkeley takes the matter of undue foreign government influence seriously,” he said.
Tsinghua Uni prez shakes hand with a Berkeley dean.
Photo Illustration by Luis G. Rendon/The Daily Beast/Berkeley Press Release
“That sort of language sounds like the purpose of the research is IP generation versus the sharing of knowledge globally in an academic context,” he said.
In addition to its funding from the Chinese government, TBSI also courted support from dozens of Chinese companies. Executives from 21 Chinese companies sat on TBSI’s industrial advisory board, supporting the “creation of joint laboratories, collaborative research projects and visiting industry fellows” at TBSI and enjoying access to Berkeley researchers.
Companies later sanctioned or put under export control by the U.S. government—including telecom giants Huawei and ZTE and the drone company DJI—sat on the industrial advisory board; so too did Chinese firms accused of complicity in human rights abuses, such as internet company Tencent and automobile firm BYD.
Some of these companies that participated in TBSI benefited from Berkeley’s innovation. Take for example Shenzhen Waveguider, a Chinese biotech company that built a joint laboratory with TBSI. Waveguider Chairman and CEO Yu Dongfang reportedly said that by leveraging Berkeley’s “best-in-the-world” biosensor technology, Waveguider was able to achieve multiple innovations in the field of diabetes medicine through its partnership with TBSI.
Berkeley’s comments regarding its Chinese corporate sponsors have also been inconsistent. A Berkeley spokesman initially told The Daily Beast that no Berkeley faculty members ever participated in TBSI’s big data research laboratory. The statement contradicted Berkeley’s own websites, which listed three Berkeley academics as participants in the lab. (The spokesman later acknowledged that one of the researchers conducted some work with the big data research lab, but said that the other two left the project in its early stages.)
For the time being, Berkeley appears intent on continuing the TBSI, albeit on a narrower scale; in 2022, Berkeley administrators announced a “phase II” for the institute, committing to support the partnership for another five years.
However, some Berkeley officials may be having second thoughts about its relationship with China. In 2018, Berkeley submitted a complaint to the U.S. Trade of Representatives, saying that Beijing’s tech regulations unduly restrict the university’s ability to license IPs in China.
And even as far back as in 2015, a member of the U.C. Board of Regents expressed reservations about Berkeley’s participation in TBSI.
On passing the academic intellectual torch
William Kirby is a renowned China scholar at Harvard. He has written a dozen books on Chinese history and our relations with China. He has a long list of accomplishments at the highest levels of international academia and professional societies.
When he writes about superior universities in Germany and the US and China, I can only marvel at the scope of his erudition. So I feel a bit out of my element commenting on his latest book Empires of Ideas: Creating the Modern University from Germany to America to China.
Kirby writes that on academic engagement with China the educational resurgence is much less a threat than an opportunity for American and other international universities…. American research universities have been strengthened enormously by recruiting Chinese doctoral students, themselves largely graduates of Chinese universities, who are admitted exclusively on the basis of merit. Our faculty ranks, too, are augmented by extraordinary Chinese scholars. We restrict these students and colleagues at our own peril. Today, any research university that is not open to talent from around the globe is on a glide path to decline.
True enough. Kirby is familiar with the finest research universities and students in China and the world. Some Chinese students go on to excel in academia and business, scientific and professional worlds in the US and China – fewer right now in the US, and that is an issue for American xenophobia.
Kirby is talking about intellectual leadership. In his historical progression, the 19th century German university model of openness and serious intellectual pursuit passed to the US in the 20th. He says the leading research, learning and education model for the 21st century is now being passed on to Chinese universities. No nation has greater ambition than China, or ability to devote resources to higher education.
Kirby’s approach to international cooperation is what one would expect from a man with so many interconnections – diplomatic and deflecting on sensitive issues and no one can fault that. It is sophisticated and mature. In Empires of Ideas, one is reminded of the marketplace of ideas, the informal, collegial and multinational networks that were part and parcel of the Enlightenment. Free exchange of information and ideas advanced science and engineering and freedom. True then, and true now.
I want to push back a little, though, basically to report on what I’ve seen at schools not in the top ten of universities in China. Kirby sees engagement with Chinese universities as an opportunity, not a threat. I agree. More exposure to the world is a good thing. But we should not fool ourselves into thinking that (1) there are always good intentions behind the dinners and smiles; and (2) most Chinese students are international work-force caliber.
On (1), no one should assume that exchanges are all collegial. CCP has weaponized exchanges within the academy and between businesses. For evidence, one need look no further than the hundreds of cases brought by the FBI against researchers, Chinese and American, seeking to steal IP from university labs and from businesses. FBI director Christopher Wray’s “whole of state” threat from China is not hyperbole.
On (2), no one should fault Kirby for addressing the university environment with which he is familiar. But most schools, faculty, and students are not in that top 5% internationally. We know the myriad stories of cheating and plagiarism in schools in China, and students who come to the US with the same attitudes toward doing the work. I’ve seen myself how lack of respect for honest work tends to bring down the performance of an entire class, including that of domestic students. We know the Yale-Peking University program was cancelled in 2012, partly attributable to allegations of widespread plagiarism and cheating.
Dishonesty in academic work is not unknown among American students. But I know of many instances in which faculty at schools in China simply turn their backs on cheating in exams. And they get little administration support when they try to restrain the dishonest behavior.
We know cheating on the college entrance exam – the gaokao – is controlled more now than a decade ago, when attempts to control cheating resulted in an angry mob of 2000 parents yelling at test administrators. “We want fairness. It’s not fair if you won’t let us cheat.”
The national push in China to control cheating resulted in some odd experiments. At our school in Hangzhou the new president decided to promote an honor code in final exams, as is the case at nearby Zhejiang University (Zheda), one of those top schools in China. This is not to take anything away from Zheda. There is an honors option in the Global Engagement Program, designed to cultivate Chinese students for work in international organizations. The program is conducted in English. Professor Kirby would be happy to engage with these students, some of the best and brightest in China.
But at our provincial-level school an exam honor code was DOA among both students and faculty – no one thought it could work. The only faculty member who could give voice or pen to objection, though, was me. Everyone else had careers on the line. I didn’t have to care. But what the president wanted, the president got.
Before the honor code was to be implemented, I did my own experiment. In one economics course I had plenty of scores from homework, quizzes, and a midterm to provide final grades. I had noticed years before that a final exam with a significant weight – 30% or 50% of a final grade – almost never changed a grade from that going into the final exam.
In class we had some discussion of the honor code. I proposed an experiment. The final exam would only count 10% of the final grade. But I would hand out the exams and leave the room for two hours and we would see what result. No monitors in the room. If students cheated, others were supposed to report them to the instructor for consideration, as the university president proposed.
I also arranged with six of my very good students, three foreigners and three Chinese, to take the final exam a day earlier and then take it again during the whole class exam. In the whole class exam they were to very obviously cheat in any way they wished, but so that other students could see. Open textbooks, read from notes, use phones, copy from other students. Make it obvious. And oh, yes – the whole class exam was different from the one I gave my star students.
You can guess the result – my good students cheated as best they could, and no one reported them to me. When my six finished the exam, they hung around outside the exam room and took pictures of students getting up from desks to look at other exam papers and using phones with abandon.
I don’t know if you call the experiment a success or a failure. But no one told me I had to use the honor code in subsequent semesters.
There is little sense of honor built in to these students. Lots of American students are no different. But an honor code needs good intentions. What good intentions do exist can get waylaid by pressures from family, culture, and particularly CCP.
Kirby is impressed by the earnestness, even in the current days of trauma and contestation, with which Chinese academics pursue joint arrangements with American schools. On one hand, that is understandable. Chinese academics are desirous of contacts for academic and personal reasons (including the ability to publish in western journals and to get their own kids into American schools). Kirby alludes to the CCP corporate overlords that can work to encourage or discourage such arrangements. For a few years before 2012, university joint ventures of all kinds were the rage. CCP pushed for engagements and wanted measurable results. A couple of my Chinese government students from Chicago were responsible for those foreign outreach programs. The pressure to get some agreement was palpable – one-way semester exchange, two-way, with or without American faculty in China, some sort of joint program, and even in some cases a joint degree with an American school. My school had a joint civil engineering degree program with San Francisco State University. A couple of years in China and then to the US for the last two or three years. The American degree was worth something. The Chinese degree – not so much. Until recently there was no international accreditation for most Chinese engineering degrees.
We need the Chinese students, undergrad and PhD candidates, for our own development. But we should not lose sight of the ill-preparedness and ill will that still lurks.
Plenty of Chinese, students and families, come to the US for education and business and – dare I say it – the freedoms that accompany a green card. There are tens of thousands of Chinese immigrants to the US each year – 150,000 in 2018. I know several student immigrants personally- come for the advanced degree, stay for the high-paying job. Quite often, their parents tell them not to come back to live, but to stay in America.
Not so many Americans go the other way.
Kirby is right to promote engagement for the good of American schools and students and faculty. Some Chinese universities may well join the upper ranks of international schools in the next ten years. But I hope he – and other administrators and scholars – can go into the engagements with a bit of the skepticism and hard evidence-seeking that led to dismissal of Confucius Institutes at the University of Chicago, Penn State, William and Mary, SUNY, Oklahoma, Texas A & M and others and cancellation of the Yale-Peking U program and consideration of the continual warnings of Chinese deception and theft from attorneys experienced in Chinese business arrangements. Harris Bricken is a good example.
We can take a hint from Ronald Reagan’s treaty policy with the Soviet Union – trust but verify. The expensive dinners and gifts and warm smiles are enticing. Its easy to become enamoured under the influence the velvet-gloved fist. I keep thinking of Sergeant Phil Esterhaus’ warning to street cops before going out on patrol in Hill Street Blues –“Let’s be careful out there.” It can be hard to do that, especially after the wining and dining and graciousness of their potential partners. But Kumbaya this ain’t.
I don’t have hard recommendations for administrators of great American universities. But they should jealously guard the reason they became great in the first place – freedoms of expression, dissent, and honesty in relationships. Too often we have let the Chinese camel’s nose into the academic tent to the detriment of American academic quality standards, research and innovation. A little caveat emptor is always a good idea.