On February 23, 2022, Assistant Attorney General (AAG) Matthew Olsen, the head of the Department of Justice’s (DOJ) National Security Division (NSD), announced that a review of the China Initiative begun under the Trump administration had concluded was that it was “not the right approach” and that the DOJ would adopt a more comprehensive framework, the Strategy for Countering National-State Threats, to counter threats from hostile nation-states.1 This Customer Alert addresses the China Initiative, highlights key points from AAG Olsen’s comments, and shares practical takeaways from the announcement.
The mixed record of the China Initiative
The DOJ’s China Initiative, launched on November 1, 2018 and led by the DOJ’s NSD, was designed to counter threats to US national security from China. The stated objectives of the initiative included: (i) identifying high-profile cases of trade secret theft; (ii) Developing an enforcement strategy in relation to non-traditional collectors (eg., researchers in laboratories, universities and in the defense industry) allegedly co-opted for technology transfer to China against US interests; (iii) application of the Foreign Agents Registration Act to unregistered Chinese agents seeking to advance China’s political agenda; and (iv) identifying Foreign Corrupt Practices Act cases involving Chinese companies.2
While the DOJ secured a number of convictions against individuals over the three years of the China Initiative’s existence, it also encountered some large and high-profile setbacks in court, particularly in relation to fraud and misrepresentation charges against researchers and scientists who work there allegedly failed to disclose their affiliations with the Chinese government or Chinese state-funded entities.3 Most recently, in January 2022, the DOJ dismissed criminal charges against Dr. Gang Chen, a professor at the Massachusetts Institute of Technology, for his alleged failure to disclose awards and grants from various Chinese institutions.4
Highlights from AAG Olsen’s remarks
In his speech, AAG Olsen acknowledged concerns that the China Initiative fuels perceptions that the DOJ “treats people of China or Chinese descent differently” and discourages academic collaboration. However, he stressed that the “genuine national security concerns” of the Chinese government and other regimes remain high. Among other things, his remarks highlighted the following:
- The DOJ launches the Strategy for Countering Nation-State Threats to counter threats from nations like China, Russia, Iran, and North Korea. Threats identified include cross-border suppression of freedom of expression, foreign anti-malicious influence campaigns, hacking and cyberattacks, espionage activities, and circumvention of export controls.
- Threats from the Chinese government and its agents remain a major focus for the DOJ. Examples of actions allegedly taken by the Chinese government include theft of government and military secrets, industrial espionage, theft of intellectual property and technology, malicious cyber campaigns, and suppression of dissent.
- NSD will pursue three strategic imperatives: (i) defend the United States from espionage threats, export control evasion, sanctions violations, and interference with critical American infrastructure; (ii) protecting key technologies, private information about Americans and US supply chains; and (iii) defending democracy and values from the malicious influences of authoritarian regimes.
- NSD will rely on various tools to combat and mitigate threats to national security, economic security, or democracy and freedom: (i) taking law enforcement action to investigate and prosecute crimes assisted by foreign government agencies and their agents; (ii) the use of civilian and administrative tools to detect and mitigate foreign influence on US public opinion; (iii) supporting diplomatic engagement and building resilience in domestic and foreign communities; and (iv) working with Democratic allies to share information and develop strategy.
The departure from the China Initiative does not mean that the Biden administration is relaxing its enforcement stance against perceived threats from China. As AAG Olsen made clear in his remarks, the NSD will continue to use an all-instruments approach to counter nation-state threats, and he assured that “it is clear that the Chinese government is on the sidelines.” The director of the Federal Bureau of Investigation (FBI) publicly addressed the same issue in a speech earlier this year, underscoring the FBI’s continued commitment to deterring and countering perceived threats from the Chinese government in the areas of espionage, intellectual property theft and cybercrime.5 Other US enforcement and regulatory agencies – such as the Commerce Department and Treasury Department – have also pledged to use their full arsenal of investigative and enforcement tools.6 These authorities’ existing regulatory and enforcement mechanisms related to China, such as B. CFIUS reviews, sanctions and entity lists are not impacted by the DOJ’s announcement. Multinational companies operating in both the United States and China would be wise to remain vigilant and adopt or update policies and procedures appropriately designed to ensure compliance with US laws and regulations under the ensure a strategy for defending against nation-state threats.
1 “Assistant Attorney General Matthew Olsen Delivers Remarks Addressing Nation-State Threats,” DOJ (February 23, 2022).
2 “Information About the Department of Justice’s China Initiative and a Compilation of China-related Prosecutions Since 2018”, DOJ (19 Nov. 2021).
3 “Former Cleveland Clinic Employee and Chinese ‘Thousand Talent’ Contestant Arrested for Wire Fraud,” DOJ (May 14, 2020); see also “Researchers accused of visa fraud after lying about their work for the People’s Liberation Army of China,” DOJ (July 23, 2020); see also “Chinese Citizen Charged with Destroying Hard Drive During FBI Investigation into Possible Transfer of Sensitive Software to China,” DOJ (August 28, 2020).
4 “Statement by U.S. Attorney Rachael S. Rollins Concluding the Gang Chen Case,” DOJ (January 22, 2022); see also “MIT Professor Arrested and Charged with Aid Fraud,” DOJ (January 14, 2021).
5 Countering Threats Posed by the Chinese Government Inside the US, FBI (January 31, 2022).
6 “Trade Laws to Prevent the People’s Republic of China’s Misuse of Biotechnology and Other U.S. Technologies in Support of Surveillance and Military Modernization That Threaten National Security,” Department of Commerce (December 16, 2021); see also “The Ministry of Finance Identifies Eight Chinese Tech Companies as Part of the Chinese Military-Industrial Complex,” Ministry of Finance (December 16, 2021).