Spy Vs. Spy

Foreign direct investment into China is at a 30-year low. Dozens of Western firms left during Chairman Xi’s nightmarish Covid crackdown. Now Western execs say a big reason they are not returning is China’s new espionage law. The law could be interpreted as treating ordinary due diligence for a prospective investment as spying, with the reward an involuntary spell of Chinese government hospitality.

Assessing the motives of the inscrutable ones is never easy, but it would not be unreasonable for the Chinese to protest, like siblings fussing in the back seat of the car, “he started it.” If the Chinese are getting paranoid about trade secrets, they are following in the footsteps of U.S. leaders who, as Richard shows in a forthcoming article in Reason magazine, have been lying about alleged Chinese technology theft for two decades.

The U.S. government, you will be glad to hear, does not sleep. Our leaders are working overtime to ensure we do not lose the paranoia race. To that end, we have an espionage law of our own, directed at blotting out the last vestiges of Chinese-American technology collaboration.

Well, it’s not really a law. Laws are out of fashion. It’s an order from the President, whom we do not yet call the Supreme Leader. Issued by Donald Trump and dubbed National Security Presidential Memorandum 33, its stated goal is to “strengthen protections of United States government-supported R&D against foreign government interference and exploitation.”

Memorandum 33 requires any institutions—including universities—that receive more than $50 million in annual federal R&D funding to “implement their own research security programs.” These security programs must cover, among many other issues, “foreign travel security, and insider threat awareness and identification.” In other words, be ready to justify whom you hire, where they are allowed to do research, and with whom they associate.

Memorandum 33 has gained new importance with the CHIPS act, which looks to capture nearly every significant player in the U.S. semiconductor industry by virtue of that “$50 million in federal R&D funding.”

To maximize the leverage CHIPS gives our masters, the National Institute of Standards and Technology (NIST) has issued a “framework” for compliance outlining “requirements for an integrated, mission-focused, risk-balanced approach for safeguarding international science and technology from undue foreign interference.”

The NIST hastens to add that implementations of the “framework” must simultaneously protect “the openness and integrity of the U.S. research ecosystem.” And demonstrate believing in six impossible things before breakfast.

In keeping with this “framework,” the NIST has prepared the “CHIPS for America Guidebook,” instructing any applicants for CHIPS funds include in their “proposed research security plan” methods for:

• Reviewing Personnel Appointments
• Reviewing Foreign Travel Requests
• Reviewing Collaboration and Service Requests
• Implementing Technology Control

Applicants are urged to “compartmentalize fundamental and non-fundamental research products and to enable pre-publication reviews of non-fundamental research products.” In other words, be careful with whom you collaborate, even in your own university.

CHIPS funded research must occur in the United States, “unless NIST approves otherwise.”

Research personnel and staff must report foreign travel, “including virtual conference/meeting attendance.” There must be procedures “to evaluate the risks and benefits of work-related foreign travel,” and processes “to ensure that overseas travel does not provide a foreign entity of concern access to CHIPS-R&D funded research products” and even processes to “remove project-related data from devices prior to travel.”

CHIPS applicants should develop “processes for research personnel to report requests for collaboration or services . . . including foreign requests, and for notifying CHIPS R&D, as appropriate.”

Artfully speaking from both sides of its mouth, the handbook “encourages collaborative research between entities across the domestic semiconductor value chain, to include international collaboration” but only “subject to NIST approval.”

The joyful noise you hear in the background is battalions of lawyers shouting Hallelujahs.

The backside covering language about openness and collaboration aside, the entire document can be summed up in single phrase now being memorized by corporate and university compliance officers and legal counsel: “Don’t do it.”

Any university professor following the normal practices of science, collaborating with colleagues from abroad, could have his career destroyed by what the CHIPS or NIST bureaucrats construe to be a violation of these elastic rules. The only safe course will be to “overcomply” deep-sixing innovation.

Readers of this letter will recall our celebration of what may turn out to be the most significant advance in microelectronics in 70 years: the first graphene semiconductor. This spectacular achievement was announced simultaneously, in January of this year, by a team of researchers from Georgia Tech and Tianjin University, China’s oldest. The discovery was the fruit of almost a decade of collaboration.

Today, neither the Chinese nor the American researchers would dare work together on such a project. Doesn’t that make you feel safe?