Academic ties had grown stronger, with leading American colleges, including Harvard, the Massachusetts Institute of Technology (MIT) and Carnegie Mellon, hosting forums for Chinese investors. These have now been placed under new investigation. In January 2021, the FBI arrested MIT professor Gang Chen on charges of federal grant fraud in January 2021. The charges were later dropped.
It was around this time that Michael decided to leave the US and return to China to join a startup founded by some friends. “At that time, China seemed to have more opportunities, while there were too many political issues involved in doing business in the US,” he says.
Since then, President Joe Biden’s administration has continued to put pressure on China’s technology sector by imposing new export controls, investment restrictions and tariffs. In October 2022, the US Department of Commerce released new rules prohibiting US companies from exporting technology used to produce advanced chips or supercomputers. The White House is about to reach an agreement on limiting US investment in Chinese tech companies and banning some deals in critical industries, including microchips. Under pressure from China and the US, some Chinese tech companies, including ride-hailing giant Didi, have delisted from US markets. Others, including the podcast platform Himalaya, have postponed their own plans to appear in the US. US lawmakers are publicly discussing the ban on TikTok, the social media platform of Beijing-based ByteDance.
These heavy-handed actions have sparked an angry response from some in China. Andy Mok, a research fellow at the Center for China and Globalization, a Beijing-based think tank, says Chinese investors still want to cooperate with their American counterparts, but “this animosity on the part of the US is putting up barriers”.
“I find it deeply disappointing that many Americans are being poisoned by Western media about China,” says Mok.
Many Chinese investors have left the US; others keep a low profile. Before the Sino-American relationship began to unravel, Sino-American academics formed a bridge between the two countries and regularly participated in exchange programs and incubators. “But since many scholars like Chen Gang have been investigated by the FBI, they are now too afraid to have ties to Chinese investors and the Chinese government,” says Liu.
Liu’s company is shifting focus to Europe, Israel, Japan and South Korea.
USC’s Orlando says he is now very rarely approached by Chinese investors and that founders are hesitant to take Chinese money. “People think ahead and take the potential risks into account. Just as I have startups thinking about the risk of building a following on TikTok, founders are aware of the potential risks of reliance on Chinese investment.”
But despite the barriers, a trickle of money is still flowing from China to the US. US markets are picking up and there are opportunities in unapproved sectors of the economy. And many wealthy Chinese are looking less at the risks in the US and more at the risks at home.
Chin, the logistics entrepreneur, says she has noticed a shift in focus among Chinese investors in Silicon Valley. Their motivation isn’t what it used to be – they’re not talking about “going public” or “bringing American technology to China.” They talk about “transferring money from China,” she says. “They are afraid they could be dealt with by the Chinese government at some point in the future.”
According to data from New World Wealth, an asset information agency, nearly 11,000 wealthy Chinese will leave China in 2022, the highest number since 2019.
Michael is once again considering emigrating back to the US. The startup he joined initially did well, but went downhill during the pandemic. Strict “zero Covid” policies and associated lockdowns have challenged his personal life, while government restrictions on technology, education, gaming and cryptocurrencies mean he is concerned about his ability to continue doing business. “There are too many uncertainties here in China,” he says.
