Elite Universities Are Investing In China’s Surveillance State. A New Bill Would Tax Those Investments At 100%.

Elite Universities Are Investing In China’s Surveillance State. A New Bill Would Tax Those Investments At 100%.

A bill proposed by Rep. Greg Murphy (R-NC) on Wednesday would tax university endowments at a 100% rate for investments into Chinese entities deemed a threat to national security.

Elite schools such as Princeton University and the Massachusetts Institute of Technology have invested in SenseTime, Megvii, and other companies linked to the Chinese surveillance state, according to a 2019 investigation from BuzzFeed News, such as through facial recognition technology used to track racial minorities in the province of Xinjiang. The Protecting Endowments from our Adversaries Act would tax investments in such entities and others on the U.S. Department of Commerce’s “Entity List” with 50% excise taxes upon acquisition and 100% capital gains taxes.

“These billion-dollar, tax-advantaged university endowments have a moral obligation to divest from companies that are detrimental to the safety and security of the United States,” Murphy said in a statement provided to The Daily Wire.

Funded by donations and tax-exempt investment returns, endowments support the teaching and research efforts of universities. At nearly $42 billion, Harvard University’s endowment was the largest in the United States as of fiscal year 2020, according to the National Center for Education Statistics.

Last month, Murphy sent a letter to the 15 private universities boasting the nation’s largest endowments, urging them to nix investments in “entities that are supporting the imprisonment of Uyghur Muslims or aiding the Russian Federation’s horrific invasion of Ukraine.”

Leading universities have been known to divest from companies involved in fossil fuels, prison management, and other industries perceived as contrary to leftist values. Yet Murphy’s statement noted that 75% of the universities responding to his letter have stakes in entities deemed a national security risk.

“Harvard and several schools have a record of divesting from companies for a variety of reasons, including on the basis of Environmental Social Governance (ESG) causes,” Murphy concluded. “Unfortunately, it is clear that we must force their hand to take the same approach for compromising Chinese entities that are a known risk to U.S. national security.”

Amid the most recent economic downturn, the validity of ESG investing has been called into question as such funds take severe hits. For instance, iShares’ ESG Aware MSCI ETF — which has its largest holdings in companies like Microsoft, Alphabet, and Tesla — is down over 18% since the beginning of 2022, slightly lower than the overall S&P 500 index. Meanwhile, iShares’ Global Energy ETF — dominated by oil and gas conglomerates like Exxon Mobil, Chevron, and Shell — has risen over 24% over the same time period.

Beyond their endowments, many American universities have granted control of curriculum and programming to their Confucius Institutes — Chinese government-backed language and cultural exchanges that have been criticized as promulgators of Chinese Communist Party values, according to a 2021 investigation by Campus Reform. Some signed documents agreeing that they will “make any necessary modifications” to their Confucius Institutes based upon suggestions from the Chinese government.

In recent years, several academics have been charged for making false statements about their involvement with the Thousand Talents Plan — a Chinese initiative that draws Western scientists to China in an effort to access their work for economic and military advancements. Harvard chemistry professor Charles Lieber, for example, was convicted last year for lying about his involvement with Thousand Talents while receiving up to $50,000 per month from Wuhan University of Technology for his work as a “Strategic Scientist.”