Killing Chinese Life Sciences, Part I: Poisoning WuXi AppTec and its Kin

In January 2024, Congressman Mike Gallagher, the Chair of the United States (US) House Committee on the Chinese Communist Party, introduced the “Biosecure Act,” which prohibits the US government (USG) from “procuring or obtaining biotechnology equipment or services produced or provided by a biotechnology company of concern,” participating in a contract that used such equipment or services or “requires the direct use of such equipment or services.” The Act’s language specifically lists Chinese companies like BGI, MGI, and WuXi AppTec and also notes it applies to companies under the “jurisdiction, direction, control, or operating on behalf of the government of a foreign adversary” [in short, all other Chinese companies?] As of this writing, the bill’s future is uncertain. In the House, it has been referred to Committee; Gallagher is resigning from Congress; and the U.S. Senate has yet not voted on its version of the bill.[1]

The catalog of concerns motivating the Biosecure Act echo, at least in their general form, many of those leveled against other, not just biotech, Chinese firms, with the responses of Beijing and Chinese companies equally familiar. With respect to the former, there are worries that the Chinese government will gain access to precious personal information (genetic, genomic, other), which, in turn, could be used for blackmail, eugenics and human rights/privacy abuses, and surveillance. There are those troubled by the perceived close ties among some Chinese companies and Chinese military and security bodies. Even if the Chinese government itself did not directly access data, there are those anxious about the data handling and privacy practices of Chinese firms as well as what these firms are doing (or what could be done) with the masses of data they are accumulating. Regarding the latter, some have noted China might exploit their data to dominate global pharmaceuticals, create genetically enhanced soldiers, or develop efficient bioweapons. As one would expect, the broader US-China economic, military, and technological competition as well as their respective dependencies are part of the story, too.[2] For Beijing, the Act and related measures are components of the US’s larger effort to “maintain its technological advantages and hegemony,” protectionism, jingoism, “zero-sum Cold War mentality,” and domestic politics.[3] Beyond lobbying, Chinese companies deny any ties with China’s military, stress their data protection policies or the boundedness of the data they collect or have, and, not surprisingly, emphasize the economic and health benefits of their equipment and services.[4]

According to various commentators, the potential downsides of banning or constraining USG or US firms’ dealings with Chinese biotech companies such as BGI, MGI, and WuXi AppTec include inadequate, or inefficient, or slower quality drug development and production, limits on access to drugs that might be licensed, and higher drug development and drug costs. More generally, US initiatives, which go beyond the Biosecure Act, have the potential to disrupt academic, business, and scientific cooperation in life sciences which, in turn, will hinder US competitiveness and constrain the ability of the US and China to tackle their respective and global health care problems such as chronic diseases as well as issues surrounding the field of biotechnology such as biosafety and biosecurity. Aside from the above, US maneuvers supposedly are threatening the values of free enterprise, transparency, and trade.[5]

Even if the Biosecure Act fails to become law or its language is severely narrowed, concerns about Chinese businesses in the biotechnology sector specifically and the life sciences sector more generally are not going away given the numerous factors that motivated the Biosecure Act in the first place. This is partly evidenced by President Joseph Biden’s Executive Order on February 28, 2024 that prohibited or restricted the sale, transfer, transportation, export, or possession of “bulk sensitive personal data,” USG-related data, or other designated data, Congressional moves restrict to whom data brokers sell their data, and the possibility that the US may adopt measures to limit foreign direct investment (FDI) in China’s life sciences sector much as it has moved to hinder FDI in China in artificial intelligence, quantum computing, and semiconductors.[6] Whatever the USG does, the consequences are not small. Direct and portfolio investors may lose billions. Health care may decline in quality or quantity or costs may rise notably. US-China economic ties may deteriorate further and perhaps, in tandem, political relations, which, in turn, may lead to new restrictions on American enterprises in China, Chinese companies in the US or business dealings with the other side. On the other hand, a failure to take resolute measures may weaken further the privacy of the American people and USG employees and military personnel while increasing their vulnerability, magnify a variety of military and political risks, and undermine the future business prospects of American companies in the biotechnology as well as other life science areas.

Part II in this series entitled “Killing Chinese Life Sciences” will examine the development of the Chinese life sciences sector from the 2000s onward, the Chinese government’s considerable role in advancing it development, and the issues raised by that involvement. Part III will provide a general treatment of US-China ties in the life sciences sector, offering information about interactions between life science businesses as well as US investment in China’s life sector and China’s investment in the US life science sector. Part IV will conclude the series by reviewing US concerns at greater depth, enumerating relevant policy issues for businesspeople and decisionmakers, and putting forth some business and policy recommendations.