US foreign-aid halt is making scrutiny of China even harder

Nonprofits cited halts to funding from U.S. institutions including the State Department, the U.S. Agency for International Development and the National Endowment for Democracy.

Activists and nonprofit executives say the shutdown—led by Elon Musk’s Department of Government Efficiency—is forcing nongovernment organizations to suspend or stop their research on everything from human-rights abuses to socioeconomic indicators prized by foreign businesses.

One nonprofit has suspended efforts to collect data on public dissent and worker unrest—information that investors and academics have mined for clues on China’s economic health and social stability. Some activists say they are cutting research on Chinese supply chains, disrupting work that has helped foreign companies and consumers navigate legal and ethical concerns over the alleged use of forced labor.

Other NGOs are dialing back efforts to track the Communist Party’s suppression of speech and religious freedoms, and worry that they may have to cease contact with Chinese activists, independent journalists and whistleblowers who share information that Beijing tries to suppress. Also at risk are think-tank studies on Chinese cyber threats and foreign-influence operations, which have uncovered potentially malicious activities that democratic governments around the world are trying to thwart.

“U.S. government grants often fund research that cannot be conducted easily in China due to Beijing’s formidable censorship apparatus," said Neil Thomas, a fellow on Chinese politics at the Asia Society Policy Institute. “Cutting off support for researchers focused on understanding Beijing could raise the risk of strategic misunderstandings that endanger U.S. national security."

Foreign officials, academics and executives have turned to China-focused NGOs, and their local connections, for help parsing signals from a country where the Communist Party has tightened controls on data and suppressed independent analysis of social and economic trends. Many of these NGOs now say they are scrambling to seek new funding or lobby for resumptions to their grants.

Many of these NGOs have received U.S. government grants that were meant to fund research and advocacy projects that support Washington’s foreign-policy goals, according to a U.S. government database.

Their findings have informed policy debates in Washington, with citations by the House Select Committee on the Chinese Communist Party, and in reports published by the Congressional-Executive Commission on China, a group of lawmakers and executive-branch officials that tracks human-rights issues in the country.

Some of these NGOs have also provided international institutions such as the United Nations with information on alleged human-rights abuses and forced labor in China, such as the Communist Party’s forced-assimilation program targeting Uyghurs and other Muslim ethnic minorities in the frontier region of Xinjiang, according to activists and nonprofit executives familiar with such work.

One widely cited data set on social unrest in China came from Freedom House, a Washington-based organization that tracks political freedoms around the world, which said the U.S. aid freeze has forced it to suspend its China Dissent Monitor, a platform that documents protests and other forms of public unrest.

Launched in 2022, China Dissent Monitor documents mainly in-person demonstrations and online dissent by tracking news reports and social-media posts, as well as information from local activists and NGOs. In its most recent quarterly report, the initiative said it tracked 937 instances of dissent from July to September last year, a 27% increase from the same period in 2023, and categorized more than 40% of protests as being led by workers.

“We hope that we will be able to continue work on this important project soon," Freedom House said.

While major nonprofits suspend U.S.-backed research projects on China, smaller organizations say they are struggling to survive, even after furloughing or laying off staff to buy time. Many of these groups are reluctant to speak publicly about their difficulties, since this could make public their reliance on U.S. funding and jeopardize the safety of partners in China, activists said.

“When smaller NGOs are broken, they can’t be easily rebuilt," said an Asia-based executive of an American private foundation that has provided funding to China-focused nonprofits. “The functions and capabilities that these NGOs provide would be lost."

China Digital Times, a California-based website that tracks Chinese censorship, said it has slashed management salaries and working hours for regular staff after losing grants from the National Endowment for Democracy, a nonprofit funded by the U.S. Congress.

Founded in 2003, China Digital Times has emerged as a leading resource on Beijing’s media and internet policies by publishing government propaganda directives and archiving internet content scrubbed by Chinese censors. Its work has helped foreign officials and academics study how the Communist Party tries to shape public narratives, and preserved Chinese voices and writings that would otherwise have been lost.

In February, Canadian authorities said they relied on China Digital Times’s findings to uncover what they called a malicious information operation that targeted former Canadian finance minister Chrystia Freeland, a candidate to succeed Prime Minister Justin Trudeau.

“This funding cut has had severe and immediate consequences on our ability to continue this work effectively," said Xiao Qiang, the founder of China Digital Times, who is seeking a resumption of the NED grants while searching for new financing.

The NED said it has been “forced to suspend support for nearly 2,000 partners worldwide," even though 95% of its funding comes from Congress, isn’t considered foreign assistance, and should have been exempt from Trump’s aid freeze. “The disruption is hitting hardest in highly repressive environments, where dedicated frontline organizations have been forced to lay off staff, curtail operations, and, in some cases, face increased security threats," NED said.

China Labor Watch, a New York-based advocacy group that monitors workers’ rights, said the aid freeze eliminated some 90% of its $1 million budget for this year. The group has suspended investigations into the use of forced labor in Chinese supply chains—work that helped U.S. authorities identify and ban imports from companies that allegedly use Uyghurs and other ethnic minorities as forced labor.

The Atlantic Council, a Washington-based think tank, has paused work on several China-focused projects that were funded by State Department grants, including research on how Beijing tries to use international institutions to advance its interests, and a program to train Latin American journalists on how to monitor Chinese influence operations in that region.

The think tank is working to get the grants restored, according to Romesh Ratnesar, senior vice president of engagement at the Atlantic Council. “These programs are cost-effective investments in U.S. national security," he said. “They allow for independent research and engagement to counter China’s strategic ambitions."

The Australian Strategic Policy Institute, a Canberra-based think tank, said the U.S. funding halt has prompted it to stop work on China-related research and data projects—worth about $1.2 million—that focused on cybersecurity and technology issues. The think tank’s China work has often been cited by members of the U.S. Congress.

“Like many NGOs we’re waiting to hear whether this work will proceed in the months to come," said Danielle Cave, ASPI’s director of strategy and research. “In the meantime, we’re looking for alternative support and staff have been moved to other projects where possible."

To help finance its work, ASPI is planning to charge access fees for some of its more popular research, particularly on China-related projects that require significant resources to produce and maintain, Cave said. “In an ideal world, we want it to be free-for-all public good, but in this situation, we don’t have much of a choice."

U.S. government grants have accounted for roughly 10% to 12% of ASPI’s funding and financed roughly 70% of its China research since 2019, which included studies on Chinese disinformation and data-harvesting operations, according to the institute. In its latest annual report, ASPI said it received nearly 3 million Australian dollars—about $1.9 million at current rates—in U.S. State Department grants during the 2022-2023 financial year, which supported work on issues including disinformation and protection against intellectual property theft.

“The U.S. government was the key funder of large grants on topics focused on China," Cave said. Other governments and supporters have tended to give far smaller grants or actively avoid funding China-focused projects, for fear of upsetting the Chinese government, even though they “eagerly read and use the research once it’s published," she said.

“This work is data-intensive, expensive and there is no backup" to the U.S. funding, Cave said. “Now other governments need to step up."

Write to Chun Han Wong at chunhan.wong@wsj.com