Chinese-American physicist Xiaoxing Xi is still haunted by the memory of an early morning in 2015, when a group of FBI officers surrounded his home in Pennsylvania. 

The agents pointed guns at his wife and two daughters and then handcuffed him.

The former chair of Temple University's physics department was charged with leaking sensitive technology to the Chinese government.

Prosecutors accused Professor Xi of secretly sharing the design of a pocket heater for a supercomputer with scientists in China.

Overnight, Professor Xi's face was splashed across US media and he was branded a "Chinese spy".

He faced up to 80 years in prison if found guilty.

But just four months later, Professor Xi's case came to a dramatic turning point.

Before the trial had even kicked off, the US Department of Justice (DOJ) dropped all charges against Professor Xi, with a document filed in court explaining that "additional information came to the attention of the government".

According to Professor Xi's lawyer Peter Zeidenberg, the scientist had never shared secret technology with Chinese colleagues.

He says Professor Xi was simply engaging in "typical academic collaboration" about a different device.

Mr Zeidenberg said the government hadn't understood the complicated science his client was working on and had failed to consult with experts before arresting him.

Instead, the FBI was alleged to have used Professor Xi's email exchange with Chinese scientific institutions — where he just explained legitimate collaboration projects — as evidence of technology theft.

Despite proving his innocence, the memory of armed FBI agents storming his house has haunted Professor Xi during countless nights over the past seven years.

He also warned that as geopolitical tensions between the US and China continued to escalate, more and more Chinese scientists like him would be caught under a cloud of suspicion for spying.

"In the last maybe 30 years, there were all these [ideas of] openness, exchange and everything," Professor Xi told the ABC from his home in Pennsylvania.

At the university and research sector in Australia and the US, an action countering China's foreign interference and technology theft has been underway since 2018.

Security experts say these efforts are aimed at preventing Beijing's increasing espionage activities.

But insiders of the sector have also raised concerns about the damage being done to Australia and the US's STEM sectors, arguing these measures are driving away prospective students and creating an opportunity for Beijing.

A mass exodus of Chinese scientists from America

In 2018, the Trump administration launched the controversial China Initiative, which sought to protect US laboratories and businesses from economic espionage

Since its launch, the DOJ investigated around 150 scientists over their links with China. Two dozen of them were later charged.

The DOJ wins almost every case it brings. But when it came to the China Initiative, many of the cases of alleged spying or economic espionage were dropped before going to trial.

The program was also accused of racial profiling against scientists of Chinese heritage.

In February 2022, the DOJ announced it would axe the controversial program, replacing it with new measures that would target not just China but also countries of concern.

However, the chilling effect of the program had already spread through the Chinese-American scientist community.

A recent report launched by Asian American Scholar Forum showed that in 2021, at least 1,400 US-trained Chinese scientists had switched their affiliation from American institutions to Chinese ones.

The report also found 72 per cent of more than 1,300 surveyed academics felt unsafe, while about 40 per cent of scientists said they were fearful of conducting research in the US.

The China Initiative had instilled a deep fear of racial profiling and targeting against immigrant scientists, said Gisela Kusakawa, executive director of Asian American Scholar Forum.

"There is this feeling and sentiment that no matter how long you stay in the country, no matter how much you contribute, that somehow you are not going to be treated in the same way that other Americans are going to be treated, that you're going to be subjected to a higher level of scrutiny," she said.

It's not just the number of academics leaving the US that worries Ms Kusakawa.

She has also found young researchers were turning away from America due to concerns about political scrutiny.

"How many young Asian Americans see these high-profile cases of some of the best and brightest in our country and think to themselves, 'that's not the future that I want for myself?'" Ms Kusakawa said.

"We are seeing this loss of talent for the United States, from a community that has really made a big, positive impact for our science and technology."

And it's not just the US that's facing a science talent crisis.

A similar situation is happening in Australia, with even more potentially damaging ramifications.

'Very difficult' getting new blood into Australia, prominent scientist claims

Australia's science, technology, engineering and mathematics (STEM) sector also heavily relies on migrants, especially when it comes to highly-skilled jobs.

Of the 11.5 million people in the Australian labour force in 2016, only 6 per cent had a STEM university degree, according to the 2020 Australia's STEM Workforce Report.

Of that 6 per cent, more than half were born overseas.

But the Australian university sector, which heavily relies on funding from Chinese international students, has faced questions about foreign interference.

Those include allegations that Australian institutions have struck so-called alliances or collaborations with organisations whose sole intent may have been building up China's military strength.

Meanwhile, academics and students say they have been pressured to be silent over their criticism of the leadership in Beijing.

Bart Hogeveen, head of cyber capacity building at Australian Strategic Policy Institute (ASPI), says there are "ample signs" in the public domain that China is seeking technology information and intellectual properties from overseas.

"China has clearly expressed its ambition to transform the 'Made in China' policy to 'the world's technology powerhouse' in their words," he said.

In response to growing concerns, the federal government implemented two new laws to counter foreign influence and interference in 2018.

A year later, it also established the University Foreign Interference Taskforce, which later released a guideline on protecting national interest while developing international academic partnerships, conducting due diligence and mitigating cyber business risks.

In March 2022, after a year-long inquiry, the Parliamentary Joint Committee on Intelligence and Security released a 171-page report with 27 recommendations on preventing national security risks at Australian universities and research institutions.

Mr Hogeveen said academic institutions and small-to-medium-sized businesses had also been reassessing their linkages and intellectual openness with China in recent years.

While university leaders and human rights advocates acknowledged the necessity of such measures, some fear it may have consequences for Australia's future.

Prominent Australian scientists who were recruiting talented researchers from overseas have had their prospective students caught in lengthy visa delays because they had to endure national security checks.

Since 2018, hundreds of PhD applicants and postdoctoral researchers — including those from China — have reportedly waited as long as three years for visas.

Some have been told by the Department of Home Affairs that their delays were related to "legislated national security checks".

Dayong Jin, a prominent Chinese-Australian scientist and distinguished professor in biomedical devices at the University of Technology Sydney, said his PhD students were experiencing visa delays, some for more than a year.

Though it has not yet prompted the same mass exodus of scientists as in America, Professor Jin said in the past four years, at least "half a dozen" students he recruited had given up on Australia and decided to join universities in Hong Kong, Singapore and Europe instead.

"We've been trying to get good [PhD] candidates, it's just very difficult," he said.

A Department of Home Affairs spokesperson told the ABC that in the second half of 2022, it finalised 217,000 offshore student visa applications — a 72.7 per cent increase from the same period in 2019 to 2020.

However, the department didn't answer questions about national security checks for prospective PhD students.

How Beijing is reaping the benefits

Beijing stands to benefit from a potential exodus in the US and Australia of the best and brightest from STEM.

As early as 2001, China's Ministry of Science and Technology said every level of society should "encourage and attract outstanding overseas [ethnic Chinese] talents to return to China to work by multiple means — or serve the motherland's developments in other different forms".

These "different forms", as examined by leading China scholars such as Didi Kirsten Tatlow, co-editor of China's Quest for Foreign Technology: Beyond Espionage, means Beijing would use "legal, illegal and grey zone" approaches to acquire "technology, knowledge and talents" from overseas.

While some of these approaches may involve China's spy agency — the Ministry of State Security — they could also involve other agencies of the Chinese government.

The controversial Thousand Talents Plan is just one example.

The program, launched in 2010, aims to entice expatriate Chinese researchers to return to help make the country a global leader in science and technology.

A similar Youth Thousand Talents Plan (YTT) has been launched for early-career researchers.

While many assumed the Thousand Talents Plan exclusively targeted Chinese scientists to come home, new research shows the program really appeals to young researchers with non-Chinese backgrounds.

"For the first nine or 10 cohorts of the YTT recruits, slightly more than 100 scientists are non-Chinese," said Yabo Wang, co-author of the research and associate professor of strategy at University of Hong Kong.

"These are many young and capable scientists in places like North America, European Union, Australia and Japan who do not receive the support to pursue independent research [in their home countries]."

Already it appears as though China is reaping the rewards of its programs with new research finding China has overtaken the US to produce the top 1 per cent of most-cited science papers.

Professor Wang said over the longer term young scholars enticed by YTT and other programs would become the pillars of China's academic science.

"If [Australia and the US] do not engage in serious funding scheme reform to create more opportunities for early-stage scientists, places like China with talent recruitment programs are definitely attractive to them," Professor Wang warned.

And experts warn competition will only continue to increase in future.

China's desire for young talent will grow now that the country is being shut off from key technology in the West, said Chris Tang, Distinguished Professor in Business Administration at University of California, Los Angeles (UCLA).

"So if [China wants] to actually roll out the 5G technology, if they want to improve in terms of healthcare, biotech and space exploration, they need more talent to actually catch up," he said.

How is Australia attracting prospective scientists?

Australia has only recently realised the global competition is heating up, according to Yun Jiang, the China Matters Fellow for the Australian Institute of International Affairs.

Despite government efforts to lure talent to Australia, the country is still too "slow" in this global competition compared to China, she claimed.

"Australia needs to be more involved and needs to be more coordinated in attracting talents," Ms Jiang said.