WASHINGTON (Reuters) - China has provided over $158 million to U.S. schools for Confucius Institutes to promote Chinese culture, U.S. Senate investigators said on Wednesday, releasing a report saying the centers have acted as tightly controlled propaganda arms for Beijing and should be changed - or shut down.

Chinese staffers adjust U.S. and Chinese flags before the opening session of trade negotiations between U.S. and Chinese trade representatives at the Diaoyutai State Guesthouse in Beijing, Thursday, Feb. 14, 2019. Mark Schiefelbein/Pool via REUTERS

The Senate’s Permanent Subcommittee on Investigations spent eight months investigating the Confucius Institutes, which were created in 2004 to promote Chinese language and culture at schools and universities around the world.

But the centers have been criticized, particularly in the United States, for promoting the views of the Chinese Communist party, assertions denied by both the institutes and the government.

The FBI has said it is “watching warily” the Confucius Institutes and the State Department has called them “China’s most powerful soft power platforms,” the investigators found.

The report said the Department of Justice should decide whether any Confucius Institutes or their employees should register as foreign agents.

China’s government said on Feb. 24 that it plans to “optimize” the spread of the institutes and they will remain a key part of government policy.

The new Senate report said China’s government controls nearly every aspect of the institutes in the United States, including their funding, staff and programming. It also can veto any program or speaker.

The report was released amid a costly trade war between Washington and Beijing, which has seen President Donald Trump and other U.S. officials accuse the Chinese of using students as spies, stealing intellectual property and a range of other dirty tricks.

Earlier on Wednesday, U.S. Trade Representative Robert Lighthizer told a House of Representatives committee that the United States will need to maintain the threat of imposing tariffs on Chinese goods for years even if a deal is struck to end the current dispute.

NO EVIDENCE OF ESPIONAGE

The Senate investigators did not find evidence that staff at the Confucius Institutes were involved in espionage or other activity that would need reporting to law enforcement.

But they did find many staff had obtained the wrong type of visa and that 70 percent of U.S. colleges and universities that received at least $250,000 per year from the Chinese government did not report it as required by the Department of Education.

The report’s recommendations included requiring that U.S. schools publish online all contracts with foreign governments, ensure hiring conforms to their rules, not Beijing’s, and that the State Department review all visas and demand reciprocal treatment in China.

“Absent full transparency regarding how Confucius Institutes operate and full reciprocity for U.S. cultural outreach efforts on U.S. campuses in China, Confucius Institutes should not continue in the United States,” Senator Rob Portman, the subcommittee’s Republican chairman, said in a statement.

Subcommittee investigators said they were considering legislation to ensure the centers complied with their recommendations. The subcommittee will hold a hearing on China’s influence on U.S. education on Thursday.

Speaking at a daily news briefing in Beijing, Foreign Ministry spokesman Lu Kang said the “baseless accusations” and “politicisation” of Confucius Institutes betrayed a “typical cold war mentality and lack of confidence”.

He said the institutes were open and transparent and contributed to advancing people-to-people exchanges between the two countries.

Besides Confucius Institutes at 100 U.S. schools, Beijing also funds more than 500 “Confucius Classrooms” that teach Chinese language and culture in primary and high schools.

The investigators said some of the U.S. universities’ contracts with the Chinese government include non-disclosure provisions and require adherence to U.S. and Chinese law. They faulted the U.S. Department of Education for doing too little oversight.

Officials at the Education Department did not immediately respond to a request for comment.

The report also said the U.S. State Department had tried to set up a program in China to promote U.S. culture, but that China had insisted on controlling the program to such an extent that the department stopped funding it in October.