It was sometime before 7am on 21 May 2015 when Xiaoxing Xi, a physics professor at Temple University in Philadelphia, was woken by people pounding on his front door. Still not fully dressed, he opened the door to be confronted by about 12 armed FBI agents.

The agents burst into Xi’s house, running about, shouting “FBI, FBI”. They pointed their guns at his wife and two daughters and ordered them to walk out of their bedrooms with their hands raised. Xi was handcuffed and arrested in front of his family.

His alleged crime? Four counts of wire fraud for passing sensitive US technology to China, the country of his birth. “Overnight, I was painted as a Chinese spy all over the news and internet and faced the possibility of up to 80 years in prison and a $1m fine,” he wrote in a statement to the US House of Representatives last year.

Four months after his arrest, the case collapsed before reaching trial. Xi, who came to the US from China in 1989 at the age of 32, was told through his lawyer that the US justice department (DoJ) had dismissed the case after “new information came to the attention of the government”.

On Monday, nearly seven years after that raid, Xi, 64, asked a federal appeals court in Philadelphia to reinstate his claims for damages against the US government and the FBI. He and his family claim that they had been “wrongly” investigated and prosecuted in 2015.

The Xi family also wants a declaration that the FBI violated their fourth and fifth amendment rights. They say they have “clear evidence” the FBI violated their constitutional rights, and that years later they are still dealing with the trauma of the ordeal.

“If we can’t hold the government accountable now, there will be little to stop the government from profiling other Asian American scientists and ruining more innocent people’s lives in the future,” Xi said. “The government is not entitled to do what they have done to me and my family.”

This is not Xi’s first attempt to take on the US government. Last April, a lower court dismissed nine of his 10 claims, which included allegations the FBI knowingly made false statement. The court also rejected his claim that the FBI’s action was “discriminatory”.

But the lower court has yet to rule on Xi’s 10th claim, which challenges the US government’s surveillance of Xi and his family. The DOJ declined to comment on the lawsuit. The FBI has been contacted by the Guardian for comment on the Xi case.

Xi’s ordeal occurred under the Obama administration, but his latest attempt to secure compensation comes amid a wide-ranging debate in Washington about how the US should compete with China. Stories like Xi’s have also been emerging as more American scientists – in particular those of Chinese origin – are being caught up in the geopolitical tensions.

In 2018, the Trump administration launched a China Initiative to “[reflect] the strategic priority of countering Chinese national security threats and reinforce the president’s overall national security strategy”. The DoJ website boasts a series of examples – the latest, from 5 November, detailing an alleged attempt by a Chinese intelligence officer to steal trade secrets.

Last week, the FBI’s director, Christopher Wray, alleged “there is just no country that presents a broader threat to our ideas, our innovation, and our economic security than China”. He claimed his bureau opens a counterintelligence case against China “about twice a day”.

Opponents of the China Initiative argue it creates a pervasive atmosphere of fear among American academics who used to, or still have, links to China. Until recently, they were seen by many as a bridge between the two nations.

Judy Chu, a California Democrat and the first Chinese American woman in US Congress, said the China Initiative is an instrument for “racial profiling”. “[The government] has turned it into a means to terrorise Chinese scientists and engineers. Something has gone dramatically wrong,” she told US media in December.

Responding to concerns, the attorney general, Merrick Garland, said to Congress in October that the DoJ would review the programme. Opposition to the initiative has grown louder in recent months. In December one former DoJ official said it had “drifted and, in some significant ways, lost its focus”.

In a statement to the Guardian, a DOJ spokesperson said: “Consistent with the Attorney General’s direction, the Department is reviewing our approach to countering threats posed by the PRC government. We anticipate completing the review and providing additional information in the coming weeks.”

Zhigang Suo, a Chinese-born Harvard academic who, like Xi, is also a naturalised US citizen, said the heated atmosphere was having an adverse affect. “Of course people are upset about China, but I can see it takes two people to bicker. And I’m not a fan of the juvenile behaviour on either side,” he said. “In the past, very few fellow Chinese Americans would even think of leaving the US. But now, I can tell you some of the top Chinese American scientists have either left or are thinking about leaving.”

For most of the three decades since settling in the US, Suo was not interested in politics. “My wife is a political junkie, but I wasn’t interested in it at all,” he said. But on 14 January 2021, the arrest of his best friend, Gang Chen, a fellow Chinese American scientist, changed that.

Chen, a Chinese-born mechanical engineer at the Massachusetts Institute of Technology, was charged with hiding his links to China. The charges were later dismissed, but the incident turned Suo from an apolitical science nerd into a political activist.

“Before [the China Initiative], you were innocent until proven guilty. Now, you are guilty until you prove you are innocent,” Suo said. “I fear this is the start of a slow process of brain drain for America. Historically, brain drain precedes the decline of great nations.”

In a recent interview with the New York Times, Chen, who has now been released, said: “You work hard, you have good output, you build a reputation … The government gets what they want, right? But in the end, you’re treated like a spy. That just breaks your heart. It breaks your confidence.”

Supporters of the China Initiative argue that this China-focused programme is not completely without merit. They point to the recent case of a Harvard chemistry professor, Charles Lieber, who, in December,was found guilty of six felony counts, including failure to disclose his associations and funding from a China-based university and the country’s controversial talent programme.

But that same month, a Bloomberg analysis showed that among 50 indictments announced or unsealed since the programme’s inception, “only 20% of the cases allege economic espionage, and most of those are unresolved. Just three claim that secrets were handed over to Chinese agents.”

Xi said the nightmare experience seven years ago interrupted his “American dream”. Although the charges were quickly dropped and his university position reinstated, his career has been damaged nevertheless, he said. “My research programme is now much smaller… I’m scared of applying for funding because as long as I do anything imperfectly, it could one day come back to haunt me.”

Yet, despite the ordeal, Xi said he had also learned an important lesson. “If we – Americans of Chinese descent – want our environment improved, we need to speak out and fight for our rights. This is how democracy operates.”