Were it not for the uproar over Chinese nuclear espionage, Feng Gai might still be working at Los Alamos National Laboratory, burnishing his reputation as a budding star in the field of laser spectroscopy.

Feng's work is not secret and has nothing to do with nuclear weapons; he studies the unfolding of human proteins, research critical to understanding Parkinson's and Alzheimer's diseases. But after the U.S. Department of Energy fired Chinese American physicist Wen Ho Lee in March for security violations, Feng was ordered to stay home from work for several days while Los Alamos put in place new screening procedures for foreigners.

Feeling "angry and hopeless," Feng says, he decided to say goodbye to the hysteria. This summer he packed up his family and moved to the University of Pennsylvania, which promised to build a $400,000 laboratory for its promising new professor of chemistry.

"I never cared about politics, back in China or here," said Feng, 36, sitting on a crate containing a new $80,000 laser. "I just want to do good research."

Penn's gain is not just a loss for Los Alamos, which does an increasing amount of unclassified research with commercial applications. If allegations of Chinese spying are poisoning the atmosphere for foreign scientists in this country--as some Chinese American groups contend--the United States may be a big loser as well.

Foreign students, of whom the largest contingent are from China, now receive more than half the PhDs in engineering granted by U.S. universities and are becoming increasingly dominant in physics, chemistry, mathematics and computer sciences.

More than two-thirds of those foreign PhD recipients say they want to stay and work in the United States, continuing a 50-year process through which many of the world's top scientists have become naturalized U.S. citizens. Five Nobel prizes in physics and one in chemistry have gone to Chinese Americans.

At an Oct. 5 hearing sponsored by the Congressional Asian Pacific Caucus on the Chinese espionage scandal's adverse impact on Asian Americans, Rep. Anna G. Eshoo (D-Calif.) said that at least a third of all the engineers in Silicon Valley are Asian Americans.

"If you subtracted that," Eshoo said, "the valley would collapse."

Charles Sie, a retired vice president at Xerox Corp., said in a recent letter to President Clinton that approximately 150,000 Chinese American scientists and engineers now work in the United States, including more than 15,000 in the defense industry.

But many foreign-born scientists have felt uncomfortable in defense facilities since the Wen Ho Lee case, and Feng is just one of several who have left Los Alamos "because of the uncertainty associated with the environment for foreign nationals," according to a report by the Los Alamos National Laboratory Fellows.

The report noted that all five top candidates for the lab's most prestigious postdoctoral positions were foreigners, and added: "Of these five, three (including the top two) rejected the offers."

When a prototype missile defense system intercepted a dummy enemy missile 140 miles in space during a critical test flight on Oct. 2, Ted Wong couldn't help feeling a surge of pride.

"I started the whole business," said Wong, an engineer who guided Hughes Aircraft Co.'s missile systems group (now part of Raytheon Corp.) into early research on the Reagan administration's proposed missile shield, known as the Strategic Defense Initiative or "Star Wars," in the mid-1980s.

Other Chinese Americans who have made major contributions to U.S. defense programs include:

* Andrew Chi, a physicist at NASA's Goddard Space Flight Center who developed the atomic clock at the heart of the Pentagon's Global Positioning System, a satellite network vital to guiding bombs and navigating ships.

* H.K. Cheng, a professor at the University of Southern California whose work in hypersonic flow physics helped to enable the reentry of intercontinental ballistic missiles and spacecraft into the atmosphere.

* Chih-Ming Ho, a scientist at the University of California at Los Angeles who showed how tiny micro-electromechanical systems, or MEMS, could replace traditional wing flaps and make U.S. fighter jets faster, more agile and harder to detect.

Despite this record of accomplishment, Chinese American leaders say, scientists of Chinese ancestry have felt under suspicion ever since a congressional committee chaired by Rep. Christopher Cox (R-Calif.) issued a report in May charging that China has stolen the designs of America's most sophisticated nuclear warheads.

"The good reputation of Chinese American scientists, which took many generations of hard work to build, has been tarnished. Their loyalty and their contributions to this country have been challenged and questioned," said Cheuk-Yin Wong, a Chinese American physicist at Tennessee's Oak Ridge National Laboratory who is also chairman of the 400-member Overseas Chinese Physics Association.

"We've done so much to contribute scientifically, but our contributions aren't being recognized," added Xerox's Sie. "You can't help but think there is some kind of racism in this. It's a combination of geopolitics and racism."

Energy Secretary Bill Richardson has gone out of his way to fight such allegations, assuring large gatherings of scientists that he will not tolerate any form of racism and that no one should be considered suspect on the basis of ethnicity alone.

A former head of the FBI's Chinese counterintelligence efforts, Paul D. Moore, bluntly told the Congressional Asian Pacific Caucus this month that "racial profiling" does occur in counterintelligence investigations. But he blamed China, charging that its intelligence service routinely targets Chinese citizens studying or working in the United States as well as Chinese Americans who travel to technical conferences abroad.

As long as Chinese agents remain "interested obsessively in people of Chinese American ancestry to the exclusion of people from other groups," he said, it is inevitable that the FBI also will focus disproportionately on Chinese American scientists.

"So you are profiling Chinese Americans?" asked Rep. Robert T. Matsui (D-Calif.).

"What's the option?" Moore replied.

Congress has already spoken on the issue, mandating polygraph testing for U.S. nuclear weapons scientists and tighter restrictions on Chinese and other foreigners who visit or work at the labs.

The danger of going overboard, however, is illustrated by the case of Tsien Hsue-shen, a brilliant Chinese immigrant who worked on top-secret U.S. defense projects during World War II, only to be hounded out of the United States as a suspected communist in 1955--after he had elected to become a U.S. citizen.

Tsien, a pioneer at the Jet Propulsion Laboratory in Pasadena, Calif., went back to the only other land he knew--and soon earned a place as the "father of Chinese rocketry."

"It is the story of one of the most monumental blunders the United States committed during its shameful era of McCarthyism, in which the government's zeal for Communist witchhunting destroyed the careers of some of the best scientists in the country," Iris Chang wrote in her 1996 biography of Tsien, "Thread of the Silkworm."

For more than a decade, however, the flow of scientists has been almost entirely one-way, an enormous brain drain from China to the United States.

"It's been a good thing for us--and a concern of [China's]," said Houston T. Hawkins, director of nonproliferation and international security programs at Los Alamos. "How would we like to have the top 10 percent of all graduates from U.S. technical institutions go to Libya?"

Feng Gai's background is typical. He came to the United States in 1989 to attend graduate school in physical chemistry at Iowa State University. After working for three years as a postdoctoral researcher at Harvard, he turned down a teaching position in Singapore to become a prestigious Director's Postdoctoral Fellow at Los Alamos in 1997. He has been a legal alien resident since 1994 and plans to apply for U.S. citizenship.

Hai-Lung Dai, chairman of Penn's chemistry department and a naturalized U.S. citizen born in Taiwan, said Feng's appointment shows how dependent on foreign scientists America has become. Penn reviewed a field of more than 70 U.S. and foreign scientists, but all four finalists were foreigners.

Top officials at Los Alamos also realized their dependence on foreign scientists when they advertised this year for a postdoctoral fellow to do unclassified research in nuclear materials and had 24 applicants--none of whom were American.

Indeed, the United States now leads the world in commercial and defense technology, according to Stanford University physicist Michael M. May, precisely because it has had the most open scientific system for the past 50 years--welcoming refugees, immigrants and foreign-born citizens into its universities, corporations and defense research facilities.

"It's a great system for all," said May, a naturalized U.S. citizen who immigrated from French Indochina in 1940 and rose to be director of Lawrence Livermore National Laboratory, one of the nation's three principal nuclear weapons labs. "But we derive the greatest benefit from it."

CAPTION: Feng Gai left behind Los Alamos National Laboratory and the hysteria generated by spying allegations against another foreign-born scientist to be a chemistry professor at the University of Pennsylvania.