BOSTON — Federal prosecutors on Thursday dropped the government’s charges against Gang Chen, a professor of mechanical engineering at the Massachusetts Institute of Technology, in a high-profile setback to the China Initiative, a nearly three-year-old government effort intended to stop scientists from passing sensitive technology to China. Dr. Chen was arrested on Jan. 14, 2021, during President Donald J. Trump’s last full week in office, and charged with a form of grant fraud, hiding his affiliations with Chinese government institutions in applications for $2.7 million in grants from the U.S.…