House Committee Probing American Firms' Investments in Chinese Tech
The House Select Committee on China this week sent letters to four U.S. venture capital firms about their investments in Chinese artificial intelligence and semiconductor companies, saying those investments may be helping Beijing “perpetrate human rights abuses and enhance its military capabilities.” The letters, sent to GGV Capital, GSR Ventures, Qualcomm Ventures and Walden International, also seek information about any of their potential investments in China’s quantum industry, how the companies decide which Chinese firms to invest in, how they respond if a company they invest in is added to the Commerce Department’s Entity List and more.
The letters, signed by Committee chair Mike Gallagher, R-Wis., and ranking member Raja Krishnamoorthi, D-Ill., say each of the American firms have invested in at least one Chinese company on the Entity List: GGV invested in Megvii, GSR invested in iFlytek, Qualcomm invested in SenseTime and Walden invested in Intellifusion.
The lawmakers said “no technology company in China is truly a private company,” adding that these investments “directly contribute to the [People’s Republic of China] human rights abuses, military modernization, expansion of authoritarianism around the globe, and the PRC’s overall effort to supplant U.S. technological leadership." They asked each company for the names of each AI, semiconductor or quantum business they’re investing in that has ties to China, the dollar amounts of those investments, the “business or management expertise or advice” that the companies have provided to those firms and more.
“These venture capitalists have invested millions into PRC-based AI and semiconductor firms,” Gallagher said, adding that the letters are the “beginning of a broader investigation.” The committee will “take a hard look at investments in sectors that are a strategic priority for the PRC, because we know that the PRC leverages private companies for military and surveillance purposes.”
The companies didn’t immediately respond to requests for comment. The letters were sent as the Biden administration crafts a new outbound investment screening regime to limit certain American investments in sensitive Chinese technology sectors (see 2307170029 and 2305310075).