Five major U.S. venture capital firms invested at least $3 billion in and provided expertise to Chinese critical technology companies that either aid the country’s military, surveillance state or the Uyghur genocide, a report found.
According to the investigation findings published February 8 by the House Select Committee on the Strategic Competition between the United States and the Chinese Communist Party (CCP), entitled “The CCP’s Investors- How American Venture Capital Fuels the PRC Military and Human Rights Abuses,” the five firms (GGV Capital, GSR Ventures, Qualcomm Ventures, Sequoia Capital China and Walden International) invested over $1.9 billion in artificial intelligence companies that support the Chinese military and/or China’s human rights abuses. The investigation also found that at least another $1.2 billion was funneled into China’s semiconductor sector, which includes companies that provide technology to the Chinese military while advancing the country’s genocidal “ambitions.”
“The Committee’s findings suggest that there are billions of dollars beyond those captured in this report that have flowed into PRC companies that support the PRC’s military, digital authoritarianism and efforts to develop technological supremacy and undermine American technological leadership,” the report said. “The status quo is untenable… Decades of investment — including funding, knowledge transfer and other intangible benefits — from U.S. VCs have helped build and strengthen the PRC’s priority sectors.”
Lawmakers responsible for the report suggested the U.S. restrict investments in companies sanctioned or red-flagged by the government for ties to the PLA, forced labor or genocide. They also recommended that the U.S. implement more outbound investment restrictions in areas related to China’s critical and emerging technology sectors.