Five American venture capital firms invested at least $3 billion in Chinese technology companies making products used in human rights abuses and aiding the Chinese military and government, according to an investigation from the House Select Committee on the Chinese Communist Party (CCP).
GGV Capital, GSR Ventures, Qualcomm Ventures, Sequoia Capital and Walden International supplied funds to support the development of semiconductors that are being put to use by China’s military for research on equipment and weapons, according to the House Committee. The report follows findings by the Daily Caller News Foundation in October that several U.S. venture-capital firms were participating investors in CCP-backed start-up contests that supported China’s Thousand Talents plan, which aims to poach technology and researchers abroad.
“Artificial intelligence and semiconductor technologies are necessary components of the CCP’s Orwellian surveillance state and human rights abuses,” the report notes.
More than $1.9 billion went to AI companies that provide resources supporting the CPP’s human rights abuses, such as surveillance technology, as well as support the Chinese military, according to the report. The firms also invested more than $1 billion into more than 150 semiconductor companies, with around $180 million in chip companies that support the Chinese military.
The findings suggest that there are billions more in investment not captured in the report from U.S. firms that have gone to support the Chinese military, “digital authoriantarism” and efforts to bolster China’s technological standing, according to the report.
10/17/23 – @DailyCaller reported on IDG, GSR, GGV, Walden Int’l. & Sequoia Capital’s role in Thousand Talents Plan contests, love seeing it covered in @committeeonccp‘s new report:
“THE CCP’S INVESTORS: How American Venture Capital Fuels the PRC Military and Human Rights Abuses” pic.twitter.com/1W4wkLNpd6
— Philip Lenczycki 蔡岳 (@LenczyckiPhilip) February 8, 2024
Firms were apprehensive about cooperating with the investigation due to CCP pressure, with one firm telling investigators that company personnel based in China were “scared to death” about providing key information, according to the report. The CCP is allegedly “actively pressuring” firms not to cooperate with the investigation, another firm told the Committee.
The concern regarding semiconductors comes amid a trade war between the U.S. and China, with both countries vying for a technological advantage in consumer and military applications. The U.S. has aimed to leverage its intellectual property rights to keep production technology out of China through sanctions, while China has largely sought to cut off the U.S. access to key minerals that it holds a commanding supply of.
The Biden administration expanded restrictions on U.S. involvement in the Chinese chip industry in August 2023, restricting private equity and venture capital firms from directly investing in many Chinese companies that operate in the semiconductor, quantum computing and artificial intelligence sectors. The rule only restricted new investments, not already-in-place portfolio investments.
The firms did not immediately respond to the Daily Caller News Foundation’s request for comment.
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Republished with permission from Daily Caller News Foundation