The House Select Committee on the Chinese Communist Party has raised concerns about investments made by four U.S. venture capital firms in Chinese tech startups. The committee sent letters to GGV Capital, GST Ventures, Qualcomm Ventures, and Walden International, expressing “serious concern” over their investments in areas such as artificial intelligence, chipmakers, and quantum computing companies in China.
The lawmakers also pointed out that some of these companies receiving U.S. investments have been linked to the profiling and tracking of Uyghur ethnic minorities in China. They emphasized the importance of semiconductors in technologies like AI and quantum computing and stated that the domestic development of semiconductors is a top priority for the Chinese Communist Party.
Representatives from the venture firms have not yet responded to requests for comment. This effort by politicians reflects the increasing pressure on U.S. investments in China amid rising tension between the two countries and escalating national security concerns. U.S. Treasury Secretary Janet Yellen and Secretary of State Antony Blinken have recently visited China as part of efforts to stabilize relations.
The letters written by Representative Mike Gallagher and Representative Raja Krishnamoorthi, the top two members on the committee, linked specific investments to human rights violations and China’s military enhancement. For example, Qualcomm Ventures invested in SenseTime, which has been associated with the tracking and profiling of Uyghurs. Tiger Global Management and Silver Lake also invested in SenseTime prior to its IPO.
Qualcomm’s investment in Denglin Technology, a potential competitor, is also under scrutiny by Congress. GGV Capital, with the most potentially problematic investments, has offices in Silicon Valley, San Francisco, Shanghai, Beijing, and Singapore. The lawmakers identified GGV’s investment in Megvii, a facial recognition software provider, as concerning, as the company is known to support the surveillance of Uyghurs.
Walden, a smaller firm, was noted as a significant backer of Chinese AI companies, including Intellifusion, which is now blacklisted. GSR Ventures was cited as one of the top U.S. investors in Chinese AI companies, with investments in Horizon Robotics.
Representative Gallagher has been advocating for controls on U.S. investments in key technologies in China. Following a meeting with Silicon Valley executives, he expressed cautious optimism about implementing sensible controls to prevent funding of American losses in the AI race.
The U.S. Commerce Department has also been considering measures to prevent China from leveraging U.S. technologies for its AI efforts, including potential limits on advanced chip exports. VC firms with substantial investments in China are facing increasing pressure due to concerns over intellectual property theft and the competition in the AI field.
In response to these developments, Sequoia Capital announced a restructuring of its international business, creating a dedicated Sequoia China unit. Overall, these actions reflect the growing efforts to address the risks associated with U.S. investments in Chinese tech startups.
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