The House Select Committee on the Chinese Communist Party has sent out letters to four American venture capital firms in order to express their "serious concern" regarding the investments in Chinese tech startups. These letters were sent to GGV Capital, GST Ventures, Qualcomm Ventures, and Walden International and are related to investments in AI and semiconductor firms. There is a fear that these investments have been linked to the profiling and detainment of the Uyghur minority group in China.
The House Select Committee on the Chinese Communist Party on Wednesday announced its "serious concern" about U.S. venture capital firms investing in Chinese tech startups, citing letters sent to GGV Capital, GST Ventures, Qualcomm Ventures, and Walden International. Of particular concern to the lawmakers are investments in artificial intelligence, chipmakers, and quantum computing companies in China, noting some of these have been linked to the profiling and tracking of Uyghur ethnic minorities.The letter noted that the Chinese Communist Party gives "top priority" to the domestic development of semiconductors, which are essential for advanced dual-use technology.Representatives from the four venture firms who received the letters did not immediately respond to requests for comment.This bipartisan effort stems from ongoing tensions between the world's two largest economies and heightened national security concerns. U.S. Treasury Secretary Janet Yellen and Secretary of State Antony Blinken have both visited China this year in an attempt to stabilize relations.The letter from Gallagher and Krishnamoorthi identified dozens of investments which could be in violation of human rights and used to advance China's military, drawing particular attention to Qualcomm Ventures and their thirteen investments in Chinese A.I. companies from 2015 to 2021, one of which was linked to the tracking and profiling of Uyghurs.Tiger Global Management and Silver Lake have both invested in SenseTime prior to its 2021 IPO, with Tiger reportedly having fully exited their position. The letter also highlighted GGV Capital, which has offices in Silicon Valley, Beijing, Shanghai, and Singapore, and has $9.2 billion in assets under management. GGV was identified as having the most potentially problematic investments with 43 investments in Chinese A.I. companies from 2015 to 2021. One of these investments was in Megvii, which "actively supports the surveillance of Uyghurs." The company is backed by Alibaba, Foxconn, and the Macquarie Group. Walden, a smaller firm, was also identified as a particularly significant backer of Chinese A.I. companies with at least 39% of their AI deals from 2015 to 2021 taking place in this sector.Among the U.S.-located investors in PRC artificial intelligence companies, GSR Ventures was mentioned, having made 33 distinct AI investments, including one in Horizon Robotics which was last privately valued at $5 billion in 2021.Gallagher and Krishnamoorthi's push for controls on U.S. money in China has progressed as Silicon Valley executives expressed their support for his plans to prevent U.S. asset managers from investing in Chinese A.I. firms. Similarly, the Wall Street Journal reported last month that the U.S. Commerce Department was looking into placing further restrictions on advanced chips exported to China.Last month, Sequoia Capital announced its intention to separate its international business into three parts, with Neil Shen helming Sequoia China, amidst mounting pressure on VC firms with investments in China due to fears of intellectual property theft and the AI race.
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