The House Select Committee on the Chinese Communist Party despatched letters to 4 separate U.S. enterprise capital companies, together with Qualcomm’s enterprise arm, expressing “serious concern” about their investments in Chinese tech startups.
The letters, which have been made public on Wednesday, have been despatched to GGV Capital, GST Ventures, Qualcomm Ventures, and Walden International. They have been written by and Wisconsin Republican Mike Gallagher and Illinois Democrat Raja Krishnamoorthi, the highest two members on the committee.
associated investing news
Of explicit concern to the lawmakers are investments in synthetic intelligence, chipmakers and quantum computing corporations in China. They additionally famous that a number of the corporations to obtain U.S. cash have been linked to the profiling and monitoring of Uyghur ethnic minorities in China.
“Like AI, the domestic development of semiconductors is a top priority of the Chinese Communist Party,” the letter says. “Semiconductors are essential for artificial intelligence, quantum computing, and other advanced dual use technology.”
Representatives from the 4 enterprise companies who acquired the letters didn’t instantly reply to requests for remark.
The outreach represents the most recent bipartisan effort by politicians to step up stress on U.S. investments in China as stress swells between the world’s two largest economies and nationwide safety considerations escalate. U.S. Treasury Secretary Janet Yellen traveled to China earlier this month as a part of a plan to stabilize relations with China. Secretary of State Antony Blinken visited in June.
In their letter, Gallagher and Krishnamoorthi linked dozens of explicit investments to human rights violations and efforts to reinforce China’s army, which runs counter to American pursuits.
Qualcomm Ventures, for instance, made 13 investments in Chinese A.I. corporations from 2015 to 2021, in accordance with the letter. One funding was in SenseTime, which a New York Times report linked to Chinese monitoring and profiling of the Uyghurs.
In addition to Qualcomm, PitchBook information reveals that U.S. companies Tiger Global Management and Silver Lake, which weren’t talked about within the letter, invested in SenseTime previous to its 2021 IPO.
An individual accustomed to the matter stated Tiger had since totally exited its place in SenseTime, which it had taken on previous to the New York Times reporting.
Silver Lake didn’t instantly return a request for remark.
Qualcomm’s funding in Denglin Technology, an obvious competitor, additionally faces Congressional scrutiny. Qualcomm was certainly one of Denglin’s earliest backers, in accordance with PitchBook, and invested in an extra 2022 funding spherical.
The agency with essentially the most probably problematic investments, in accordance with the letter is GGV Capital, which has places of work in Silicon Valley, San Francisco, Shanghai, Beijing and Singapore. The letter recognized 43 completely different investments in Chinese AI corporations from 2015 to 2021, greater than some other recognized by unbiased researchers at Georgetown’s Center for Security and Emerging Technology.
GGV has $9.2 billion in property beneath administration, and established operations on the bottom in China in 2005. Even earlier than that, it invested in Chinese e-commerce large Alibaba, and subsequently backed TikTok dad or mum ByteDance and ride-hailing firm Didi.
Gallagher and Krishnamoorthi establish GGV’s funding in Megvii, a Beijing-based facial recognition software program supplier, as a degree of concern. The firm “actively supports the surveillance of Uyghurs,” the letter says.
Megvii is backed by quite a few main buyers, together with Alibaba, Foxconn and the Macquarie Group. GGV invested in Megvii in 2019 alongside Abu Dhabi’s sovereign wealth fund in a deal that valued the corporate at about $4 billion.
Walden, a smaller agency, was recognized as a very vital backer of Chinese AI corporations. The letter stated that from 2015 to 2021, not less than 39% of the agency’s AI offers have been in that sector, together with one funding in a now blacklisted firm referred to as Intellifusion.
Intellifusion has since gone public and has a market cap of twenty-two billion Chinese yuan, or roughly $3 billion.
Regarding GSR Ventures, the letter stated the agency “was among the top U.S.-located investors in PRC artificial intelligence companies between 2015 and 2021, according to a recent report by the Center for Security and Emerging Technology.” The lawmakers cited 33 distinct investments within the six-year interval, together with Horizon Robotics, which was final privately valued at $5 billion in 2021.
The letters advance Gallagher’s push for controls on U.S. cash in key applied sciences in China.
After assembly with Silicon Valley executives in April, Gallagher instructed CNBC in an interview that he “emerged from that day cautiously optimistic that we could put in place some sensible controls on American capital flowing to China that would allow us to not fund our own destruction or fund our own loss in the great AI race.”
He stated on the time he discovered there was “broad support” amongst enterprise capitalists and others to maintain U.S. asset managers from investing in Chinese AI companies.
The U.S. Commerce Department has additionally thought-about steps to make sure U.S. applied sciences cannot be overly leveraged by China to advance its personal AI efforts. The Wall Street Journal reported final month that the company was weighing additional limits on superior chips used for AI that may very well be exported to China.
Pressure has been constructing on VC companies with substantial investments in China, partially as a result of considerations over mental property theft inside know-how and a budding AI race. Last month, legendary VC agency Sequoia Capital stated it will cut up its worldwide business into three elements, with Neil Shen helming its highly effective Sequoia China unit.
WATCH: A.I. will probably be important for U.S. to maintain its lead over China
Source: www.cnbc.com