Recently, the House Select Committee on the Chinese Communist Party has sent letters to four prominent U.S. venture capital firms expressing “serious concern” over their AI investments in China, among other forms of investments. The committee, represented by Wisconsin Republican Mike Gallagher and Illinois Democrat Raja Krishnamoorthi, specifically raised apprehensions about investments in artificial intelligence (AI), chipmakers, and quantum computing startups in China. This bipartisan effort reflects growing tensions between the United States and China and heightened national security concerns. Moreover, the lawmakers noted that some Chinese companies receiving U.S. investments had been associated with profiling and tracking the Uyghur ethnic minority in China.
AI Investment concerns
The letters, made public on Wednesday, were addressed to GGV Capital, GST Ventures, Qualcomm Ventures, and Walden International. Gallagher and Krishnamoorthi highlighted the critical importance of semiconductors for AI, quantum computing, and other advanced dual-use technologies. They expressed worries that these investments could inadvertently strengthen the Chinese Communist Party’s domestic development of such technologies, contrary to American interests. The lawmakers also cited instances where the U.S. venture capital firms had invested in companies involved in human rights violations and efforts to enhance China’s military capabilities.
Qualcomm Ventures and GGV Capital
Qualcomm Ventures, the venture arm of Qualcomm, drew attention due to its investments in Chinese AI companies. The letter specifically mentioned Qualcomm Ventures’ investment in SenseTime, which has been linked to the tracking and profiling of Uyghur individuals. Another concern was Qualcomm’s investment in Denglin Technology, seen as a competitor, as it faces scrutiny for potential implications on U.S. national security. GGV Capital has the highest number of potentially problematic investments and was identified as having 43 different investments in Chinese AI companies from 2015 to 2021. The lawmakers highlighted GGV’s investment in Megvii, a facial recognition software provider that reportedly supports the surveillance of Uyghurs.
Walden International and GSR Ventures
Walden International, a smaller venture capital firm, was identified as a significant backer of Chinese AI companies. The lawmakers noted that at least 39% of the firm’s AI deals from 2015 to 2021 were in the sector, including an investment in Intellifusion, a now blacklisted company. Intellifusion has since gone public and has a market capitalization of approximately $3 billion. GSR Ventures, on the other hand, was cited as one of the top U.S.-based investors in Chinese AI companies between 2015 and 2021, with 33 distinct investments, including Horizon Robotics, valued at $5 billion in 2021
Bipartisan efforts and National security concerns
This latest bipartisan effort reflects a growing consensus among politicians to intensify pressure on U.S. investments in China, given escalating tensions and concerns about national security. Treasury Secretary Janet Yellen and Secretary of State Antony Blinken have also played key roles in efforts to stabilize relations between the two countries. The lawmakers highlighted the need for sensible controls on American capital flowing into China to prevent the funding of technologies that could compromise U.S. interests and potentially lead to the loss of the AI race.
As tensions continue to rise between the United States and China, lawmakers are increasingly scrutinizing U.S. venture capital firms’ investments in Chinese AI, chipmakers, and quantum computing startups. The House Select Committee on the Chinese Communist Party expressed concern over potential national security risks and human rights violations associated with these investments. With bipartisan support, politicians aim to establish controls on American capital flowing into China and prevent the inadvertent funding of technologies that could compromise U.S. interests. This development underscores the complex relationship between the world’s two largest economies and the ongoing competition in advanced technologies.
