Home Venture Capital American VC firms helped grow blacklisted Chinese AI, semiconductor companies: Report

American VC firms helped grow blacklisted Chinese AI, semiconductor companies: Report


Andrew Dorn and Joe Khalil

People walk outside the U.S Capitol building in Washington, June 9, 2022. (AP Photo/Patrick Semansky, File)

(NewsNation) — Five American venture capital firms invested at least $3 billion in Chinese companies that “facilitate human rights abuses” and funnel money directly to the Chinese Communist Party and the Chinese military, according to a Congressional investigation released Thursday.

A new report from the House Select Committee on the Chinese Communist Party said those investments helped strengthen some of China’s “largest and most notorious” artificial intelligence and semiconductor companies, many of which are now blacklisted by the U.S. government over national security concerns.

“Both technologies have civilian and military applications. Both will drive the future of warfighting, and both are necessary components of the Chinese Communist Party’s (CCP) Orwellian surveillance state and human rights abuses,” the report says.

The committee’s investigation likely captures only a fraction of the U.S. investment that has flowed into China’s AI and semiconductor sectors, the report says.

The five U.S.-based firms examined in the report are GGV Capital, GSR Ventures, Qualcomm Ventures, Sequoia Capital and Walden International.

“In short, U.S. capital and expertise have flowed directly into the hands of our nation’s foremost strategic competitor,” the report says.

Two of the firms, Sequoia and GGV, have announced plans to split off their China businesses into separate entities.

Qualcomm Ventures, the investing arm of U.S.-semiconductor giant Qualcomm, told the
the committee that it divested from one of the largest facial recognition companies in China after it was blacklisted by the U.S. government.

GSR Ventures told the committee it could not disclose the exact amounts invested in a handful of companies, due to China’s “data privacy rules.”

The U.S. bars the export of sensitive tech to certain Chinese companies but does not block U.S. investors from funding them, the report points out while also calling for congressional action to change that.

The committee urged Congress to pass legislation to “generally prohibit investment” in Chinese companies on “key U.S. government sanctions and red flag lists.”

Read the full report below.

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