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U.S. lawmakers accuse five VC firms of investing $3 billion in Chinese companies linked to military activities

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Rep. Mike Gallagher, center, chair of the House Select Committee on the Chinese Communist Party, speaks at a news conference following a GOP caucus meeting at the Republican National Committee offices in Washington, D.C., on Feb. 28, 2023. He is joined by fellow Republicans Rep. Elise Stefanik, left, and Majority Whip Steve Scalise.

Chip Somodevilla | Getty Images

Sequoia Capital China, Qualcomm Ventures and three other venture capital firms plowed at least $3 billion into Chinese tech companies that support Beijing’s military and its repression of minorities in Xinjiang, a U.S. congressional report alleged on Thursday.

The House of Representatives’ select committee on China, led by Republican Congressman Mike Gallagher, released the report, which also scrutinizes investments made by GGV Capital, GSR Ventures and Walden International in Chinese artificial intelligence and semiconductor firms with unsavory ties.

Reuters could not reach the venture capital firms for comment.

The Committee called on the Biden administration to restrict U.S. investment in Chinese firms sanctioned by the U.S. government over ties to China’s military or its repression of minorities and urged it to bolster recent U.S. curbs on U.S. investment in China to include more sectors.

“The status quo is untenable… Decades of investment—including funding, knowledge transfer, and other intangible benefits—from U.S. VCs have helped build and strengthen the PRC’s (People’s Republic of China) priority sectors,” the report said.

The White House did not respond to requests for comment.

The Chinese Embassy in Washington said the use of national security and human rights as a pretext to restrict U.S. investments in China “will undermine the principle of free trade…, destabilize the global…supply chains and serve the interests of no one.”

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