US Committee Probes Venture Capital Firms' Chinese Tech Investments

US congressional committee led by Wisconsin Republican Michael Gallagher is investigating four venture capital firms for their investment activities in Chinese technology companies.

The firms under scrutiny are GGV Capital, GSR Ventures, Walden International, and Qualcomm Ventures. The investigation is part of Washington's increasing scrutiny of American funds suspected of aiding the development of sensitive industries in China.

The focus of the investigation is on investments made by these firms in Chinese companies involved in next-generation technology, particularly in areas such as semiconductors, artificial intelligence, and quantum computing. US officials are concerned that China's dominance in these fields could pose security and economic risks. The White House and Congress are working on policies to track and potentially block US investments in Chinese companies involved in these critical technologies, citing human rights abuses and potential contributions to the Chinese military.

Michael Gallagher referred to the four venture capital firms as the "initial targets" of the investigation. The committee aims to use the findings to shape policy recommendations, including potential requirements mandated by Congress to review outbound investments.

One of the main concerns raised by Gallagher is the potential connection between Chinese companies receiving US investment and human rights abuses in China's Xinjiang region. The committee also worries about the Chinese military's access to advanced technology through these investments, given China's military-civil fusion strategy.

The committee specifically cited GGV's investments in AI developer Megvii Technology Ltd and semiconductor firms, as well as Qualcomm Ventures' investment in SenseTime Group Inc. Both Megvii and SenseTime were placed on the US Entity List in 2019, restricting their business with American firms without US government approval. Walden International's investment in chip maker Semiconductor Manufacturing International Corp was also mentioned, and this company is also on the US blacklist.

The committee sent letters to the firms, referring to research by Georgetown University's Center for Security and Emerging Technology, requesting their responses to questions by August 1st. The investigation reflects the broader US effort to scrutinize and potentially restrict investments in sensitive Chinese technology companies.

By fLEXI tEAM