According to The Wall Street Journal, executives at U.S. investment firm Sequoia Capital have criticized the Biden administration for the Chinese unit’s national security efforts, even though the company’s Beijing office’s managing partner has deep ties to the Chinese government. He said he tried to persuade him not to pose a threat to his insurance.
Sequoia Capital spun off from Sequoia Capital China, now called Hongshan, after mounting pressure from Washington and Congress over huge investments in Chinese technology competitors and even Chinese military contractors, the WSJ reported. reportsaid, citing a person familiar with the matter. Sequoia China makes decisions independently from the U.S.-based company, although Don Vieira, Sequoia’s chief policy officer in Washington, has tried to keep the company clean amid the accusations. Despite being the founder and managing partner of Sequoia China, he was not allowed to invest in Chinese defense companies, he said. Neil Shen was an active member of the Chinese Communist Party apparatus, but failed to convince the Biden administration, according to the newspaper.
Bloomberg reports that the White House is set to introduce tough restrictions on U.S. investment in Chinese companies in July. report. Funding firms known to support the Chinese People’s Liberation Army have been banned from 2021. (Related: China’s Defense Firms Target Arms Market Flood as US ‘obsessed’ with Ukraine: Report)
U.S. institutional investors backed Sequoia China in its latest funding round through July 2022, according to a survey of public records by the WSJ and the Daily Caller News Foundation.
A record $8.5 billion pool of capital pouring into Chinese companies has alarmed the US government and increased pressure on Silicon Valley firms to establish independence from Beijing ventures.
Kurt Campbell, the administration’s senior policy officer for East Asia, said after the summer 2022 investment round, why would Sequoia fund companies that could threaten U.S. national security despite the administration’s opposition? He asked Vieira if he would continue, the WSJ reported, citing people familiar with the conversation. Vieira said Sequoia China does not finance companies affiliated with the Chinese military, but it would not affect investment in Chinese troops.
In April 2022, Neil Shen, who founded Sequoia Capital China and has been a managing partner since 2005, lost a bid to take over control of consolidated company WSJ. report.
Shen regularly meets with Chinese Communist Party officials and until January 2023 served as a member of the Chinese People’s Political Consultative Conference, the political advisory body of the Chinese Communist Party. according to to information. His close ties to the Chinese government have further disrupted relations between Sequoia and Washington, the WSJ reported.
Shen’s venture backed TikTok’s parent company, ByteDance, and is believed to have encouraged TikTok to strike a security pact with the Biden administration in exchange for U.S. privileges.
2021, a think tank at Georgetown University discovered Artificial intelligence startup 4 Paradigm, backed by Sequoia Capital China, provided surveillance services to the People’s Liberation Army.
“Sequoia China does not invest in businesses intended to support or assist the Chinese military,” a company spokesperson said, according to the WSJ. Sequoia Capital confirmed the statement.
China said it strongly condemned President Joe Biden’s signing of an order banning investments in dozens of Chinese defense and high-tech companies. https://t.co/PsWNOm6S2t pic.twitter.com/7d5JTcI8jj
— Reuters (@Reuters) June 5, 2021
But Sequoia’s brand power has helped attract major U.S. institutional investors to its China operations under Shen. University of Texas Investment Management Company (UTIMCO), University of Washington Investment Management Company (UWINCO) — both 2022 funding rounds — and Children’s hospital corporate pension system, according to Pitchbook data. UWINCO invested $20 million, according to for public record.
The fund targets Chinese startups in tech, healthcare and consumer sectors, Reuters reportsaid, citing a person familiar with the matter who was not authorized to speak publicly because the information is private.
Yet China’s military-civilian fusion policy ostensibly codifies the exploitation of private corporations to further the PLA’s goal of “developing the world’s most technologically advanced military.” according to to the State Department.
In 2021, the State Department said, “The Chinese Communist Party is systematically reorganizing China’s science and technology enterprises so that new innovations can simultaneously drive economic and military development.”
UTIMCO, UWINCO, Children’s Hospital Pension Plan, and the White House did not immediately respond to DCNF’s requests for comment.
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