Five American venture capital firms invested more than $3 billion into critical technology projects in communist China, according to the results of a congressional investigation.

That sum includes direct investments into companies with ties to China’s military, surveillance apparatus, and ongoing human rights abuses in Xinjiang.

The findings stem from a bipartisan investigation into U.S. venture capital funding in China by the House Select Committee on Strategic Competition with the Chinese Communist Party (CCP).

A Feb. 8 Select Committee statement, shared with The Epoch Times, said that these firms’ investments directly aided the Chinese Communist Party’s (CCP) strategic goals against the United States.

“The lawmakers found that these firms invested at least $3 billion in, and provided expertise and other benefits to, People’s Republic of China (PRC) critical technology companies, including many aiding the Chinese military, surveillance state, or the CCP’s genocide in Xinjiang,” the statment said.

The Select Committee’s report, also shared with The Epoch Times, investigated investments made by GGV Capital, GSR Ventures, Qualcomm Ventures, Sequoia Capital China, and Walden International.

The report specifically investigated the five firms’ investments into two sectors: artificial intelligence (AI) and semiconductors.

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

“By virtue of our small sample size, our results significantly understate the amount of U.S. investment and expertise that has flowed into companies linked to the People’s Liberation Army (PLA) or the CCP’s human rights abuses.”

Massive VC Support for China ‘Untenable’

The vast bulk of the investments, totaling some $1.9 billion, were made to Chinese AI firms, the report found. Another $1 billion went to semiconductor corporations, including those owned by the state.

Of that, some $190 million went into AI companies that are now blacklisted by the U.S. government for directly supporting the PLA, and another $140 million went to AI companies with known links to the PLA.

“U.S. investments were critical to the early growth and success of some of the PRC’s largest and most notorious AI and semiconductor companies, many of which are now blacklisted by the U.S. government over national security concerns, and many of which are supported by the PRC government,” the report said.

Importantly, the report found that the investments advanced the strategic goals of the CCP while directly undercutting the United States’ position internationally.

“This report illustrates that outbound U.S. capital investment in critical sectors has advanced the PRC’s strategic priorities while undercutting U.S. strategy toward the PRC,” the report said.

“The Committee’s findings suggest that there are billions of dollars beyond those captured in this report that have flowed into PRC companies that support the PRC’s military, digital authoritarianism, and efforts to develop technological supremacy and undermine American technological leadership. The status quo is untenable.”

Committee Calls for Restrictions on China Investments

U.S. tech and venture capital firms have long been supercharging the CCP and its military development. What has been left less understood until now is just how those investment dollars translate into direct strategic gains for the CCP.

Some of the companies named in the report, like Sequoia, have been known to invest in companies with deep ties to the Chinese military for some time.

Sequoia made headlines in 2021, for example, due to its investments in Chinese facial recognition firms subsequently blacklisted by the U.S. government over links to ongoing human rights abuses against ethnic Muslim minorities in Xinjiang, which the U.S. government has characterizes as a genocide.

Sequoia long maintained that the investments of its China branch were made separately from those of its American branch. After increasing scrutiny, however, the firm finally announced it would split off its China operation into a separate entity altogether last year.

As such, the Sequoia China cited in the report no longer exists, but has been replaced by Chinese company HongShan.

For the Select Committee, however, the damage has been done. The CCP has dramatically increased its military power and authoritarian surveillance apparatus thanks to investments from American venture capital firms.

To curb the threat, and to prevent future dangers, the Select Committee report recommends wide reaching restrictions on outbound investments to China.

“This bell cannot be unrung,” the report said. “Simply put, robust PRC outbound investment restrictions in key strategic sectors are a national security and human rights are imperative.”

The Epoch Times has requested comment from GGV, Qualcomm, and Walden. GSR and HongShan could not be reached.