The US congressional panel created to focus on threats from Beijing plans to look at the role of private equity, venture capital and Wall Street firms in China as it prepares to launch hearings on Tuesday.
Mike Gallagher, a Wisconsin lawmaker who chairs the House committee on the Chinese Communist party, said it would “engage with prominent CEOs and industry representatives” to get an understanding of how companies invest and operate in China.
“One thing I’m interested in understanding is, if you’re a major company with interests in China, like Disney or the NBA, how are you navigating the complexity?” Gallagher told the Financial Times.
Gallagher said the 24-member panel — 13 Republicans and 11 Democrats — wanted to “engage” with private equity and venture capital firms that have “substantial investments in Chinese technology companies that may have connections to the Chinese military”. He said it also wanted to talk to Wall Street firms to better understand the complexities of “de-risking, or selective economic decoupling”.
He said the panel would “potentially have hearings” with companies from those industries but said no decision had been made. His comments come as the White House works to create a screening mechanism for outbound investment, which some experts hope will spark more scrutiny of US companies investing in groups with defence connections.
A retired Marine Corp veteran who served in Iraq, Gallagher said the panel might allow some executives to testify in private at first, but he stressed the purpose of the panel was to help the American public understand threats posed by the Chinese Communist party.
“This isn’t going to be the bomb thrower, gotcha committee,” he said. “I genuinely want to hear the perspective of these companies that really have made the same bet that everybody made for the past three decades, which is, let’s just pursue business in China, with China integrated in the global economy, and that good things will happen.
“The bet . . . paid off literally for a lot of investors and businesses, but it didn’t pay off politically, geopolitically or politically for us or for the Chinese people.”
Two people who consult for companies operating in China said there was a lot of concern about entering the panel’s crosshairs.
In one example of the scrutiny on US companies, the panel recently wrote to Geoffrey Siebengartner, chair of the American Chamber of Commerce in Hong Kong, to express “deep concern” over his “appearance in a recent video created by Hong Kong’s pro-Beijing government” that claimed Hong Kong had a “sound legal system”.
In the letter, the panel asked what actions AmCham had taken to support democracy activists in Hong Kong and whether it had taken any action to facilitate the implementation of China’s national security law. Under the law, 47 prominent democracy campaigners were put on trial this month.
The American Chamber of Commerce in Hong Kong said it was preparing a response to the committee but did not provide further details.
Gallagher said he worried that some companies were “being seduced” by China’s charm offensive, citing the appearance of Liu He, China’s economic tsar, at Davos, where he told delegates “China is back” after its zero-Covid lockdowns.
“They want to make money in China. So if Liu He goes out there and says: ‘Hey, we’re open for business . . . We’re not going to invade Taiwan’, . . . they’re eager to believe that,” Gallagher said. “That’s naive.”
Gallagher said officials told him during a recent visit to Taiwan they would welcome a fact-finding trip from the panel. He said he wanted to do a “basic terrain walk . . . to understand the dynamics of a military invasion” and understand how hard it would be to supply Taiwan in a war.
“I’d like to take the minister of defence up on the offer to . . . go with him to various military sites and see how they’re preparing,” Gallagher said, adding that a trip to Taiwan would underscore the challenge the US is facing in sending already approved weapons.
“It would be very useful for my members to see the problem up close. For the Taiwanese . . . it doesn’t create the dilemmas that maybe a higher-profile visit would,” Gallagher said in an indirect reference to then-US House Speaker Nancy Pelosi’s trip to Taiwan, which sparked an unprecedented response from the Chinese military.
Gallagher declined to provide a date for a Taiwan trip but said “time was of the essence”.
The panel will hold its first hearing on Tuesday. The witnesses include Matt Pottinger, the deputy national security adviser during the Trump administration who is credited with forcing the bureaucracy to become tougher on China, and former national security adviser HR McMaster. Other speakers include Tong Yi, a Chinese human rights advocate, and Scott Paul, president of the Alliance for American Manufacturing.
Gallagher said most Americans realised China was an economic threat, but there was not enough recognition about the military and espionage threat.
“Americans don’t sort of think about the MSS [Chinese Ministry of State Security] in the same way they thought about the KGB in the old Cold War,” Gallagher said. “But gradually people are waking up to the threat the CCP poses to American sovereignty.”
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