In a May 12 Substack article published by the Dispatch, Klon Kitchen, a senior fellow at the American Enterprise Institute, wrote that American companies are investing in Chinese companies assisting the Chinese government and military. Kitchen noted that although investment in these types of companies is illegal, it is often difficult to track all of the offending parties.
Kitchen attacked the fact that firms investing in China often give the excuse that it's not a major investment.
"First, it doesn’t matter what percentage of an investment portfolio is helping America’s rivals, and helping the United States military doesn’t offset this aid," Kitchen wrote. "Imagine finding a soldier who was helping an enemy target his own forces and his defense was, 'But I only did it once, and I’ve helped you too!' Not very persuasive."
"Second, we can and should hold companies accountable when they knowingly and materially improve our rivals’ ability to kill Americans. Maybe investors didn’t originally predict their money would support such efforts, but there’s no excuse once these facts are known. Naivete isn’t illegal, complicity should be."
"Third, I don’t care if someone else will fill the funding gap; it’s immoral and self-defeating for us to enrich ourselves by enabling the world’s largest human rights abuser and our chief geopolitical competitor. There’s also very little proof that this financial support buys influence over these organizations because, at the end of the day, venture funds don’t have armies and prisons—the Chinese Communist Party does."
"Finally, arcane arguments about the legal structure of investment entities try to obscure the fact that foreign-incorporated branches of U.S. firms clearly benefit from their American association, and that the American firm clearly receives help from its foreign subsidiary. Otherwise, neither entity would enter into these agreements in the first place. More to the point, if a U.S.-based investment firm cannot prevent its foreign branch from supplying the Chinese military, it’s time to cut off that branch."
Kitchen noted that nearly $124 billion of $6.15 trillion in 2020 Foreign Direct Investment (FDI) went to China, with $2.5 billion in U.S. venture capital going to the Chinese technology industry.
He specifically seized on Sequoia Capital's investment in 4Paradigm, "one of China’s leading artificial intelligence (AI) companies that specializes in applying AI across large enterprises." He also noted direct ties with the Chinese military. Sequoia, based in Menlo Park, California, is not the only firm engaged in this type of investment, yet is a prime example of US-based firms helping boost Chinese military capabilities that could potentially be turned on US soldiers.
On March 28, the Senate passed their version of the USICA, which included policies targeting China and bolstering the United States' relationship with Taiwan. The House and Senate are expected to meet today to begin reconciling differences and negotiating the final contents of the USICA, according to a May 6 Twitter post by John Bresnahan.
According to his bio page, "Klon Kitchen is a senior fellow at the American Enterprise Institute, a former national security adviser to Sen. Ben Sasse, and a 15-year veteran of the intelligence community."
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