SMIC is the mainland’s largest semiconductor foundry company and since 2020 has been on the US government’s Entity List, which bars it from buying tools from US suppliers without a special licence.

“Decades of investment – including funding, knowledge transfer and other intangible benefits – from US VCs have helped build and strengthen the PRC’s priority sectors,” the lawmakers wrote in the report. “This bell cannot be unrung.”

China’s Xinjiang invites overseas media to political meetings for first time

“The status quo is untenable,” it said.

In a reply to the Post, a Qualcomm spokesperson said that its VC unit invests in companies worldwide as part of its engagement with the global tech ecosystem.

“Qualcomm’s investments are generally small in any given market compared to venture firms and constitute less than two per cent of the total investments discussed in today’s report,” the spokesperson said.

GGV Capital, GSR Ventures, Sequoia Capital and Walden International did not immediately respond to Post queries regarding the congressional findings.

In Thursday’s report, the lawmakers recommended that Washington immediately restrict US investment in entities sanctioned or red-flagged by the US government for ties to either the People’s Liberation Army or forced labour and genocide.

Meanwhile, they recommended implementing additional outbound-investment restrictions in areas related to China’s critical and emerging technologies, military capabilities and human rights.

Beijing has vehemently denied that any human rights abuses have taken place in Xinjiang, where the West’s accusations of genocide and forced labour have centred.

China to more tightly control ethnic minority discussion to temper ‘risks’

Dominic Chiu of Eurasia Group, a New York-based consultancy, said Thursday’s report would have more of a bearing on what Congress was doing on this front than on the development of the Biden administration’s order.

That was because lawmakers were “looking for new language to insert into future legislation, such as the [National Defence Authorisation Act] for this fall”.

The committee “is taking a ‘better-safe-than-sorry approach’ by advocating for sector-wide controls”, said Chiu. “This is much more restrictive than other suggestions currently floating around, such as a company-specific approach to limiting investments.”

“US companies will feel increasing heat from [the committee’s] scrutiny as they face the risk of being singled out in future investigations examining other sectors,” he added.

US Congress mulls new methods to restrict investment in Chinese tech sectors

Last June, Sequoia Capital announced a formal split from its Chinese section Sequoia China, which has been rebranded as HongShan.

Last week, at a hearing by the House Financial Services subcommittee on national security, illicit finance and international financial institutions, US lawmakers solicited recommendations for potential legislative actions to tighten restrictions on outbound investment that could bolster China’s tech and military sectors.

Asked about Thursday’s report, Liu Pengyu, a spokesman for Beijing’s embassy in Washington, accused the US government of “politicising, instrumentalising and weaponising trade and tech issues”.

“Some in the US intend to restrict US companies’ investments in China under the pretext of national security and human rights and to place arbitrary curbs on normal technology cooperation and trade,” Liu said.

“This will undermine the principle of free trade and international economic and trade rules, destabilise the global industrial and supply chains and serve the interests of no one,” he added.