American investors were involved in at least 37 percent of all investment transactions in China’s artificial intelligence, or AI, sector between 2015 and 2021, according to a new report.
Georgetown University’s Center for Security and Emerging Technologies found that $40.2 billion of the total amount raised by all Chinese AI companies during that period was US-backed. However, the Center could not determine what percentage of that money came from US investors or from overseas investors.
This amount went to 251 Chinese AI companies, and 91% of US investment came as venture capital for early-stage businesses.
“Some of the biggest investments include Goldman Sachs’ solo investment in 1KMXC, an AI-powered robotics company, as well as an investment by three American [venture capital] firm at Geek+, an autonomous mobile robot company,” the report said.
US investment in Chinese AI companies has faced scrutiny in recent years as China seeks to use AI for not only civilian but also military applications. Analysts believe AI will play a central, “game-changing” role in China’s military innovation and future war strategy.
US investment in China’s AI sector was particularly valuable. The report noted that while US investors participated in only 17% of all global transactions, these transactions accounted for 37% of total funding.
And while U.S. investment in China’s AI sector is smaller than that of Chinese investors, their gains could have profound implications.
“While data from Crunchbase shows that US outbound investment in Chinese AI companies is limited, such financial activities, trade ties, and US efforts to target companies in China’s booming AI ecosystem “There are implications for the transition from funders based in the business sector to those outside the business sector,” the report says. “The first stage [venture capital] Investments in particular can provide intangible benefits beyond capital, including mentorship and coaching, name recognition, and networking opportunities. As such, US foreign investment in Chinese technology, and AI in particular, deserves additional attention and tracking.”
In addition to potentially benefiting the military, another point of concern regarding U.S. investment in the Chinese AI sector is the ruling Communist Party’s influence over China-based companies.
Chinese companies are required to establish CCP. [Chinese Communist Party] cells work in their own operations and support CCP security agencies,” according to the China Task Force report, a major project organized by members of Congress in 2020. “The CCP places its members in every company and organization. adds.”
US officials have also said that Chinese espionage costs the US more than $600 billion annually.
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