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FBI Director Christopher Wray said in congressional testimony on Wednesday that China requires US and other foreign-owned companies to host groups that monitor their compliance with Chinese Communist Party doctrine.
Ray told the House Judiciary Committee that it is one way the Chinese government has “exploited” joint ventures to obtain corporate secrets and information.
Ray testified, “No country, no one, poses a wider and more comprehensive threat to our ideas, our innovation, our economic security, than the Chinese government and the Chinese Communist Party.”
“In many ways it represents, I think, the defining threat of our time,” he said.
Ray’s outspoken criticisms against the Chinese government’s alleged interference in foreign business, in a place where his language has been closely guarded, highlights the high tension between Beijing and Washington. His remarks also follow high-stakes visits to China by Secretary of State Antony Blinken and Treasury Secretary Janet Yellen.
Rep. Lance Gooden, R-Texas, asked Wray on Wednesday if China was “essentially nationalizing American companies” by forcing companies doing business in the country to allow the Chinese Communist Party to run internal “political cells.”
“The CEOs I’ve talked to are afraid they’ll say something, say they came to the FBI,” Godin said.
Ray called it a “very important issue” that deserved more attention.
“While there is no law against joint ventures, the problem we face is that the Chinese government has frequently exploited those joint ventures to then use them as routes for improper access to corporate secrets and information,” the FBI director said.
Ray said Americans would be “shocked to hear” that nearly all companies that do business in China are required to allow those cells.
“If we tried to install something like that in American companies, or if the British tried to install something like that in British companies or any number of other places, people would lose their minds, and rightly so,” he said.
Wray did not name specific companies that were asked to house CCP cells in China. Nor did he directly respond to Godin’s concerns that Beijing had stepped up its use of those cells.
The US Chamber of Commerce and CEO advocacy group Business Roundtable, whose members include leaders of major companies such as Apple and Nike, did not immediately respond to CNBC’s requests for comment on Wray’s remarks.
Sayari business risk intelligence platform warned In a 2021 report that private companies in China face mounting pressure to give so-called CCP cells more influence.
These companies have been required since 2018 to create CCP hives in order to be listed on local exchanges, according to Sayari. The company said the cells, in turn, pushed to strengthen their role in corporate governance.
The Wall Street Journal mentioned Last year, Chinese regulators changed their rules for equity investment funds, including requiring foreign-owned companies such as Black stone and devotion to establishing communist cells within their Chinese business operations.
Formerly the Financial Times mentioned that HSBC It incorporated the CCP into its banking business in China, making it the first foreign lender to do so.
This is not the first time Ray has raised concerns about Beijing’s alleged efforts to impose communist political views within foreign companies operating in China.
“It got to the point that under Chinese law, Chinese companies of any size are required to host in-house,” Ray said in an interview with CNBC. “They call it a committee, but it is essentially a cell whose sole responsibility is to ensure that the company adheres to the orthodoxy of the Chinese Communist Party.”
“It applies not only to Chinese companies, but also to foreign companies if they reach a certain size in China as well,” Ray told CNBC.
Those companies “must comply,” he added. “They have to cooperate.”
The conversation with Godin came as a respite from the hostile questions Ray received from the Republican majority on the committee. The Biden administration official answered heated questions and repeated interruptions from Republicans focused largely on the agency’s perceived political bias against conservatives.
– CNBC’s Christina Wilkie contributed to this report.
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