A venture capital firm backed by the Chinese government is a major investor in an artificial intelligence company that counts Commerce Secretary Gina Raimondo's husband as a top executive, a potential conflict of interest as her agency works to counter China on the world stage.
Danhua Capital, based in California but established with the financial backing of the Chinese Communist Party, is one of the main funders of PathAI, an artificial intelligence firm that employs Raimondo's husband, Andy Moffit, as its chief people officer. Danhua Capital has been invested in PathAI since at least 2017, when it joined five other funders to contribute $11 million worth of seed funding for the artificial intelligence startup. It is unclear how much Danhua Capital has invested in PathAI, a private company, but the Chinese firm lists PathAI on its website as one of its featured "biotech and health" investments.
Danhua Capital was established and funded with the help of the Chinese government as part of its "penetration of Silicon Valley," according to a 2018 Reuters report on the firm. The Center for a New American Security (CNAS), a liberal think tank with former staffers now in the highest ranks of the Biden administration, testified to Congress in 2018 that Danhua Capital's mission is to use its capital to narrow the technology gap between China and the United States.
Neither Raimondo nor PathAI responded to requests for comment on Danhua Capital's investment. As commerce secretary, Raimondo is tasked with managing the U.S. business relationship with countries across the globe, and she has emerged as one of the most pro-China voices in the administration. In a September Wall Street Journal interview, Raimondo said the United States should strengthen economic ties with China, arguing "robust" commercial engagement with China would "mitigate any potential tensions" with the global rival.
The Wall Street Journal reported on Friday that Raimondo's agency was pushing back on efforts by others in the Biden administration to block Chinese technology firms from working with American companies. Commerce officials are arguing internally, according to the report, that the administration's tougher approach to China would hurt U.S. companies.
Raimondo said on Thursday she would not urge U.S. companies to pull sponsorships from the upcoming Beijing Olympics after President Joe Biden announced a diplomatic boycott of the games over human rights abuses. "What individual companies do is entirely up to them," Raimondo said. "We’re not going to pressure them one way or another."
Raimondo's ethics agreement to serve in the Biden administration bars her from participating in any matter that could have a "direct and predictable effect on the financial interests of PathAI." Raimondo's financial disclosure forms show she would greatly benefit from the company's success. In addition to an annual salary, Moffit was given a significant number of ownership shares in the company as well as stock options. The value of the nearly 200,000 shares is not ascertainable, according to the disclosure form.
In 2018 testimony titled, "China’s Threat to American Government and Private Sector Research and Innovation Leadership," Elsa Kania, an adjunct fellow at CNAS, told Congress that Danhua Capital is directly tied to the Chinese government. In Kania’s testimony, she said Danhua Capital is open about its plans to narrow the gap between America and China when it comes to technological development. "According to its cofounder, the fund is committed to ‘narrowing the gap’ in technological development between China and the U.S.," she wrote.
Multiple senior CNAS staff from the time of Kania's testimony now serve in top roles in the Biden administration. Kania’s former colleagues from CNAS include Colin Kahl, Ely Ratner, and Victoria Nuland—all of whom now occupy top roles in the State Department and Defense Department.
Subsequent testimony in the Senate Small Business Committee from Robert Atkinson, the president of the Information Technology and Innovation Foundation, warned that Danhua Capital is used by Beijing to exert its influence overseas.
"Zhongguancun Development Group, a state-owned enterprise headquartered in Beijing has set up ‘Danhua Capital' to promote the strategy of ‘Zhongguancun Capital going global and bringing in overseas advanced technology and talents,’" Atkinson said.
PathAI has received funding from Danhua Capital across multiple years. In 2017, Danhua Capital joined investors in bringing PathAI's total capital raised to $15 million. In 2019, the company raised at least $60 million, and Danhua Capital was again listed as an investor.
Raimondo’s Commerce Department has also provided a lifeline to Huawei, a company closely tied to China’s brutal repression of its Muslim Uyghur population. In August, the Commerce Department approved license applications for Huawei to buy hundreds of millions of dollars worth of chips for its growing interest in the automobile industry.
Raimondo is not the only Biden administration official with family ties to the Chinese Communist Party, which complicates a planned diplomatic boycott of the upcoming Winter Olympics hosted by China.
Republican senators recently called for climate czar John Kerry to resign or be fired by Biden after the Washington Free Beacon reported that Kerry and his wealthy heiress wife have at least a $1 million stake in a Chinese firm that funds China's artificial intelligence sector—including a company blacklisted in America because it aids China in its human rights abuses against the Uyghurs.