With the escalating mistrust of the Chinese Communist government by both political parties in the United States, congressional offices are threatening to blacklist lobbying firms serving Chinese clients with ties to the Chinese military. This has led to lobbying firms in Washington D.C. abandoning their Chinese clients, as those with a Chinese Communist background quickly found that they no longer have avenues to reach U.S. decision-makers in the capital.
Earlier this year, six lobbying firms in Washington D.C. dropped their Chinese clients. Currently, Congress is putting pressure on several trade groups based in Washington D.C., with major industry associations facing congressional inquiries demanding the expulsion of members with ties to the Chinese Communist Party.
According to Politico magazine, there has been a significant shift in the political landscape in Washington D.C. compared to a few years ago. Back then, when Chinese telecom giant ZTE faced the prospect of being banned from continuing operations in the U.S., they could hire notable figures like former Senators Norm Coleman and Joe Lieberman to advocate for them in Washington D.C. However, such occurrences are now a thing of the past.
Taking the example of the conservative tech industry group NetChoice, under pressure from House Majority Leader Steve Scalise’s office, the organization removed the short video social media giant TikTok from its membership list in May. TikTok’s parent company is based in Beijing, China.
Earlier this year, when U.S. lawmakers called for TikTok’s parent company to divest TikTok or face a ban in the U.S. market, NetChoice initially tried to maintain its partnership with TikTok and defended it in court. Yet, within the same week, NetChoice was forced to sever ties with TikTok.
The Biotechnology Innovation Organization (BIO), representing the biopharmaceutical industry, immediately cut ties with China-based biotech company WuXi when questioned by members of Congress whether it should register as a foreign agent.
Not only Chinese companies with ties to the Chinese Communist Party, even the Chinese government itself has lost all lobbyists in the U.S. According to documents submitted to the Justice Department earlier this year, Squire Patton Boggs was the last lobbying firm formally registered to represent the Chinese Communist government, but it ceased representing the Embassy of Communist China to the U.S. at the end of 2023. Records from the Justice Department show that the lobbying firm had worked for the Chinese Embassy for nearly two decades, earning over $9.2 million in lobbying fees from 2005 to 2023.
Industry experts in lobbying suggest that relationships with the Chinese government have damaged the reputation of lobbying firms, as the industry relies on reputation to access decision-makers and convert those relationships into financial gain.
Tom Spulak, a partner at King & Spalding who provides lobbying compliance advice to clients, told Politico, “As many people have said, as you know, ‘All we have is our reputation.’ If a lobbyist’s reputation is damaged on Capitol Hill, it could affect your ability to conduct business.”
Amid the U.S. Congress shifting its focus towards countering the Chinese threat, trade associations in Washington D.C. have become their latest focus. Hawks on China from both parties are working to block companies with Chinese backgrounds from using their American industry associations as crucial avenues for lobbying.
Congress is intensifying scrutiny of trade association members’ relationships with China, as one member of a trade association can mobilize the lobbying and financial power of the entire organization to address threats they face, while the trade associations provide credibility to their members and can serve as important defenders.
In May of this year, House Republican leader Congresswoman Elise Stefanik and the new chairman of the House China Commission Congressman John Moolenaar called on the Justice Department to investigate whether a drone advocacy alliance sponsored by Chinese drone manufacturer DJI should register as a foreign agent.
A Senate Republican staffer stated, “Clearly, these companies are now under stricter scrutiny than a few years ago.”
The congressional staffer noted that the Chamber of Commerce provided a warning, highlighting that even the most powerful business lobbying groups no longer have ‘immunity’ in front of Republicans.
Traditionally, congressional Republicans have considered large business lobbying groups as among their closest allies. However, with both parties in the U.S. almost unanimously united against the Chinese threat, these business lobbying groups have found that congressional Republicans hold deep and unpredictable animosity towards them.
“If you think back to five or six years ago, it’s hard to imagine Republicans openly opposing the Chamber,” the staffer said. “The (trade association) can no longer assume that their relationship with the Republican Party remains as it has for years. It means they have to be particularly mindful of the decisions they’re making or what their members are saying and doing, because they could get caught up in these troubles.”
Craig Singleton, the China program director at the FFDD, anticipated that this trend will impact many technology-related industries, especially those dominated by China such as telecommunications, electric vehicles, autonomous vehicles, batteries, and drones. Congressional pressure actions are forcing all U.S. trade associations to assess the risks of having Chinese companies as members.
If there is one thing that sets these times apart, it is Congress successfully pushing through the TikTok divestment or ban bill unexpectedly in April of this year. Legislators in Congress kept the process as secretive as possible until lobbyists did not have enough time or clout to advocate for TikTok, highlighting the need for trade associations to have sharp foresight in the future.
Singleton believes the trend of decoupling from China is developing rapidly, stating, “There’s a lot happening that industry groups don’t even know about, with a lot of changes occurring, and companies caught up in it aren’t even aware.”