FBI Director Christopher Wray testified before Congress on Wednesday that China requires U.S. and other foreign-owned companies to set up teams to monitor their adherence to Chinese Communist Party orthodoxy.

Wray told the House Judiciary Committee that it was a way for the Chinese government to “use” the joint venture to gain access to company secrets and information.

“No country poses a broader, more comprehensive threat to our ideas, our innovation, our economic security than the Chinese government and the Chinese Communist Party,” Wray testified.

“I think in many ways it represents the defining threat of our time,” he said.

Ray’s outspoken criticism of China’s alleged government intrusion into foreign businesses underscored the heightened tensions between Beijing and Washington on an occasion when his language was on high alert. His comments followed key visits to China by Secretary of State Anthony Blinken and Treasury Secretary Janet Yellen.

On Wednesday, Wray was asked by Rep. Lance Gooden, R-Texas, whether China was “essentially nationalizing American business” by forcing companies doing business in China to allow the party to operate its internal “political cells.” .

“The CEOs I’ve talked to are afraid to say anything, and they say they’ve turned to the FBI,” Gooden said.

Ray called it “a very important issue” that deserved more attention.

“While there are no laws against joint ventures, the problem we face is that the Chinese government often uses these joint ventures to improperly obtain corporate secrets and information,” the FBI director said.

Ray said Americans “would be shocked” to hear that almost every company doing business in China would have to allow the batteries.

“If we tried to install something like that in an American company, or if the British tried to do it in a British company or anywhere else, people would go crazy, and rightly so,” he said.

Wray did not name the specific companies that were asked to house the CCP cell in China. He also did not directly address Gooden’s concerns about Beijing’s increased use of the cells.

The U.S. Chamber of Commerce and CEO advocacy group Business Roundtable, which includes leaders of major companies such as Apple and Nike, did not immediately respond to CNBC’s request for comment on Wray’s remarks.

Sayari, a business risk intelligence platform warn A 2021 report said private Chinese companies were under increasing pressure to give the so-called CCP’s grassroots greater influence.

Sayari said that since 2018, these companies have been required to set up a CCP panel in order to be listed on the domestic stock exchange. These units, in turn, have contributed to strengthening its role in corporate governance, the company said.

wall street journal report Last year, Chinese regulators changed the rules for securities investment funds, including requiring foreign companies such as black stone and Fidelity Group to establish communist cells in their China operations.

The Financial Times previously report That HSBC Established a CCP committee in its banking operations in China, making it the first foreign bank to do so.

This is not the first time Wray has raised concerns about Beijing’s alleged efforts to promote communist political views among foreign companies operating in China.

“Even under Chinese law, any Chinese company of any size has to host within the company,” Lei told CNBC. They call it a committee, but it’s essentially a group whose sole responsibility is to ensure that the company adheres to Chinese Communist Party orthodoxy. “

“This applies not only to Chinese companies, but also to foreign companies that have reached a certain scale in China,” Lei told CNBC.

The companies “must comply,” he added. “They have to cooperate.”

The exchange with Gooden was a reprieve from the mostly hostile questions Wray was asking from the committee’s Republican majority. Biden administration officials responded to heated questioning and frequent interruptions from Republicans, largely focusing on the agency’s political bias against conservatives.

CNBC’s Christina Wilkie contributed to this report.

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