U.S. company State Street remains a large investor in Baidu, a company that has been tied to the Chinese military.
In early 2021, the U.S. announced that Baidu would not be added to a list of companies that Americans and American firms would be banned from investing in due to their connection with the Chinese military and other government moves that furthered the growth of Chinese hegemony, according to the Wall Street Journal. Though the company escaped regulation, it has still been linked to the military and government of China in more than one way.
State Street is one of the largest investors in Baidu as reported by Fintel as of February 2021, based on information sourced from 13F and NPORT filings. The information shows that State Street Corp. holds 5,526,961 shares, which is 1.59% ownership in Baidu.
Roger Robinson, chief executive of RWR Advisory Group and former chairman of the Congressional U.S.-China Economic and Security Review Commission, said that declining to ban the companies “would be a recipe for America being held hostage to Chinese success in ramping up its investment exposure in the U.S. capital markets.”
Though the company escaped regulation, it has still been linked to the military and government of China in more than one way. According to a report published by RWR Advisory Group in 2021, Baidu partnered with the 28th Research Institute of China Electronics Technology Group Corp. (CETC) in January 2018 to establish the Joint Laboratory for Intelligent Command and Control Technologies in Nanjing. According to the RWR report, the purpose of this move was "to collaborate on high-tech military-civilian fusion projects in areas such as big data, cloud computing and artificial intelligence to bolster 'national defense informatization.' CETC develops military-oriented information systems and was previously subordinate to China’s Ministry of National Defense."
The report also noted that Baidu was involved in a Beihang University program that was one of the first graduate AI programs in China. It is estimated the university spends 60% of its research budget on defense research and development, including state run projects involving "military equipment and weapons systems with a focus on military aeronautic technologies (including intelligent UAVs)."
The RWR report also linked Baidu to Chinese military satellite system development.
According to the Federal Register, the executive order that banned investment in identified firms stated that "those companies raise capital by selling securities to United States investors that trade on public exchanges both here and abroad, lobbying United States index providers and funds to include these securities in market offerings, and engaging in other acts to ensure access to United States capital. In that way, the PRC exploits United States investors to finance the development and modernization of its military."
According to Wikipedia, "Baidu, Inc. is a Chinese multinational technology company specializing in internet-related services and products and artificial intelligence, headquartered in Beijing's Haidian District. It is one of the largest AI and internet companies in the world."