The Beijing office of US management consultancy firm Bain & Company was paid a surprise visit and questioned by the Chinese police two weeks ago, a report by The Financial Times (FT) said. This comes when foreign businesses face tighter scrutiny in China amid its rising tensions with the US.
According to the FT report, the police removed computers and phones from the office but did not detain anyone. People in the know of the matter were also quoted as saying that the police had visited the offices more than once.
Several US politicians and companies have been worried that Beijing might increase retaliatory actions due to the measures taken by Joe Biden against Chinese companies. Last week, US treasury secretary Janet Yellen pointed out a "recent uptick in coercive actions targeting US firms".
Yellen also said that decoupling the US and China would be "disastrous" for both countries and "destabilising" for the rest of the world.
Beijing has repeatedly said that Washington was trying to limit the rise of the country's semiconductor industry. It has formed a Chip 4 alliance with Japan, Taiwan, and South Korea. However, along with Japan, the Netherlands have already started restricting exports of chip-making technology to China.
Earlier this week, the US also requested South Korean chipmakers to refrain from filling potential market gaps in China if semiconductor company Micron is banned there.
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Micron has been facing tough investigations in China on the ground of national security.
Congress in the US approved a $52.7 billion CHIPS Act last year to expand domestic semiconductor manufacturing facilities.
China, on the other hand, is also working on ramping up its domestic semiconductor industry. An earlier report by news agency Reuters suggested that it plans a $143 billion package to make the industry self-sufficient.
The majority of the financial assistance would be used to subsidise the purchases of domestic semiconductor equipment by Chinese firms, mainly semiconductor fabrication plants (fabs).
Apart from semiconductors, Taiwan is also a bone of contention between the two major economies. The US is helping Taiwan to resist China's plan to bring the island nation under its control.
Bain has several Chinese clients, including Alibaba and EV startup Li Auto.
Not the first such incident
The raid follows a similar one on another US firm, Mintz, last month. The police had also detained five Chinese employees at the due diligence firm's Beijing office.
China had also earlier suspended Deloitte's operations in Beijing for three months. It had hit the accounting firm with a record fine over deficiencies in past audits.
Last week, China's commerce ministry banned several Raytheon and Lockheed Martin executives from entering the country.