A coalition of Republican lawmakers is calling for a federal probe into the consulting firm McKinsey & Company regarding its operations with the Chinese government and state-owned enterprises. This demand arises amidst reports that McKinsey is modifying its business activities in China to mitigate risks. The lawmakers have issued a letter to the Justice Department, advocating for an investigation into whether McKinsey’s contracts, valued at $480 million with the U.S. Defense Department, adhere to federal regulations, particularly given the firm's consultancy role with China’s national and provincial governments and state-controlled enterprises.
Key figures behind the letter include Representative John Moolenaar of Michigan, Senator Marco Rubio of Florida, and Senator Joni Ernst of Iowa. They accuse McKinsey of providing misleading information about its engagements with the Chinese government, highlighting that such activities could menace U.S. national security and potentially breach federal laws. McKinsey has chosen not to provide comments on these allegations but has previously stressed its compliance with robust client service policies and has clarified that it does not engage directly with the Chinese Communist Party or the central government. Its focus, it claims, remains on working with multinational entities and private Chinese companies.
This scrutiny of McKinsey's dealings comes amid escalating tensions between the U.S. and China, where American political leaders are reevaluating business relationships to ensure they do not inadvertently bolster Beijing's economic and military capabilities. Meanwhile, the Biden administration has implemented export controls to impede China’s access to advanced technologies, including computer chips, microelectronics, quantum information technologies, and artificial intelligence. Furthermore, recent congressional reports underline concerns about partnerships between American and Chinese universities potentially aiding China in developing critical technologies necessary for military advancements.
As geopolitical dynamics shift, American corporations, including McKinsey, which have been active in China for decades, are recalibrating their strategies. Recently, The Wall Street Journal noted that McKinsey has significantly reduced its governmental client base in China and cut down its workforce there by approximately 500 employees, constituting about one-third of its employees in the region. The letter from Republican representatives accused McKinsey of bolstering China’s military and economic strides through its consultancy work, suggesting that the firm failed to disclose its Chinese affiliations while securing lucrative U.S. defense contracts that provided access to sensitive national security data.
In a February interaction with a Senate subcommittee on investigations, McKinsey’s global managing partner, Bob Sternfels, stated that to his knowledge, the company has never worked for the Chinese Communist Party or the central Chinese government.
