WASHINGTON — A coalition of Republican lawmakers is calling for a federal investigation into the consulting firm McKinsey & Company due to its work with the Chinese government and state-owned entities, following reports that the firm is altering its operations in China to mitigate risks.
In a letter addressed to the Justice Department, signed by Rep. John Moolenaar (MI), Sen. Marco Rubio (FL), and Sen. Joni Ernst (IA), concerns were raised regarding McKinsey’s $480 million contracts with the Defense Department. The lawmakers argue that these contracts may contravene federal laws given McKinsey’s advisory roles with national and provincial Chinese governments, as well as state-owned enterprises. They allege that the firm has misrepresented its connections to the Chinese authorities.
The letter, issued last Thursday, states, “McKinsey’s activities pose a serious risk to U.S. national security and may have failed to meet the firm’s obligations under federal law.”
While McKinsey has refrained from commenting on the letter, it has previously defended its practices in China, asserting that it adheres to the “most rigorous and comprehensive client service policy in our industry.” The firm maintains that it does not engage with the ruling Chinese Communist Party or the central government, focusing instead on partnerships with multinationals and private Chinese businesses.
The scrutiny surrounding McKinsey’s ties to Beijing emerges amid escalating competitiveness between the U.S. and China, prompting American lawmakers to reassess business relationships to prevent strengthening Beijing’s military capabilities with U.S. assistance. Additionally, Beijing has grown increasingly cautious of American corporate influences.
Amid these geopolitical tensions, the Biden administration has implemented export controls to restrict China’s access to advanced technology, particularly in areas such as microelectronics and artificial intelligence. A recent congressional report has also expressed concerns about collaborations between American and Chinese universities potentially aiding Beijing’s military advancements.
U.S. firms, which have accrued extensive experience in China over recent decades, are now recalibrating in light of the shifting geopolitical landscape. Reports indicate that McKinsey is scaling back its engagements with government-affiliated clients in China and has reduced its workforce there by approximately a third, cutting nearly 500 positions.
In their letter, the Republican lawmakers accused McKinsey of facilitating the rapid military and economic development of China through its consulting services. They allege that the firm failed to adequately disclose its collaboration with the Chinese government while securing U.S. defense contracts, which have provided access to sensitive national security information.
Bob Sternfels, McKinsey’s global managing partner, asserted during a Senate committee meeting in February that the firm has never provided services to the Chinese Communist Party or the central government, to his knowledge. The letter also claims that McKinsey may have misrepresented its relationship with Chinese authorities, referencing various public documents and information.
