As the Hill sets its focus on China, DC trade groups are the latest in the line of fire

More than half a dozen lobbying firms dumped Chinese clients earlier this year after POLITICO reported that congressional offices were threatening to blacklist them for working for companies linked to the Chinese military.

And as distrust of the Chinese government reaches a fever pitch in Washington on both sides of the aisle, companies with roots in the country — or suspected links to the Chinese Communist Party — are rapidly finding themselves without allies to make their case to lawmakers.

The pressure campaign is now turning to Washington’s trade associations, with several major industry groups buckling under demands to boot China-linked members when faced with congressional inquiries.

In an industry where relationships and access to those in power are currency, threats alone can be enough to spook advocates, especially if being associated with one client could compromise a lobbying firm or trade group’s ability to advocate on behalf of the rest of its clients.

“Many people say, you know, ‘All we have is our reputation,’” said Tom Spulak, a partner at King & Spalding who advises clients on lobbying compliance. “If one's reputation is marred on the Hill, that could be existential to your ability to stay in business.”

The dynamics in Washington are a marked change from even a few years ago, when the Chinese telecom giant ZTE was able to hire major names like former Sens. Norm Coleman and Joe Lieberman to defend it in Washington as it fought against being barred from doing business with American companies.

The value of membership in a trade group isn’t only in the ability to mobilize the lobbying and financial muscle of the collective against threats to an industry. Trade groups also give their members a veneer of credibility and can serve as a crucial defender of individual members.

Take NetChoice, the center-right tech group that in May dropped TikTok from its membership rolls after pressure from House Majority Leader Steve Scalise’s office. NetChoice stuck with the social media giant through lawmakers’ initial efforts to ban it from the U.S. and defended the app in court — including that same week.

A trade group representing the biopharmaceutical industry, the Biotechnology Innovation Organization, cut ties with one of its member companies, the Chinese biotech firm WuXi, in March after lawmakers questioned whether BIO should be required to register as a foreign agent for lobbying against legislation that would hurt WuXi.

Not only did BIO oust WuXi, the group’s new chief executive announced that BIO would flip its support in favor of the bill, which would block WuXi and other Chinese biotechs from doing business in the U.S.

Meanwhile, one of the retail industry’s marquee trade associations, the National Retail Federation, has reportedly rebuffed efforts by the e-commerce giant Shein to join its ranks. The fast fashion site, which previously was based in China and still faces questions about its ties there, has embarked on a hiring spree amid the Washington inquisition, staffing up its D.C. office with veteran retail lobbyists and retaining five new outside lobbying firms — many with ties to Republicans critical of the company — since February.

Even the Chinese government itself has lost all its U.S. lobbyists.

Squire Patton Boggs, the last lobbying firm registered to work for a formal arm of the Chinese government, no longer represents China’s U.S. Embassy as of the end of 2023, according to documents filed with the Justice Department earlier this year. The firm had worked for the embassy for nearly two decades, bringing in more than $9.2 million for its advocacy from 2005 through 2023, DOJ filings show.

Meanwhile, scrutiny on trade groups over their members’ ties to China doesn’t appear to be letting up.

In May, Rep. Elise Stefanik (R-N.Y.) and Rep. John Moolenaar (R-Mich.), the new chair of the House China Committee, called on the Justice Department to investigate whether a drone advocacy coalition sponsored by the Chinese drone maker DJI should be forced to register as a foreign agent.

“Obviously, these companies are coming under much closer scrutiny than” even a few years ago, said one Senate GOP staffer, who was granted anonymity to speak candidly about internal discussions.

The U.S. Chamber of Commerce provides a cautionary tale of how even the most powerful organizations aren’t immune from the blowback of crossing Republicans, the aide offered.

Congressional Republicans traditionally counted the behemoth business lobby one of their closest allies. But amid a wider break-up between populist Republicans and corporate America — and the Chamber’s critique of partisan grandstanding and embrace of some business-friendly Democrats — the business lobby has found itself at the center of previously unfathomable Republican ire on the Hill.

“If you think back five years ago, six years ago, it’d be kind of hard to imagine Republicans in outright revolt against the Chamber,” said the aide. The episode demonstrates trade associations “can no longer take for granted that relationship that they've had with Republicans over the years. And that means they have to pay extra close attention to the types of decisions they make [or] what their members are saying and doing, because they can get bogged down in all of it.”

Craig Singleton, director of the China Program at the Foundation for Defense of Democracies, expects the trend to ripple across a number of tech-adjacent sectors — especially industries China is looking to dominate such as telecom, electric and autonomous vehicles, batteries and drones.

If anything, Congress’ surprise success in pushing a TikTok divest-or-ban bill across the finish line in April may act as a galvanizing force for lawmakers to target Chinese companies with exponentially less risk for political blowback. And if members opt to try to replicate the TikTok model — keeping their efforts a secret until there is too little time and too much momentum for lobbyists to overcome — that will require trade groups to be especially discerning.

“There's a lot of things that industry groups aren't even aware of, and there's a lot of movement afoot that the companies that could be implicated are not aware of,” Singleton argued.

“Every single tech industry group, every single industry group that has Chinese company membership and participation is … in a state of analyzing” its potential risk exposure, said Singleton.

But all hope is not lost for Chinese-linked companies looking for allies in Washington.

TikTok didn’t lose any lobbyists earlier this year when lawmakers floated expanding their lobbyist blacklist threat to include TikTok’s hired guns.

And even as some firms raced to sever ties with their controversial clients and others swore off Chinese clients altogether, another subset of lobbying shops swooped in to save the day, as K Street is wont to do.

It’s a series of events that “looks eerily similar to the backlash the Saudi lobby faced following the murder of Jamal Khashoggi,” noted Ben Freeman, director of the Democratizing Foreign Policy program at the Quincy Institute. After Khashoggi’s murder, which the U.S. intelligence community concluded was carried out with the approval of Saudi Crown Prince Mohammed bin Salman, Freeman pointed out, “the initial outrage was immense and firms cut ties with the Saudis.”

“But, as Saudi Arabia fell out of the spotlight, the Saudi lobby slowly but surely came roaring back and is, arguably, as influential as ever.”

Freeman expects China to chart a similar path.

“So long as there's not a legal impediment to working for a high-paying foreign client — as there was for lobbying firms representing Russian interests that feel under sanctions after the Ukraine war began — there will always be someone in the U.S. willing to lobby for them,” he said.