Republican David McCormick, in his second attempt at securing a US Senate seat in Pennsylvania, has repositioned himself as a staunch advocate of President Trump's aggressive stance towards China. He has raised concerns about the economic relationship between the United States and China, particularly regarding trade ties.
Ironically, as the leader of the largest hedge fund worldwide, McCormick was responsible for overseeing substantial investments in Chinese companies and assets listed on US exchanges, as revealed in a thorough examination of the hedge fund's holdings by CNN KFile.
McCormick, during a recent interview on Hugh Hewitt's podcast, expressed the need to halt investments in China, citing his expertise in investing. He further suggested implementing restrictions on portfolio or direct investments that support the CCP or the Chinese military. In his testimony at the House select committee on China in September 2023, McCormick, the former CEO of billion-dollar hedge fund Bridgewater Associates, voiced his significant concerns about engaging in business dealings with the country.
McCormick, as CEO, had a fiduciary duty to maximize returns for shareholders and clients in alignment with their needs. Prior to officially launching his campaign in September 2023, he expressed concerns about Bridgewater's exposure to the moral and patriotic risks associated with conducting business in China.
During McCormick's tenure as CEO from 2017 to 2021, Bridgewater Associates reported a significant increase in disclosed holdings in US exchange traded Chinese companies. According to filings submitted to the US Securities and Exchange Commission and reviewed by CNN's KFile, these holdings grew from $1.6 million in the second quarter of 2017 to $1.77 billion in the final quarter of 2021.
During McCormick's tenure at Bridgewater, the hedge fund invested in companies that were found to have connections to human rights violations and abuses in China and have subsequently been blacklisted by the US government. Additionally, one of the investments involved a partnership with a state-run company, which is prohibited by the US government for US investments.
McCormick's shift in China policy coincides with the Republican Party's growing departure from neoliberal foreign policy, adopting a more confrontational stance towards China. Additionally, McCormick aims to distance himself from his previous pro-China image. Formerly a West Point graduate and Treasury undersecretary for international affairs during the Bush administration, he previously embraced Chinese investment, affirming in September 2007 that the success of China would benefit the United States.
McCormick received severe backlash for his connections with China during his campaign for the Republican nomination in 2022. He narrowly lost the primary to Republican Dr. Mehmet Oz by a margin of fewer than one thousand votes. Oz, in turn, was defeated by Democrat John Fetterman, the previous lieutenant governor of the state.
In addition to this, McCormick's hedge fund indirectly held $779 million in Chinese companies through their investments in exchange-traded funds. Furthermore, Bridgewater introduced a China-centric investment fund in 2018, which grew to a staggering $6.15 billion by March 2022, catering to investors.
Elizabeth Gregory, a spokesperson for the McCormick campaign, informed CNN that Dave's stance on China has been extensively recorded over the years. He has consistently voiced his concerns, even criticizing Ray Dalio (founder of Bridgewater), regarding the increasing threat posed by the Chinese Communist Party and its ascension.
Moreover, Gregory stated that McCormick has proposed a comprehensive strategy to address the China issue. This strategy involves safeguarding supply chains, preventing American companies from supporting the Chinese military or violations of human rights, and ensuring that the country is held accountable for intellectual property theft and other abuses against the United States.
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The campaign also highlighted McCormick's House testimony in September 2023, where he explicitly urged Congress to limit investments in sectors connected to national security. CNN contacted Bridgewater Associates for comment, but did not receive a response.
McCormick stepped down as CEO of Bridgewater Associates in early 2022 in order to pursue a political candidacy.
During that period, one of Bridgewater's holdings in China was found to be linked to human rights violations in Xinjiang's northwestern region, while another had connections to the Chinese military.
In June 2021, a subsidiary of Bridgewater, an energy company, was blacklisted in the US after being implicated in human rights violations and abuses. These violations were related to the implementation of China's campaign of repression against Uyghurs and other Muslim minority groups in the Xinjiang region. Both the company and China vehemently denied any involvement in rights violations in the region.
Bridgewater Associates significantly increased its investment in the parent company following its blacklisting, with its shares more than doubling between the second quarter of 2021 and the final quarter of the year.
Additionally, Bridgewater acquired shares in a credit services company approximately one year after the US Commerce Department imposed the blacklisting on its parent company in May 2020 due to alleged involvement in supporting the procurement of military-related items in China.