US House Ways and Means chair accuses China of funding anti-data center protests to stall American AI

A senior Republican leader in the US House of Representatives has alleged that organizations receiving funding from China are fueling domestic opposition to data centers and must be penalized.

Representative Jason Smith, chairman of the House Ways and Means Committee, asserted in an interview that China is funding numerous non-profit organizations to incite the American public against data centers, which are vital for the development of artificial intelligence.

Having launched his own investigation, Smith is calling on Treasury Secretary Scott Bessent to revoke the tax-exempt status of these organizations, arguing that the government should not effectively subsidize groups that “endanger our national and economic security.”

“We have tracked money originating from China to US non-profits that are organizing protests against data centers because China wants to dominate the computing field,” Smith said. “If they can sow division and chaos among the American public, they will slow [America] down in the AI race and win. We must remain vigilant.”

When asked to comment on Smith’s remarks, a Treasury spokesperson said in a statement:

“Tax exemption is not a shield for foreign influence. Organizations that abuse charitable status to advance foreign interests undermine our laws, our democracy, and the public trust.”

Legal action against non-profit organizations in the US represents a significant step and could assist the technology sector in overcoming domestic opposition.

However, legal experts warn that this could be another example of the Trump administration weaponizing the tax code for political purposes.

“People should think twice before using the tax code or the IRS [Internal Revenue Service] to go after ideas or taxpayers they dislike,” said Nina E. Olson, executive director of the Center for Taxpayer Rights. “This breeds distrust toward the tax authority and negatively impacts compliance… and it can be used against you when you fall from power.”

Smith has previously targeted the activist group The People’s Forum, alongside news websites BreakThrough News and Tricontinental, over donations they received from Neville Roy Singham, a US citizen and former technology mogul residing in Shanghai.

Smith has threatened to subpoena these groups if they refuse to hand over the internal financial records he has requested.

Policymakers are currently grappling with public concern over the massive new data centers emerging across the nation.

Since late last year, at least 14 states have proposed restrictions or bans on these facilities.

Dozens of municipalities nationwide have already enacted such measures.

According to Gallup, approximately seven out of 10 Americans now oppose the construction of AI data centers near their homes.

Technology companies are targeting approximately $7 trillion in new physical infrastructure investment by 2030 to support the upcoming AI boom.

Some members of Congress and industry experts worry that new government hurdles could stall progress and weaken the US as it competes with Chinese technology firms.

Regarding the domestic opposition to data centers, Smith said, “I absolutely believe this is being incited by foreign actors.”

Critics, however, point to a range of other explanations for the domestic resistance to data centers, including their impact on utility prices and the environment.

Polls indicate that many Americans remain unconvinced they will benefit from artificial intelligence, driven by fears of job losses and various other concerns.

While Smith appears to be the highest-ranking Republican so far to directly blame China for the opposition to data centers, several others have recently made similar assertions.

Interior Secretary Doug Burgum spoke last week about the role of “foreign-sourced propaganda” in fueling data center opposition, and billionaire Kevin O’Leary of “Shark Tank” fame blamed the Chinese Communist Party for opposition facing a planned 40,000-acre data center in Utah.

The Bitcoin Policy Institute also published a report last month detailing billions of dollars channeled by Swiss, British, and Chinese billionaires to groups “driving the anti-data center campaign.”

This report serves as the foundation for many of the current allegations. Wired also reported last month that US law enforcement agencies are investigating “anti-tech extremism.”

Smith argues that the importance of the AI competition dictates that the Treasury Department must act, and says his committee will press to publicize the findings of its investigation.

“We must remain vigilant,” Smith said. “We will continue to bring this to the public eye, because this is madness.”