National Defense

Major American Consultancy Led Think Tank That Helped China Craft Policies That Strained US Relations: REPORT

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McKinsey founded the Urban China Initiative (UCI) with university partners over a decade ago intending to be a “convener of China’s leading national, provincial and local dialogues on urban issues,” the FT reported, citing people familiar with the matter. UCI released a book, commissioned by an organ of the Chinese state, advising Beijing to adopt policies to closely intertwine its military and economic sectors and drive foreign companies out of China; these policies would create a strain in the U.S.-China relationship.

UCI’s policy recommendations formed part of the Chinese government’s research for its Five-Year Plan for 2016-20, according to the FT. That plan included the “Made in China 2025” initiative that sought to increase Beijing’s global share of various sectors, which led to heightened acrimony between the U.S. and China.

However, McKinsey downplayed its involvement with UCI, claiming that it was not primarily responsible for its creation and insisting it had never done work for the Chinese government.

“The Urban China Initiative was a non-profit initiative co-founded in 2011 with Columbia University and Tsinghua University,” the consulting firm said in a statement. “The Urban China Initiative is not McKinsey, and it did not perform work on McKinsey’s behalf. To our knowledge, McKinsey was not compensated for any UCI-related research or initiatives… As we have stated previously, the central government of China is not, and to our knowledge has never been, a client of McKinsey.”

Several individuals involved in the initiative described UCI as a McKinsey project to the FT; one person said it was the brainchild of the consulting firm rather than its university partners, and several former UCI staff list themselves as having done work for McKinsey on their LinkedIn pages, according to the FT. One individual, Gengtian Zhang is described as the “Director of Research of the Urban China Initiative, McKinsey & Company, China,” in a European Commission 2018 report.

UCI presented a book to Beijing with its policy recommendations called “Scientific and Technological Revolutions Around the World,” which contained a self-described “road map to the opportunities for China’s science and technology development,” according to the FT.

The book contained policy recommendations on improvements to Beijing’s technological sector, such as in 3D printing and cloud network computing, according to the FT.

Some of the book’s recommendations suggested that China take advantage of critical minerals and special metals used in manufacturing and production to ” “accelerate the conversion of military technology into civil use [ . . . and] promote the two-way transfer and dissemination of military-civil material technology.”

The book also suggested that Beijing pour more financial support into China’s domestic “Internet of Things” – a phrase used to describe physical objects intertwined with technological advancements, such as sensors and software – so that it could “eventually take control of the industry from foreign firms.”

McKinsey shut down the UCI program in 2021 after falling under scrutiny from U.S. lawmakers, according to the FT.

McKinsey did not immediately respond to a request for comment.