HARRISBURG, Pennsylvania — Before running for the U.S. Senate in Pennsylvania, David McCormick was a big name on Wall Street.
He was the CEO of the largest hedge fund in the world, a widely traveled executive in demand for speaking engagements and key board positions.
Because of his wealth and connections, Republicans saw him as someone who could both raise campaign money and fund his own Senate campaign.
But McCormick’s Wall Street days haven’t been much of an asset lately, providing fodder for attacks from Republican primary rivals in McCormick’s failed 2022 Senate race and now from Democrats in his challenge for the senator’s third term. Bob Casey.
In speeches and advertisements, Casey has harped on about investments Bridgewater Associates made when McCormick was CEO, including investments in Chinese companies considered part of Beijing’s military and surveillance industrial complex.
“While I was fighting for union rights and for working families in Pennsylvania, he was making a lot of money investing in China,” Casey recently told a union audience at a Teamsters hall in suburban Harrisburg. “He wasn’t just investing in Chinese companies, he was investing in companies that were building the Chinese military.”
McCormick declined an interview request.
The need to fend off accusations that he has profited at America’s expense comes at an unfortunate time for McCormick, as relations between China and Washington have deteriorated. increasingly tense.
But Bridgewater wasn’t alone.
U.S. investment in Chinese companies soared when McCormick was CEO of Bridgewater, as hedge funds, institutional investors and fund managers poured their money into those same companies.
Some still do, according to a congressional report released this year after both the Trump and Biden administrations tried Blocking US investments in what they saw as China’s military and surveillance apparatus.
The US political community was already angry about China in 2016, but the US financial sector “swept right through it,” said Derek Scissors, a China specialist at the American Enterprise Institute in Washington who served on the US-China Economic and Security Review Commission.
The economic ties extend beyond Wall Street. Semiconductor companies, farmers, tech and others in manufacturing rely on China for customers or parts, Scissors said.
As CEO of Bridgewater, McCormick described China in 2019 as America’s “most defining bilateral relationship of our time,” even as calls grew in Washington to block U.S. investments in Chinese companies that could pose a threat to American security.
As a candidate, McCormick has described China as an “existential” threat to the United States. He called on the federal government to develop a comprehensive strategy to help America surpass China economically and technologically, and said his experience with China means he can go “toe to toe” with the administration on trade issues.
But McCormick also defends himself, downplaying Bridgewater’s investment in China, saying it was 2% of the company’s assets, and describing investment in China as “unavoidable” because of customer expectations and the country’s rapid economic growth.
In a book he published last year, he wrote: “As things stand, American dollars are financing Communist China’s most heinous acts and ambitions.”
During his campaign, McCormick rarely talks about his time at the hedge fund. When he does mention it, he tells the audience he ran a “financial firm” or an “investment firm.”
Instead, he focuses on other citations on his resume, which include playing football and wrestling in high school, graduating from the U.S. Military Academy at West Point and serving with the Army in the first Gulf War, where he earned a Bronze Star.
But when he’s not talking about his Wall Street days, Wall Street doesn’t seem to care. In his two Senate campaigns, super political action committees backing McCormick have raised tens of millions of dollars from the financial world.
McCormick, 59, earned a doctorate from Princeton University, ran the online auction house FreeMarkets Inc., which bore his name on a Pittsburgh skyscraper during the tech boom, and held senior positions in the administration of President George W. Bush.
There, he likes to say, he earned a reputation as a tough negotiator with the Chinese when he was responsible for the Commerce Department’s policy on export controls for sensitive technologies.
When Bridgewater Associates appointed McCormick as president in 2009, founder Ray Dalio was known as a company bullish on China.
Today, Bridgewater is just as well-known foreign investment company in China.
Disclosures from China’s regulators show the country has at least 10 billion renminbi — or at least $1.4 billion, and possibly much more — invested in Chinese assets there, said Harry Handley, a senior associate at Z-Ben Advisors, a financial advisory firm based in Shanghai.
That’s the highest number of any foreign company, Handley said.
McCormick, who was an executive at Bridgewater for 12 years, joined the company as investment banks, venture capital firms and hedge funds fueled an investment boom in China’s growing economy.
“The Chinese economy was doing well for a long time and there was money to be made,” said Greg Brown, a finance professor at the University of North Carolina at Chapel Hill who studies hedge funds.
McCormick spent his last five years at Bridgewater as co-CEO or CEO, and those were big years for investing in China. That’s when Chinese regulators loosened restrictions on foreign investment in stocks and bonds, leading to a few years of particularly heavy investment, Brown and others say.
Bridgewater gained a reputation among foreign companies as an aggressive investor in Chinese companies. “Over the last few years, they’ve kind of taken a dominant position among international companies in China,” Handley said. It also reportedly managed money for the Chinese government.
In early 2022, McCormick left Bridgewater to run for Senate in Pennsylvania in a seven-candidate Republican Party primary.
Bridgewater’s connections to China continued to haunt him.
In an attack by a Republican rival in the primary, a video of Mehmet Oz The campaign featured “finance brothers” Chad and Tad at a bar when Tad asked Chad, “Do you think saying ‘I invest in China’ is a good opening line?” Chad replied, “Investing in foreign opponents is always a good idea!”
At a rally a few days before the 2022 primaries, the former president said Donald Trumpwho wanted to help Oz, his candidate he supported, mocked McCormick for working at a company that “managed money for Communist China.”
McCormick narrowly lost to Oz.
This summer, Casey’s campaign launched two ads that aired in major Pennsylvania TV markets attacking McCormick over Bridgewater’s investments in companies with ties to the Chinese military.
“Dave McCormick sold us out to make a fortune,” hard-hatted speakers say in one ad. “That’s the real Dave McCormick.”
McCormick has attempted to link Casey to China, alleging that Casey has invested money in Chinese companies through mutual funds and that the Biden administration’s clean energy policies, which Casey has backed, are making the U.S. more dependent on Chinese lithium-ion batteries and solar panels.
Meanwhile, each candidate is trying to show that they are tougher on China. That has thrown into sharp relief the contrast between McCormick the CEO and McCormick the candidate, with McCormick explicitly calling for an end to U.S. investments in technologies in China that are critical to national security or tied to the military.
“McCormick has changed his tune because he’s a political guy,” Scissors said. “If he were in the business world, he’d still be pushing for relations with China. Because that’s what they do.”
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Follow Marc Levy on https://x.com/timelywriter.
