For years, Washington has been warning others not to trust loans from 
state banks fueling its rise as a superpower. But a new report reveals an ironic twist: The United States is the biggest recipient of all — by far. And the security and technology implications have yet to be fully understood.
China’s state lenders have funneled $200 billion into US businesses for a quarter of a century, but many of the loans have been kept secret because the money was first routed through shell companies in the Cayman Islands, Bermuda, Delaware and elsewhere that helped obscure their origins.
More alarming, much of the lending was to help Chinese companies buy stakes in US businesses, many tied to critical technology and national security, including a robotics maker, a semiconductor company and a biotech firm.
Chinese state bank financing has touched projects across the US, particularly in the Northeast, the Great Lakes region, the West Coast and along the Gulf of Mexico. Many loans targeted critical high-tech industries.
— In 2015, for instance, state-owned banks lent $1.2 billion to a private Chinese business to buy an 80% stake in Ironshore, a US insurer whose clients included the CIA and FBI officials and undercover agents who might need help paying legal bills in case they got into trouble in their jobs.
US regulators were unaware of the government involvement because the financing was funneled through a Cayman Island business with no obvious ties to China. US officials later realized the government could access information and ordered the Chinese buyer to divest.
— That same year, the Chinese government published “Made in China 2025”, a list of 10 high-tech areas, such as semiconductors, biotechnology and robotics, where it wanted to reach 70% self-sufficiency within a decade. The next year, in 2016, the Export–Import Bank of China, a policy bank, provided $150 million in loans to help a Chinese company buy a robotics equipment company in Michigan.
After China’s adoption of the manufacturing master plan, the percentage of projects targeting sensitive sectors such as robotics, defense, quantum computing and biotechnology rose from 46% to 88% of China’s portfolio for cross-border acquisition lending.
— In 2017, a Delaware private equity firm using a Cayman Islands company tried to buy a US chip maker; the deal was blocked when investigators discovered both companies were owned by a Chinese state-owned enterprise. That same Delaware company successfully bought a UK semiconductor maker that had to be divested when British authorities found out.
— And in 2022, the UK forced a Chinese company to divest another sensitive British firm in the industry, a designer of chips in Apple phones but potentially adaptable for military systems. The Chinese company had bought it through a company in the Netherlands that they owned. That Dutch firm is now accused of withholding semiconductors vital to automakers in the US-China trade war.
apnews.com/article/china-
state banks fueling its rise as a superpower. But a new report reveals an ironic twist: The United States is the biggest recipient of all — by far. And the security and technology implications have yet to be fully understood.
China’s state lenders have funneled $200 billion into US businesses for a quarter of a century, but many of the loans have been kept secret because the money was first routed through shell companies in the Cayman Islands, Bermuda, Delaware and elsewhere that helped obscure their origins.
More alarming, much of the lending was to help Chinese companies buy stakes in US businesses, many tied to critical technology and national security, including a robotics maker, a semiconductor company and a biotech firm.
Chinese state bank financing has touched projects across the US, particularly in the Northeast, the Great Lakes region, the West Coast and along the Gulf of Mexico. Many loans targeted critical high-tech industries.
— In 2015, for instance, state-owned banks lent $1.2 billion to a private Chinese business to buy an 80% stake in Ironshore, a US insurer whose clients included the CIA and FBI officials and undercover agents who might need help paying legal bills in case they got into trouble in their jobs.
US regulators were unaware of the government involvement because the financing was funneled through a Cayman Island business with no obvious ties to China. US officials later realized the government could access information and ordered the Chinese buyer to divest.
— That same year, the Chinese government published “Made in China 2025”, a list of 10 high-tech areas, such as semiconductors, biotechnology and robotics, where it wanted to reach 70% self-sufficiency within a decade. The next year, in 2016, the Export–Import Bank of China, a policy bank, provided $150 million in loans to help a Chinese company buy a robotics equipment company in Michigan.
After China’s adoption of the manufacturing master plan, the percentage of projects targeting sensitive sectors such as robotics, defense, quantum computing and biotechnology rose from 46% to 88% of China’s portfolio for cross-border acquisition lending.
— In 2017, a Delaware private equity firm using a Cayman Islands company tried to buy a US chip maker; the deal was blocked when investigators discovered both companies were owned by a Chinese state-owned enterprise. That same Delaware company successfully bought a UK semiconductor maker that had to be divested when British authorities found out.
— And in 2022, the UK forced a Chinese company to divest another sensitive British firm in the industry, a designer of chips in Apple phones but potentially adaptable for military systems. The Chinese company had bought it through a company in the Netherlands that they owned. That Dutch firm is now accused of withholding semiconductors vital to automakers in the US-China trade war.
apnews.com/article/china-
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Byron Wan
@Byron_Wan
AidData has released the “Chasing China: Learning to Play by Beijing's Global Lending Rules” report, together with a massive dataset, that comprehensively tracks China’s lending and grant-giving activities worldwide. The scale and scope of Beijing’s portfolio is vastly larger
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