US has warned others to avoid loans from Chinese state banks. But it's the biggest recipient of all

WASHINGTON (AP) — For years, Washington has been warning others not to trust loans from Chinese 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 U.S. 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, according to AidData, a research lab at the College of William & Mary in Virginia.

More alarming, much of the lending was to help Chinese companies buy stakes in U.S. businesses, many tied to critical technology and national security, including a robotics maker, a semiconductor company and a biotech firm.

The report found a far more widespread and sophisticated lending network than previously thought — a web of financial obligations extending beyond developing countries to rich ones, including the U.K., Germany, Australia, the Netherlands and other U.S. allies.

“China was playing chess while the rest of us were playing checkers,” said former White House investment adviser William Henagan, who worries the hidden lending has given China a chokehold on technologies. “Wars will be won or lost based on whether you can control products critical to running an economy.”

While the U.S. still welcomes most foreign investment — and President Donald Trump has courted it — money from China has drawn particular scrutiny as the world’s two biggest economies with opposing ideologies battle for global supremacy.

Deals financed by China’s state-owned banks, the ones studied in the AidData report, are especially problematic. The lenders are controlled by China’s central government and the Communist Party’s Central Financial Commission, and they are directed to advance China’s strategic goals.

In total, the AidData report found China lent more than $2 trillion from 2000 through 2023 around the world, double the highest previous estimates and a surprise to even longtime analysts of China’s rise. And much of the lending to wealthy countries was focused on critical minerals and high-tech assets — rare earths and semiconductors needed for fighter jets, submarines, radar systems, precision-guided missiles and telecom networks.

“The U.S., under both (former President Joe) Biden and Trump, have been beating this drum for more than a decade that Beijing is a predatory lender,” said Brad Parks, executive director of AidData. “The irony is very rich.”Until now, a full accounting of China’s state lending has never been published because much of the financing is buried beneath layers of secrecy, masked by Western-sounding shell companies and mislabeled by international databases as ordinary private financing.

“There is a complete lack of transparency that speaks to the lengths to which China goes, whether through shell companies or confidentiality agreements or redactions, to make it extremely difficult to come up with this full picture,” said Scott Nathan, the former head of the U.S. International Development Finance Corp., an agency set up in the first Trump term to invest in foreign projects deemed in the U.S. national interest.

Since the report’s last documented loan in 2023, U.S. scrutiny has gotten better. Screening mechanisms, such as the interagency Committee on Foreign Investment in the U.S., got beefed up in 2020 to protect sensitive sectors in the economy.

But China has gotten better, too, in part by setting up banks and branches overseas — more than 100 in recent years — that then lend to offshore entities, further clouding the origins of the money.

“In places where there are more cops on the beat,” Parks said, “it has found ways to work around barriers to entry.”