US has warned others to avoid loans from Chinese state banks. But it's
the biggest recipient of all
[November 18, 2025] By
DIDI TANG and BERNARD CONDON
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."
China money gets a closer look
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.”
Shell games
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.
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 “In places where there are more cops
on the beat," Parks said, “it has found ways to work around barriers
to entry.”
Where the loans ended up
Chinese state bank financing has touched projects across the U.S.,
particularly in the Northeast, the Great Lakes region, the West
Coast and along the Gulf of Mexico, which Trump has renamed the Gulf
of America. Many loans targeted critical high-tech industries,
according to the report.
— In 2015, for instance, Chinese state-owned banks
lent $1.2 billion to a private Chinese business to buy an 80% stake
in Ironshore, a U.S. insurer whose clients included the Central
Intelligence Agency and Federal Bureau of Investigation officials
and undercover agents who might need help paying legal bills in case
they got into trouble in their jobs.
U.S. regulators were unaware of the Chinese government involvement
because the financing was funneled through a Cayman Island business
with no obvious ties to China, according to the report. U.S.
officials later realized the Chinese 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, according to
AidData.
— In 2017, a Delaware private equity firm using a Cayman Islands
company tried to buy a U.S. 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 U.K. semiconductor maker that had to be divested when
British authorities found out.
— And in 2022, the U.K. 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 U.S.-China trade war.
Following the money
To trace China's hidden lending, AidData dug through regulatory
filings, private contracts and stock exchange disclosures in more
than 200 countries written in multiple languages.
The effort to track China's state loans and investment started more
than a decade ago when Beijing launched its Belt & Road Initiative
to build infrastructure in developing countries. The project
expanded sharply three years ago when the AidData team, which
eventually grew to 140 researchers, realized many of the loans were
landing in advanced economies such as the U.S., Australia, the
Netherlands and Portugal, where acquisitions could allow it to
access technology that Beijing considers essential to its global
rise.
The report says the findings show a shift in the use of state credit
from promoting economic development and social welfare to gaining
geo-economic advantages.
“There’s global concern that this is part of a concerted effort to
gain control over economic chokepoints and use this leverage,” said
Brad Setser, an adviser to the U.S. Trade Representative in the
Biden administration. “It’s important that we understand what
they’re doing, and they don’t make it easy.”
___
Condon reported from New York.
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