WASHINGTON (AP) — For many years, U.S. officials have cautioned against relying on loans from China’s state-run banks, which have played a central role in Beijing’s transformation into a global power. Yet a recent study has surfaced a surprising reality: the United States has received more funding from these institutions than any other nation. The full impact of this financial relationship on security and technology still remains unclear.

According to AidData, a research center at the College of William & Mary in Virginia, Chinese state-owned banks have provided $200 billion in financing to American firms over the past 25 years. Much of this lending has stayed out of public view, partly because funds were channeled through shell companies in locations such as the Cayman Islands, Bermuda, and Delaware, which effectively masked their Chinese origins.

Even more concerning, many of these loans were used to enable Chinese companies to acquire stakes in U.S. businesses linked to sensitive sectors, including firms specializing in robotics, semiconductors, and biotechnology—technologies that hold national security importance.

The research points to a much more intricate and extensive lending scheme than previously believed, one that goes beyond developing countries and now includes established economies like the U.K., Germany, the Netherlands, and Australia—many of them American allies.

“While others were playing checkers, China was playing chess,” remarked William Henagan, a former White House investment advisor, who voiced concern that China could gain decisive leverage over essential technologies. “Victory in future conflicts could depend on who controls key resources and systems.”

Scrutinizing Chinese Investment

Although the United States continues to accept foreign investment, Chinese capital has drawn heightened examination as tensions persist between the two leading global economies. These tensions are driven by starkly different political systems and competing global visions.

The banks detailed in the AidData report are not private entities; they operate under the direction of China’s central government and the Chinese Communist Party’s Central Financial Commission. Their mission is to further China’s national interests and strategic priorities.

The researchers found that China has issued over $2 trillion in global loans between 2000 and 2023—a figure that doubles all previous estimates. Importantly, much of this funding to advanced economies focused on strategic assets such as rare earth elements and advanced electronics, which are critical to defense applications like radar, missiles, and secure communications.

“Both the Trump and Biden administrations have criticized China for predatory lending practices,” said Brad Parks, executive director of AidData. “The irony is, we’re among their largest recipients.”

Layers of Complexity

One major reason it's taken this long to uncover the scale of China’s financing is that the flow of money has been buried under multiple layers of secrecy. The funds are often routed through companies with generic Western identities, making it hard for public databases to identify Chinese origin or ownership.

“The lack of transparency reflects deliberate efforts to obscure the source of the money,” said Scott Nathan, former director of the U.S. International Development Finance Corporation, established in the early Trump years to support overseas projects with strategic value to the United States.

Since 2023, U.S. authorities have taken steps to better detect suspicious investments. For instance, the Committee on Foreign Investment in the United States was strengthened in 2020 to better vet transactions in critical industries.

Still, China has adapted by setting up over 100 overseas bank branches, which then finance deals via offshore intermediaries, further clouding the origin of the capital.

“As oversight improves in one area, China finds new ways around the barriers,” Parks noted.

Loan Destinations

Chinese funding has found its way into numerous regions of the U.S., especially in the Northeast, the West Coast, the Great Lakes, and the Gulf of Mexico. Many of these investments targeted technologies with strategic significance, as the report illustrates.

— In 2015, Chinese state banks financed $1.2 billion for a Chinese firm to purchase an 80% share of Ironshore, a U.S. insurance company. Ironshore clients included federal agents and officials from the CIA and FBI, who might require legal protection in sensitive situations. Since the loan was routed through a Cayman Islands entity, regulators were initially unaware of the Chinese government’s role. Once discovered, the deal was reversed.

— That same year, China launched “Made in China 2025,” targeting self-sufficiency in ten high-tech industries over the next decade. In 2016, a Chinese government policy bank loaned $150 million to help a firm acquire a Michigan-based robotics company.

Following the rollout of this national strategy, nearly 9 out of 10 China-backed acquisitions focused on advanced sectors such as defense, quantum technology, and biotech, up from less than half prior to the initiative.

— In 2017, a Delaware private equity firm attempted to acquire a U.S. chip manufacturer using a Cayman-based company. The deal was blocked when investigators found both entities were owned by a Chinese state firm. The same firm successfully bought a semiconductor maker in the U.K., but British regulators later forced a divestiture.

— In 2022, British authorities made another forced divestment when they learned a chip design company—whose technology was potentially adaptable for military use—had been purchased through a Dutch firm controlled by a Chinese company. That Dutch firm is now accused of limiting chip supplies during the U.S.-China trade dispute.

Uncovering the Funding Trail

To uncover the full scope of China’s overseas lending, AidData analyzed financial documents, legal filings, and stock disclosures across more than 200 countries, in various languages.

The project began over a decade ago when China introduced the Belt and Road Initiative, aimed at building infrastructure in developing countries. The research expanded in recent years when patterns revealed China was increasingly targeting developed nations, engaging in acquisitions that could provide access to breakthrough technology deemed critical to China’s global development goals.

The findings, the report notes, suggest that Chinese state lending has evolved from promoting growth and welfare to enabling strategic influence through economic leverage.

“There is growing global concern that this is a coordinated strategy to control essential economic links,” said Brad Setser, an advisor with the U.S. Trade Representative. “Understanding this effort is key, and China doesn’t make that easy.”

— Condon contributed reporting from New York.