China poses US$200 billion security risk to the US
Sophisticated funding networks have also targeted allies such as France, Germany and the United Kingdom
State banks in China have funneled US$200 billion into American businesses during the past 25 years, fueling national security risks. Many of the loans were shrouded in secrecy after being routed through Chinese shell companies dotted around the world.
Yet just as alarming was that this allowed Beijing to take stakes in firms involved in critical United States sectors. They included robotics, semiconductors and biotech, AidData, a research lab at the College of William & Mary in the US, revealed today in a major report.
The nearly 400-page study also exposed a far more widespread and sophisticated funding network aimed at US allies, including France, Germany, the Netherlands and the United Kingdom. Australia was also targeted.
“China was playing chess while the rest of us were playing checkers,” former White House investment adviser William Henagan told the Associated Press.
“Wars will be won or lost based on whether you can control products critical to running an economy,” he added, fearing that this hidden funding has handed Beijing a choke hold on crucial technologies.
Money-go-round:
- Apart from the US, “high-income countries,” such as Japan and the UK, were bombarded by stealth investment, according to AidData.
- Up to $60 billion went to the UK, while the 27-member states of the European Union “received $161 billion for nearly 1,800 projects.”
China was playing chess while the rest of us were playing checkers.
Former White House investment adviser William Henagan
Delve deeper: Beijing’s investment blitz in the UK also gave it “access to military-grade technology.” The spending spree “was at its height following a 2015 Chinese state directive, aimed at making the country a global leader in high-tech industries,” the BBC stated.
Between the lines: In July, William Matthews, of the Chatham House think tank, spelled out the challenges facing the British government. “Closer engagement requires significantly stronger mitigation of the risks China poses to UK national security,” he said.
Big picture: Still, as the AidData report stressed, “the scale and scope of Beijing’s portfolio is vastly larger than previously understood.” Up to “$2.2 trillion of aid and credit” was “spread across 200 countries” in every region of the world.
Bottom line: “The irony is rich. Washington has been warning other countries about debt exposure to China. [But] there’s quite a lot of inbound lending from Chinese state-owned creditors to [US] borrowers,” Bradley Parks, the executive director for the research lab, said.
China Factor comment: Cash and complacency are a deadly cocktail. The US and its allies are finding that out the hard way by drinking from this poisoned Chinese chalice.