As one of the world’s most prolific lenders, China has disbursed more than $1 trillion in loans to developing countries, financing roads in Africa, ports in South America and railways in Central Asia.
But the biggest beneficiary of this financing over the past two decades has been the United States, where Chinese banks have provided $200 billion in financial support to American companies and projects, according to AidData, a research institute at the College of William and Mary in Williamsburg, Virginia.
This money went to building gas pipelines, data centers and airport terminals, as well as boosting corporate financing for US companies such as Tesla, Amazon, Disney and Boeing. Starting in 2017, this type of financing began to raise warning signs in Washington.
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In total, Chinese state-owned companies have provided US$2.2 trillion in loans and grants around the world since 2000 — an amount two to four times greater than previously estimated, according to Brad Parks, lead author of the report released by AidData, which is based on information from more than 30,000 projects in more than 100 countries.
Covering the period from 2000 to 2023, the study offers a more complete portrait of China’s role as an international creditor. It shows how Beijing used its financial resources to position itself in strategic sectors and establish possible leverage points in supply chains.
The work also mentions agreements that continue to cause concern in the West, such as the acquisition of Nexperia, a company that recently became a central player in the geopolitical battle for control of the global semiconductor chain.
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Most Chinese funding to the developing world has been earmarked for government loans for infrastructure projects, but that has shifted to emergency loans as these countries sink into debt.
In developed countries, Beijing’s actions have been more commercial. AidData’s figures do not include the $730 billion in US Treasury bonds held by China.
Since 2000, China has become a financial powerhouse, with robust state institutions and policy banks tasked with executing Beijing’s political ambitions.
Its volume of international loans accelerated after 2013, under the command of Xi Jinping, who used Chinese coffers to release more than US$1 trillion in loans for infrastructure in developing countries through the New Silk Road.
This expansive program gave China influence in regions neglected by Western powers. The program has already been criticized for creating unsustainable levels of debt and for directing contracts to Chinese companies, which has sometimes resulted in problematic projects.
More recently, China reduced lending to poorer countries and began granting more credit to rich nations, such as Australia and the United Kingdom. Currently, China lends practically the same volume to high-income countries as it does to developing countries — US$1 trillion, according to AidData.
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China’s loans to developed countries generally take the form of lines of credit to governments and large companies. Lenders are often state-owned institutions such as the Bank of China and the Agricultural Bank of China.
Some of them are publicly traded and are among the largest banks in the world, but many experts analyze them with caution, as they often need to follow political determinations from the Chinese Communist Party.
This funding has flowed into sectors such as critical minerals, infrastructure and sensitive technologies such as semiconductors — areas that experts warn could allow Beijing to exert economic control over strategic reserves, supply chains and key maritime points.
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“These bankers tend to finance profitable projects, but they are also often required to obey the orders of the Communist Party,” said Andrew Collier, a senior fellow at the Harvard Kennedy School and former president of the U.S. branch of Bank of China International.
“The presidents of the four largest state-owned banks are players at the poker table at the highest level of the Chinese government,” Collier added.
According to the AidData survey, Chinese state lenders provided more than US$335 billion in credit for mergers and acquisitions in dozens of countries — and three-quarters of that amount financed Chinese buyers in sectors such as robotics, biotechnology and quantum computing.
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Some of these operations, however, have already been reversed. In 2019, Chinese company Wingtech Technology purchased a majority stake in Netherlands-based chipmaker Nexperia. This year, the Dutch government took control of the company after Washington imposed regulations that would severely restrict its operations as its owner was on the sanctions list.
In the United States, Chinese financing ranged from routine commercial credit for companies to financing construction projects for liquefied natural gas terminals and gas pipelines. That support also involved some of the most closely monitored takeover attempts by Chinese companies with close ties to the government.
An attempt by a Beijing-linked investor to acquire Oregon-based U.S. company Lattice Semiconductor Corp. was blocked by then-President Donald Trump during his first term. Shortly afterwards, Congress expanded the review of Chinese investments. Since then, it has become significantly more difficult for China to finance acquisitions in sensitive sectors in the United States.
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