Title: U.S. Funding of Entities Located In China Description: U.S. agencies sometimes provide funding to foreign businesses and other entities when it helps support U.S. trade and other goals. This financial support includes entities located in China. GAO's Kim Gianopoulos tells us more on this podcast. Related GAO Work: GAO-23-105538, Federal Spending: Information on U.S. Funding to Entities Located In China Released: April 2023 [Music] [Kim Gianopoulos:] The U.S. government has a variety of goals and objectives that it wants to achieve in the world. And they spend money in many, many countries, not just China. [Holly Hobbs:] Hi and welcome to GAO's Watchdog Report. Your source for news and information from the U.S. Government Accountability Office. I'm your host, Holly Hobbs. U.S. agencies sometimes provide funding to foreign businesses and other entities when it helps support U.S. trade and other goals. This financial support includes entities located in China--a major trading partner, but also a strategic rival. GAO was asked to review U.S. funding and financing of entities in China. To tell us more about what we looked at and found is GAO's Kim Gianopoulos, an expert on international trade and foreign investment. Thanks for joining us. [Kim Gianopoulos:] Thanks for having me, Holly. [Holly Hobbs:] So, Kim, the U.S. has a complicated relationship with China. Can you help us understand why federal government agencies would provide funding to entities there? [Kim Gianopoulos:] Sure. Well, the U.S. government has a variety of goals and objectives that it wants to achieve in the world. And they spend money in many, many countries, not just China. For example, the State Department has an embassy in Beijing, as well as four consulates around the country. So they would spend money to support the operations of those entities. Also, U.S. agencies may engage in research operations with a variety of Chinese entities in-country, whether it's to access certain tools or resources or address certain issues that could only be addressed in-country. [Holly Hobbs:] What can you tell us about the kinds of projects and entities that the U.S. has funded? [Kim Gianopoulos:] The U.S. has funded a variety of projects in China. So, for example, the National Institutes of Health or NIH, has funded a project with a Chinese university looking at insect borne diseases, such as malaria. The State Department supports a variety of projects in China as well, such as physical infrastructure upgrades to its embassy in Beijing, as well as certain projects that are sponsored by the U.S. Chamber of Commerce. Finally, the Export-Import Bank, or EXIM, supports U.S. exports to China by funding a variety of Chinese entities. So, for example, Air China has purchased some Boeing aircraft, and that was supported by EXIM loan guarantees. In fact, the majority of EXIM loan guarantees that went to Chinese entities between fiscal years 2012 and 2021, were for the purchases of Boeing aircraft, which is, of course, a U.S. company. [Holly Hobbs:] So how much money are we talking about and who is it going to? [Kim Gianopoulos:] We did an analysis of the money that was represented in USAspending.gov, which is the U.S. government's official repository for data from U.S. agencies. In that analysis, we found that between fiscal year 2017 and 2021, the U.S. government spent about $48 million that went to entities that have a physical, legal address in mainland China. So that's about $10 million a year or so. {MUSIC} [Holly Hobbs:] So Kim just told us that federal agencies may fund entities in China when it supports U.S. trade and other goals and that agencies use their own systems as well as U.S. spending.gov to track and share information about this funding. So Kim, what can you tell us about how funding is provided? And are there any limitations and how that funding is reported? [Kim Gianopoulos:] Sure. Well, funding can be provided through a variety of mechanisms. The most frequently used ones are contracts and assistance awards or grants. So these contracts may go to Prime recipients, in other words, first-level recipients. And that's what I was talking about with the $48 million I mentioned a moment ago. What we don't know much about are those sub-recipients or sub awardees. So, in other words, if a contractor subcontracts to an entity that's located in mainland China, we may not know about that from USAspending.gov because of the restrictions and limitations on the data in that database. U.S. policy doesn't require agencies or awardees to provide complete information on sub awardees. So we're not able to tell you exactly the full amount that's going to Chinese entities because of this limitation of the data and USAspending.gov. Now, when it comes to Export-Import Bank, they have two main tools that they use to provide funding to entities in China or other countries, for that matter. The first are loan guarantees. I mentioned earlier some of the loan guarantees that went to entities like Air China purchasing Boeing aircraft. Those totaled about $6 billion over a 10-year-period from fiscal year 2012 to 2021. They also can offer export credit insurance, which comes out to about $139 million over that same time period. [Holly Hobbs:] And last question, what's the bottom line of this report? [Kim Gianopoulos:] First of all, the U.S. government has spent about $48 million between fiscal year 2017 and 2021, went directly to entities that have a physical Chinese presence--that have an address on mainland China. The second main point is that we're unable to determine the full amount that went to Chinese entities. That $48 million is really a floor because the sub awardees don't have full information in USAspending.gov. So we can't say the total amount that went to those Chinese entities. Now, GAO is engaged in a separate study looking at sub-awardee data across the U.S. government, not just in China, because it's an issue for the entire government. And that report is scheduled to come out sometime later this year. [Holly Hobbs:] That was Kim Gianopoulos talking about GAO's new report on U.S. funding to entities located in China. Thanks for your time, Kim. [Kim Gianopoulos:] Thanks for having me. [Holly Hobbs:] And thank you for listening to the Watchdog Report. To hear more podcasts, subscribe to us on Apple Podcasts, Spotify, or wherever you listen and make sure to leave a rating and review to let others know about the work we're doing. For more from the Congressional watchdog, the U.S. Government Accountability Office, visit us at GAO.gov.