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in the United States, the activity was not in violation of laws against foreign campaign activity.35

“Exporting” Corrupt or Unethical Business Practices

China scores poorly on international indices of corruption.36 As Chinese companies expand abroad, it is possible that they could have a deleterious effect simply by exporting suspect business practices. An industry of particular importance is banking. The “big four” Chinese banks all operate in the United States, where their assets have increased sevenfold between 2010 and 2016 to $126.5 billion.37 They are often extensively involved in real estate transactions of Chinese firms operating in the United States. In 2015, 2016, and 2018, China Construction Bank,38 the Agricultural Bank of China,39 and Industrial & Commercial Bank of China40 were respectively subject to enforcement action by the Federal Reserve for not doing enough to fight money laundering.

Chinese corporations in the United States can also hinder the rule of law in other ways. When responding to lawsuits in US courts, Chinese state-owned enterprises have claimed exemption due to sovereign immunity; in other instances, Chinese firms with an American legal presence have refused to comply with US investigations by claiming that cooperation would violate Chinese law.41 These actions inhibit the ability of the US government to regulate commerce and put American competitors at a disadvantage within their own country.

Chinese Manipulation of American Companies as a Vector of Influence42

American companies play a significant role in American foreign and domestic politics and their leaders regularly are selected to take positions of leadership in government. As a result, corporate America’s traditional role in favor of engagement with China, given the country’s market potential, has had significant weight in American policy toward the country.43 China, for its part, welcomed foreign companies’ investment as part of its policy of reform and opening up in the hope of spurring economic development.

China’s relationship with corporate America has become increasingly fraught. In this report and elsewhere, China’s state-directed efforts to facilitate the theft of intellectual property, the lifeblood of developed economies, are well documented. China’s forced transfer of technology by foreign firms, as a condition of operating in China, is one of the main complaints of both the Trump administration and the European Union.

But China’s ability to pressure US companies also encompasses three other more elusive dimensions. First, recognizing the importance of American companies in American politics, China has frequently cultivated, even leveraged, American executives to lobby against policies it opposes. Where cultivation fails, it has threatened or exercised

Section 7
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