More than 125 Chinese companies with U.S. subsidiaries may have taken as much as $419 million in forgivable small business relief loans covered in the $660 billion Paycheck Protection Program (PPP).
A study of publicly available PPP loan data, conducted by the Horizon Advisory business consulting firm and reported by The New York Times, indicated $192 million to $419 million dollars ended up going to at least 125 companies that Chinese entities own or invest in. At least 32 of these Chinese companies received loans in excess of $1 million, for a total of around $180 million in PPP loans.
Continental Aerospace Technologies was one company that received up to $10 million in PPP loans. Another company, Aviage Systems, received up to $350,000 in loans. Both companies are owned by Aviation Industry Corporation of China, a Chinese state-owned aerospace and defense conglomerate.
The forgivable PPP loans approved in March as part of a more than $2 trillion U.S. coronavirus relief package were designed to help keep U.S. small businesses afloat amid lockdowns and business closures brought on by the coronavirus pandemic. Despite the intent of the coronavirus loan program the economic relief legislation did not restrict U.S. subsidiaries of foreign entities from applying for and receiving such PPP loans.
“The extent and nature of [People’s Republic of China]-owned, -invested and -connected entities among the PPP loan recipients indicate that without appropriate policy guardrails, U.S. tax dollars intended for relief, recovery and growth of the U.S. economy — and small businesses in particular — risk supporting foreign competitors, namely China,” Horizon Advisory co-founders Emily de La Bruyère and Nathan Picarsic wrote to the Times.
According to the Times, another company that received PPP loans was Dendreon Pharmaceuticals, a California-based biotech company owned by Nanjing Xinbai, a Chinese state-invested company whose controlling shareholder has close ties to the Chinese Communist Party (CCP). Dendreon Pharmaceuticals received between $5 million and $10 million in PPP loans.
U.S. lawmakers are currently considering another round of coronavirus relief spending and are reportedly eyeing provisions to help prevent abuses to the relief funds. Republicans in the U.S. Senate specifically offered up a provision that would bar businesses that are partially owned by Chinese companies or that have a Chinese resident on the board of directors from receiving new relief loans.
A U.S. Department of Treasury spokeswoman also told the Times that the Small Business Association may review any of the loans administered in the loan program and deny forgiveness if they determine a loan applicant was ineligible or if they misrepresented their business in their loan application. Denying the loan forgiveness would force the loan recipients to repay the relief money they received.