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U.S. lawmaker calls on Trump administration to review stimulus loans to China-linked firms

imageEconomy3 hours ago (Aug 05, 2020 06:30PM ET)

(C) Reuters. FILE PHOTO: Chinese and U.S. flags flutter near The Bund in Shanghai

WASHINGTON (Reuters) – A U.S. Republican congressman urged the Trump administration to review millions in coronavirus stimulus loans paid to U.S. companies with ties to China’s aviation and defense industries, amid deepening tensions between Beijing and Washington.

The letter by Jim Banks is addressed to Small Business Administrator Jovita Carranza and Treasury Secretary Steven Mnuchin, tasked with overseeing the Paycheck Protection Program.

That program, which loans money to firms to encourage them to retain employees during the coronavirus-related shutdown, has drawn fire for technical glitches, a lack of transparency and for doling out funds to large companies with ample access to credit.

Banks called for the probe, citing loans to companies whose Chinese parents, including aircraft manufacturer Aviation Industry Corporation of China (AVIC) [SASADY.UL] and weapons maker China Aerospace Science and Industry Corporation (CASIC), were recently designated as owned or controlled by the Chinese military by the U.S. Defense Department.

“China’s activity in … defense and aerospace, presents a direct and present threat to America’s national security. These companies’ entire mission is to make America less secure,” Banks wrote in the letter dated Wednesday. “A review of the … loans to firms affiliated with the PLA is warranted.”

The companies include Continental Aerospace Technologies Inc, which is owned by AVIC and received $5 million to 10 million from the program. It also includes Honghua America LLC, the U.S.- based subsidiary of Chinese drill rig manufacturer Honghua Group, which is in turn owned by CASIC. Honghua received up to $1 million, according to SBA data.

Continental and Honghua did not immediately respond to requests for comment and the SBA declined to comment. A Treasury Department representative confirmed receipt of the letter but declined to comment further.

Banks also cites a report suggesting that over 125 Chinese companies obtained up to $419 million through the lending program.

“It’s unacceptable for the Chinese Communist Party to receive taxpayer funds intended to relieve American businesses from a crisis that the CCP significantly worsened,” he added.

U.S. lawmaker calls on Trump administration to review stimulus loans to China-linked firms

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