Chinese banks invest in western nuclear weapons producers

Chinese financial institutions have made 663 million USD available to Western companies involved in the production, maintenance and modernisation of French, UK and US nuclear weapons, according to PAX latest update of the Don’t Bank on the Bomb report on worldwide investments in nuclear weapons producing companies.

By Wilbert van der Zeijden

The Chinese involvement in Western nuclear weapons producers is remarkable in the sense that the rationale for these nuclear arsenals is at least partly to threaten China. Chinese financial institutions are to a large extent state controlled, so indirectly,  the Chinese state is facilitating the ability of adversaries to threaten China with, well with obliteration really.

In total, 5 Chinese financial institutions are implicated in the report. Most money is made available to US companies through loans. Bank of China for example borrows 50 million USD to Textron, a producer of ICBM re-entry vehicles for US nuclear weapons. 76 million USD is made available by Industrial and Commercial Bank of China to Airbus, a producer of nuclear missiles for the French navy and air force. In total, the five institutions made 615 USD available through loans.

In addition to these loans, the Chinese State Administration for Foreign Exchange invested in the UK nuclear warhead producer Serco, by buying 48 million USD worth of shares.

Now, there’s something to be said for the idea that economic interdependence averts armed conflict. You’re less likely to want to destroy something if its going to cost you. So from a western perspective the Chinese involvement could make political sense. That said, it’s must be somewhat awkward when during a Serco shareholder meetings the representative of the Chinese State Administration of Foreign Exchange has to sit through an explanation of why Serco is proud to be involved in UK strategic deterrence.

From a Chinese perspective, I don’t see how the financial support for Western nuclear arsenals makes sense. The US, the UK and France have repeatedly stated that they regard ‘the rise of China’ as a security concern at best. The US policy of China Containment is not just an empty catchphrase for political purposes – it has arms and legs. The US provides extended nuclear deterrence to Japan and Korea and heavily supports their military forces, partly to contain China. The US keeps 78,000 military in the two countries as well and keeps open the possibility of re-deploying nuclear weapons in the region….

It takes all kinds to finance Western weapons of mass destruction. Strategic adversaries not excluded apparently.

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Excerpts from Don’t Bank on the Bomb on Chinese financial institutions

Bank of China (China)

Bank of China has made an estimated 312 million USD available to the nuclear weapons producers listed in this report since January 2011.

The table below provides an overview of the loans provided by Bank of China (China) to the nuclear weapon companies since January 2011.

Loans provided by Bank of China

Company

Subsidiary

Use of Proceeds

Total value (US$ mln)

Est. participation of this bank (US$ mln)

Date

Boeing

Boeing Co

General

2,300

42

11-May-2011

2,300

42

Finmeccanica

Finmeccanica SpA

Refinancing

3,001

106

09-Jul-2014

Honeywell International

Honeywell International Inc

General

4,000

73

18-Nov-2013

Textron

Textron Inc

Acquisition

500

50

23-Jan-2014

Source: Thomson ONE Banker, “Loans”, viewed August 2014.

Bank of Communications (China)

Bank of Communications has made an estimated 20 million USD available to the nuclear weapons producers listed in this report since January 2011.

The table below provides an overview of the loans provided by Bank of Communications (China) to the nuclear weapon companies since January 2011.

Loans provided by Bank of Communications

Company

Subsidiary

Use of Proceeds

Total value (US$ mln)

Est. participation of this bank (US$ mln)

Date

AECOM

AECOM Technology

Refinancing

750

20

07-Jun-2013

Source: Thomson ONE Banker, “Loans”, viewed August 2014.

Bank of East Asia (Hong Kong)

Bank of East Asia has made an estimated 50 million USD available to the nuclear weapons producers listed in this report since January 2011.

The table below provides an overview of the loans provided by Bank of East Asia (Hong Kong) to the nuclear weapon companies since January 2011.

Loans provided by Bank of East Asia

Company

Subsidiary

Use of Proceeds

Total value (US$ mln)

Est. participation of this bank (US$ mln)

Date

Textron

Textron Inc

Acquisition

500

50

23-Jan-2014

Source: Thomson ONE Banker, “Loans”, viewed August 2014.

Industrial and Commercial Bank of China (China)

Industrial and Commercial Bank of China has made an estimated 233 million USD available to the nuclear weapons producers listed in this report since January 2011.

The table below provides an overview of the loans provided by Industrial and Commercial Bank of China (China) to the nuclear weapon companies since January 2011.

Loans provided by Industrial and Commercial Bank of China

Company

Subsidiary

Use of Proceeds

Total value (US$ mln)

Est. participation of this bank (US$ mln)

Date

Airbus Group

EADS

General

4,345

76

14-Mar-2011

Boeing

Boeing Co

General

2,300

42

11-May-2011

2,300

42

11-May-2011

Honeywell International

Honeywell International Inc

General

4,000

73

18-Nov-2013

Source: Thomson ONE Banker, “Loans”, viewed August 2014.

State Administration for Foreign Exchange (China)

State Administration for Foreign Exchange has made an estimated 48 million USD available to the nuclear weapons producers listed in this report since January 2011.

The table below provides an overview of the nuclear weapon companies of which State Administration for Foreign Exchange (China) owns or manages 0.50% or more of the outstanding shares at the most recent available filing date.

Shareholdings managed by State Administration for Foreign Exchange

Company

Country

Total value (US$ mln)

% Outstanding

Filing date

Serco

United Kingdom

48

1.18

04-Nov-2013

Source: Thomson ONE Banker, “Share ownership: most recent filings”, viewed August 2014.

 

written by

Wilbert is a political scientist working for the PAX Security and Disarmament team since 2010 as researcher and campaigner. He primarily focusses on and frequently publishes and speaks about nuclear disarmament, European security, toxic remnants of war, international military infrasctructure and nuclear weapon free zones.

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