A Chinese company acquired an insurance provider for CIA operatives – a segment of Beijing’s trillion-dollar expenditure frenzy.

Since 2018, the United States has been intensifying its regulations to thwart its adversaries from investing in critical sectors, impeding investments in areas ranging from semiconductors to telecommunications.

However, the regulations were not always this stringent.

In 2016, Jeff Stein, a seasoned journalist focused on the US intelligence sector, received a tip: a small insurance firm that specialized in providing liability coverage to FBI and CIA agents had been acquired by a Chinese organization.

“Someone with firsthand knowledge contacted me and said, ‘Are you aware that the insurance firm insuring intelligence personnel is now under Chinese ownership?'” he recalls. “I was shocked!”

In 2015, the insurer, Wright USA, was quietly bought by Fosun Group, a private enterprise believed to have strong ties to China’s ruling class.

The immediate concerns in the US were evident: Wright USA had access to the personal details of numerous top-secret service agents and intelligence officials. No one in the US could ascertain who could potentially access that sensitive information given that the insurer and its parent company, Ironshore, were now Chinese-owned.

Wright USA was not a singular incident.

The BBC has gained exclusive early access to fresh data indicating the flow of Chinese state funds into affluent nations, acquiring assets in the US, Europe, the Middle East, and Australia.

In recent decades, China has emerged as the largest foreign investor globally, enabling it to potentially dominate critical industries, secrets, and essential technologies. Beijing regards details regarding its international spending – including expenditure amounts and locations – as classified information.

Yet concerning the sale of Wright USA, Stein comments: “There was nothing illegal involved; everything was quite transparent, in that sense. However, due to the deep connections in Beijing, you are essentially handing that [information] over to Chinese intelligence.”

The Chinese government played a role in the transaction: new data obtained by the BBC shows that four Chinese state banks facilitated a $1.2bn (£912m) loan, funneled through the Cayman Islands, to enable Fosun’s acquisition of Wright USA.

Stein’s account was published in Newsweek magazine, prompting a quick response from Washington. This initiated an investigation by the US Treasury Department’s Committee on Foreign Investment in the United States (CFIUS). Shortly thereafter, the company was sold again—this time back to American ownership. It remains unclear who commanded that sale.

Fosun and Starr Wright USA, the current owner of Wright USA, did not reply to a BBC inquiry for comments.

High-ranking US intelligence sources validate that the Wright USA transaction was one of several instances that motivated the first Trump administration to tighten its investment regulations in 2018.

Few could grasp back then that this state-backed spending by China seemed to be a part of a grander strategy from Beijing aimed at investing and acquiring assets across every continent.

“For numerous years, we believed that nearly all of China’s financial outflows were directed towards developing nations,” states Brad Parks, executive director of AidData. “Thus, it was a considerable surprise to us when we realized that in reality, hundreds of billions of dollars were flowing into nations like the US, the UK, and Germany, occurring right under our noses.”

AidData, a research initiative located in Virginia, specializes in monitoring how governments allocate their finances beyond their borders. It operates at William & Mary, one of America’s historic universities, receiving funding from governments and charitable organizations globally. AidData has focused significantly on China over the past 12 years.

A four-year project involving 120 researchers has culminated in the first known attempt to compile all of China’s state-backed investments worldwide. This group’s entire dataset is open-source, although the BBC received exclusive early access.

AidData’s primary revelation: Since 2000, Beijing has disbursed $2.1 trillion outside its borders, with a roughly equal distribution between developing nations and wealthy countries.

“China possesses a type of financial system that the world has never encountered,” states Victor Shih, director of the 21st Century China Centre at the University of California San Diego. He notes that China has the largest banking system worldwide, surpassing the combined totals of the US, Europe, and Japan.

This immense scale, combined with the extent of control exerted by Beijing over state banks, provides it with unparalleled capabilities.

“The government regulates interest rates and directs credit allocation,” Mr. Shih explains. “Such control is attainable only through very stringent capital controls, which no other nation could sustain long-term.”

Some of the investments in affluent economies seem to have been undertaken to ensure profitable returns. Others align with Beijing’s strategic goals, outlined a decade prior in a significant government initiative known as Made in China 2025.

This initiative delineated a specific agenda for attaining dominance in ten advanced industries, including robotics, electric vehicles, and semiconductors by this year.

Beijing sought to finance substantial investments abroad to facilitate the return of pivotal technologies to China.

Global apprehension regarding the plan led China to cease public references to it, yet Victor Shih asserts it “remains very much alive” as a guiding strategy.

“Various plans continue to be published,” he notes, “including those for artificial intelligence and smart manufacturing. However, the foundational plan is the 15th five-year plan.”

During a pivotal Communist Party meeting last month, China’s leaders established the aim of expediting “high-level scientific and technological self-sufficiency and advancement” by 2030.

AidData’s latest database reveals overseas expenditures by the state aligning with the ten sectors prioritized in 2015. Previous BBC reports corroborated how the Chinese government financed the acquisition of a UK semiconductor firm.

Following the apparent lack of awareness regarding such deals like the sale of the insurer, Wright USA, the United States, the UK, and numerous other major economies have strengthened their investment scrutiny procedures.

AidData’s Brad Parks notes that affluent nations initially failed to recognize that Chinese investments across various countries were components of Beijing’s comprehensive strategy.

“At first glance, they assumed it was simply a collection of individual initiatives from Chinese firms,” he states. “What they’ve gradually understood is that Beijing’s party state is strategically providing the finances to enable this.”

Nevertheless, it’s crucial to emphasize that such investments and acquisitions are lawful, even if sometimes obscured through shell companies or funneled through offshore accounts.

“The Chinese government has consistently mandated that Chinese enterprises operate overseas in strict compliance with local laws and regulations, and has continually endorsed their international cooperation based on mutual advantage,” remarked the Chinese embassy in London to the BBC.

“Chinese companies not only deliver quality goods and services globally but also significantly contribute to local economic growth, social progress, and job creation.”

Shifts in China’s spending habits are evident, as indicated by the AidData database, which reveals state funds are now flowing to nations that have opted to embrace Chinese investments.

In the Netherlands, there has been discussion surrounding Nexperia, a troubled semiconductor firm owned by China.

This company is also featured in the AidData database – with Chinese state banks providing $800m in financing to assist a consortium in acquiring Nexperia in 2017. Two years later, the ownership shifted to another Chinese firm – Wingtech.

The strategic importance of Nexperia was emphasized when Dutch authorities seized control of the firm’s operations in September, citing concerns that Nexperia’s technology could be disseminated to other sectors of the larger Wingtech entity.

This decisive action resulted in Nexperia being effectively bisected – separating Dutch activities from Chinese manufacturing.

Nexperia informed the BBC that its Chinese operations had ceased functioning within Nexperia’s governance structure and had disregarded directives.

The company expressed its welcome for China’s pledge to recommence exports of its essential chips to global markets.

Xiaoxue Martin, a research fellow at the Clingendael Institute in The Hague, noted that many in the Netherlands were taken aback by the government’s approach to the case, as they have historically handled their relations with China with care.

“We are a nation that has consistently benefited from open trade, free commerce. This situation truly reflects the commercial aspect of Dutch policy,” she remarks. “Only recently did we discover that, in fact, geopolitics necessitates more industrial strategy, including investment scrutiny, when previously there was minimal focus on such matters.”

Xiaoxue Martin emphasizes that there is a risk of oversimplifying the narrative, making China appear as a unified entity with a singular intention to subvert Europe and the United States, which clearly isn’t the case.

“Most businesses, particularly if they are privately owned, aim merely to generate profits. They desire to be treated like any ordinary company and not face the negative perceptions they sometimes encounter in Europe.”

If China is significantly ahead of its competitors in plans to penetrate sensitive sectors, does that imply the contest for supremacy in these fields is already concluded?

“Not at all! There will be multiple rounds,” asserts Brad Parks. “Numerous Chinese corporations continue to pursue these types of acquisitions. The distinction now is that they encounter increased scrutiny for vetting these foreign capital sources.

“Thus, China is making its move. It is no longer the follower; it is the frontrunner. It is setting the pace. However, what I foresee is that many G7 nations will shift from being reactive to proactive.

“They are transitioning from defense to offense.”