WASHINGTON (AP) — It was touted as the “largest economic development project ever” in Northern Michigan when Gov. Gretchen Whitmer welcomed a Chinese lithium-ion battery company’s plan to build a $2.36 billion factory and bring a few thousand jobs to Big Rapids in 2022.
But now Gotion High-Tech’s project is coming under scrutiny from some US lawmakers and residents.
Leading the charge is Michigan Republican Rep. John Moolenaar, chairman of the House Select Committee on China. He accuses the Chinese company of having ties to forced labor and says he fears the company could be spying for Beijing and working to expand China’s influence in the heart of the United States. Gotion denies the allegations.
“I want to see more jobs and investment in this region, but we must not welcome companies controlled by people who view us as enemies, and we should not allow them to build here,” Moolenaar said recently at a panel discussion in Michigan.
Attracted by the enormous US market, Chinese companies are coming to the US with money, jobs and technology. But they are facing growing distrust amid a deepening rivalry between the US and China that has now also engulfed the business world.
U.S. caution toward China and Beijing’s desire to protect the country’s technological competitiveness threaten to tear apart relations between the world’s two largest economies, hurting businesses, workers and consumers and, some warn, undermining the economic foundation that helped stabilize relations.
“This is a lose-lose situation,” Zhiqun Zhu, a professor of political science and international relations at Bucknell University, said in an email. “The main reason is the rivalry between the US and China, and the US government prioritizes ‘national security’ over economic interests when dealing with China.”
Lizhi Liu, an assistant professor of business administration at Georgetown University, said this trend, along with the decline in U.S. investment in China, could damage Sino-U.S. relations.
“Strong investment relations between the two countries are crucial not only for economic reasons, but also for security reasons, as the intertwining of economic interests reduces the likelihood of major conflict or even war,” she said.
But US lawmakers are convinced that much is at stake. Senator Marco Rubio said at a hearing in July that China is not only a military and diplomatic adversary for the US, but also a “technological, industrial and commercial” opponent.
“Technological and industrial superiority has always been a harbinger of global power,” said Rubio, a Republican from Florida, arguing that U.S. foreign policy should take into account the country’s commercial, trade and technological interests.
The bipartisan House Select Committee on China warned that large-scale adoption of Chinese technologies in the United States could threaten the country’s long-term technological competitiveness.
Public sentiment in the U.S. against Chinese investment began building during President Barack Obama’s administration as a countermovement to globalization, and was further strengthened after President Donald Trump took office, says Yilang Feng, an assistant professor of business administration at the University of Illinois at Urbana-Champaign who studies economic nationalism and resistance to foreign direct investment in the U.S.
“The scale has increased, and with it the intensity,” Feng said.
While President Joe Biden’s administration seeks to revitalize America’s manufacturing industry and strengthen the country’s technological capabilities, many politicians believe Chinese companies should be left out.
“Can you imagine working for an American company that is working tirelessly to develop battery technology and then finding out that your tax dollars are being used to subsidize a competitor from China?” Moolenaar said as he campaigned against the Gotion project in his congressional district in a state crucial to the presidential election.
Whitmer’s office declined to comment on the project. The Michigan Economic Development Corporation told the Associated Press it had received “bipartisan support at all levels” to move forward with the project, which will create up to 2,350 jobs.
MEDC spokeswoman Danielle Emerson said the project was “critical to anchoring the battery supply chain domestically and creating thousands of good-paying local jobs, reducing our dependence on foreign disruption and further protecting our national security.”
However, Green Charter Township residents rebelled against the project last year because of its Chinese ties and fired five officials who had supported the project in a recall election.
Also in Michigan, a partnership between Ford and CATL, another Chinese battery maker, was scaled back after facing backlash over CATL’s possible ties to China’s ruling party.
In Worcester, Massachusetts, Chinese biotechnology company WuXi Biologics halted construction of a major facility weeks after Congress introduced a bill that would prohibit U.S. companies receiving federal funds from doing business with a number of Chinese-affiliated companies, including WuXi Biologics, on privacy grounds.
John Ling, who has been helping South Carolina and Georgia attract Chinese companies for nearly two decades, says geopolitics have increasingly gotten in the way in recent years. Chinese companies are considering South Carolina less after the Senate passed a bill last year banning Chinese citizens from buying property, although the bill has not yet passed the state legislature, Ling said.
Data from the U.S. Bureau of Economic Analysis shows that China’s total investment in the U.S. has fallen from a peak of $63 billion in 2017 to just under $44 billion in 2023. However, spending in the first year rose to $621 million in 2023, which, while up from $531 million in 2022, is a drastic decline from the peak of $27 billion in 2016. The figures include acquisitions, fresh ventures and expansions.
Thilo Hanemann, partner at research services provider Rhodium Group, said there has been an upturn in fresh Chinese investment in the US after a edged decline, triggered by the end of disruptions during the Covid-19 pandemic and the need for Chinese companies to go abroad as margins at home shrink.
U.S. policymakers are concerned that Chinese companies beholden to China’s ruling Communist Party could pose a national security risk, he said, while Beijing is worried that foreign investment could lead to an outflow of Chinese technology.
“Chinese companies are in a dilemma: on the one hand, they have to deal with the domestic government, which prohibits them from expanding abroad, and on the other hand with the USA or the governments of the host countries, which have concerns,” says Hanemann.
Nevertheless, the US market could still be attractive to Chinese investors “due to its high level of consumption and judicial independence,” says Liu of Georgetown University.
In 2022, Michigan beat out several other states to lure Gotion, according to the governor’s office. The state, looking to revitalize its manufacturing base, offered an incentive package, including $175 million in grants and approval of a fresh zone that could save the company $540 million. Local communities approved tax breaks for Gotion to build a factory to make components for electric vehicle batteries.
In the Township Green Charter, the fresh board withdrew its support for the project and revoked an agreement to provide water to the factory site, but a U.S. district judge rebuked that.
The plant’s future remains uncertain as Moolenaar gathers support for his bill that would cut off federal subsidies to Gotion. He has accused the company of using forced labor after congressional staff discovered links between the company and the Xinjiang Production Construction Corps, a paramilitary group sanctioned by the U.S. Commerce Department for its involvement in forced labor in China.
Chuck Thelen, vice president of manufacturing for Gotion North America, called the forced labor allegations at recent town hall meetings “categorically false and clearly intended to deceive.”
Allowing the Chinese company to build a factory in Michigan would lend a hand “bring a technology into the country that has made tremendous progress outside the United States,” he said.
It is not “a Chinese invasion,” Thelen said. “This is a global approach, an energy solution.”
