Chinese companies hoping to expand in the United States and create jobs face uncertainty and suspicion

WASHINGTON — In 2022, Gov. Gretchen Whitmer welcomed a Chinese lithium-ion battery company’s plan to build a $2.36 billion factory and bring a couple thousand jobs to Big Rapids, calling it the “largest economic development project in history” in Northern Michigan.

But now the Gotion High-Tech project is in the crosshairs of some US lawmakers and local residents.

Leading the charge is Republican Rep. John Moolenaar of Michigan, chairman of the House Select Committee on China, who accuses the Chinese company of ties to forced labor and says he fears it could spy for Beijing and work to extend China’s influence in the American heartland. Gotion rejects the allegations.

“I want to see more jobs and investment in this area, but we should not welcome companies that are controlled by people who see us as the enemy and we should not allow them to build here,” Moolenaar said at a recent roundtable discussion in Michigan.

Lured by the vast U.S. market, Chinese companies are flocking to the country with money, jobs and technology, only to be met with growing suspicion at a time of heightened U.S.-China rivalry that has spilled over into the business world.

U.S. wariness of China, coupled with Beijing’s desire to protect its technological competitiveness, threatens to rupture ties between the world’s two largest economies. That could hurt businesses, workers and consumers, which some warn could undermine the economic foundation that has helped stabilize relations.

“This is a lose-lose situation for both countries,” 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 United States and China, and the U.S. government prioritizes ‘national security’ over economic interests when dealing with China.”

Lizhi Liu, an associate professor of business at Georgetown University, said the trend, coupled with declining U.S. investment in China, could harm China-U.S. relations.

“Strong investment ties between the two nations are crucial not only for economic reasons but also for security reasons, as intertwined economic interests reduce the likelihood of major conflict or even war,” he said.

But U.S. lawmakers believe the stakes are high. Senator Marco Rubio told a hearing in July that China is not only a military and diplomatic adversary of the United States, but also a “technological, industrial and commercial” opponent.

“Technological and industrial superiority has always been a precursor to global power,” said Rubio, a Florida Republican, who argued that U.S. foreign policy must take into account the country’s trade, commercial and technological interests.

The bipartisan House Select Committee on China has warned that widespread U.S. adoption of Chinese-developed technologies could threaten long-term U.S. technological competitiveness.

American public sentiment against Chinese investment began building during President Barack Obama’s administration in a rejection of globalization and amplified after President Donald Trump took office, said Yilang Feng, an assistant professor of business at the University of Illinois at Urbana-Champaign who studies economic nationalism and resistance to foreign direct investment in the United States.

“The scale has increased, as has the intensity,” Feng said.

As President Joe Biden’s administration seeks to revive American manufacturing and boost 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 while campaigning against the Gotion project in his congressional district in a state that is critical in the presidential election.

Whitmer’s office has declined to comment on the project. The Michigan Economic Development Corporation told The Associated Press it has received “bipartisan support at all levels” to move forward with the project, which will create up to 2,350 jobs.

Danielle Emerson, a MEDC spokeswoman, said the project is “critical to bringing the battery supply chain onshore and creating thousands of good-paying local jobs, reducing our reliance on overseas disruptions and further protecting our national security.”

However, local residents in Green Charter Township revolted against the project over its connections to China last year, when they ousted five officials who supported it in a recall election.

Also in Michigan, a partnership between Ford and CATL, another Chinese battery maker, has been scaled back following criticism over CATL’s possible connections to China’s ruling party.

In Worcester, Massachusetts, Chinese biotech company WuXi Biologics halted construction of a large facility just weeks after lawmakers introduced a bill that, over data security concerns, would prohibit U.S. entities that receive federal funding from doing business with several China-linked companies, including WuXi Biologics.

John Ling, who has helped South Carolina and Georgia attract Chinese companies for nearly two decades, said geopolitics has been hampering the process in recent years. Chinese companies are less likely to consider South Carolina after the state senate passed a bill last year banning Chinese citizens from buying property, though the bill has not yet been approved by the state legislature, Ling said.

Data from the US Bureau of Economic Analysis show that China’s total investment in the US fell to just under $44 billion in 2023 from a peak of $63 billion in 2017, although first-year spending rose to $621 million in 2023 from $531 million in 2022, but still sharply below the 2016 peak of $27 billion. The figures include acquisitions, new business establishments and expansions.

Thilo Hanemann, a partner at research provider Rhodium Group, said there has been an uptick in new Chinese investment in the United States after a significant decline, driven by the end of disruptions during the COVID-19 pandemic and the need for Chinese companies to go abroad when margins at home are shrinking.

U.S. officials are concerned that Chinese companies, which are dependent on the ruling Chinese Communist Party, could pose national security risks, he said, while Beijing is worried that foreign investment could lead to a drain of Chinese technology.

“Chinese companies are caught between a rock and a hard place, having to deal with both national governments that prevent them from going abroad and governments in the United States or host countries that have concerns,” Hanemann said.

However, Chinese investors may still find the U.S. market attractive “because of its high consumption levels and judicial independence,” said Liu of Georgetown University.

In 2022, Michigan beat out several other states in the pursuit of Gotion, according to the governor’s office. Eager to revive its manufacturing base, the state offered a package of incentives, including $175 million in grants and approval of a new zone that could save the company $540 million. Local municipalities approved tax abatements for Gotion to build a factory to make components for electric vehicle batteries.

In Green Charter Township, the new board dropped its support for the project and rescinded an agreement that would extend the water supply to the factory site, only to be rebuked by a U.S. district judge.

The plant’s future remains uncertain as Moolenaar is gathering support for his bill that would bar Gotion from receiving federal subsidies. He has accused the company of using forced labor, after congressional staff discovered ties between the company and the Xinjiang Production Construction Corps, a paramilitary group sanctioned by the U.S. Department of Commerce for its involvement in the practice of forced labor in China.

Chuck Thelen, vice president of manufacturing for Gotion North America, called allegations of forced labor “categorically false and clearly intended to deceive” at recent town hall meetings.

By allowing the Chinese company to build a plant in Michigan, it would help “bring to the country a technology that has been vastly outperformed” outside the United States, he said.

This is not a “Chinese invasion,” Thelen said. “It is a global strategy, an energy solution.”