WASHINGTON — It was billed as the “largest economic development project ever” in Northern Michigan when Gov. Gretchen Whitmer in 2022 welcomed a Chinese lithium-ion battery company’s plan to build a $2.36 billion factory and bring several thousand jobs to Big Rapids.
But now the project by Gotion High-Tech is in the sights 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 has accused the Chinese company of ties to forced labor and said he fears the company could be spying for Beijing and working to expand China’s influence in the American heartland. Gotion rejects the allegations.
“I want to see more jobs and investment in this area, but we cannot welcome companies that are controlled by people who see us as the enemy and we cannot allow them to build here,” Moolenaar said recently during a roundtable discussion in Michigan.
Lured by the large American market, Chinese companies come to the United States with money, jobs and technology, but are met with growing distrust at a time when the US-China rivalry is intensifying and extending to the business world.
U.S. caution toward China, combined with Beijing’s desire to protect its technological competitiveness, threatens to sever ties between the world’s two largest economies. That could hurt businesses, workers and consumers, and some say undermine the economic foundation that has helped stabilize the relationship.
“This is a lose-lose scenario for the two countries,” Zhiqun Zhu, a professor of political science and international relations at Bucknell University, said in an email. “The main reason is the U.S.-China rivalry, and the U.S. government prioritizing ‘national security’ over economic interests in dealing with China.”
Lizhi Liu, an assistant professor of business administration at Georgetown University, said this trend, coupled with the decline in US investment in China, could be damaging to China-US relations.
“Strong investment ties between the two countries are crucial not only for economic reasons, but also for security reasons, as intertwined economic interests reduce the likelihood of major conflicts or even war,” she said.
But U.S. lawmakers believe the stakes are high. Senator Marco Rubio said at a July hearing that China is not just a military and diplomatic adversary for the U.S., but also a “technological, industrial and commercial” adversary.
“The technological and industrial high ground has always been a precursor to global power,” said Rubio, a Florida Republican. He argued that U.S. foreign policy must take into account the country’s commercial, trade and technological interests.
The bipartisan House of Representatives Committee on China has warned that widespread adoption of Chinese-developed technologies in the US could jeopardize US technological competitiveness in the long term.
U.S. public sentiment against Chinese investment began building during President Barack Obama’s administration as a backlash against globalization and intensified after President Donald Trump came to power, said Yilang Feng, an assistant professor of business administration at the University of Illinois at Urbana-Champaign who studies economic nationalism and opposition to foreign direct investment in the U.S.
“The size has increased, and the intensity has increased,” Feng said.
As President Joe Biden’s administration seeks to revitalize U.S. manufacturing and expand American technological capabilities, many politicians believe Chinese companies should be kept out.
“Can you imagine working for an American company that works tirelessly to develop battery technology, only to find 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 constituency in a state crucial to the presidential election.
Whitmer’s office has declined to comment on the project. The Michigan Economic Development Corporation told The Associated Press that it has received “bipartisan support at all levels” to move forward with the project, which will create up to 2,350 jobs.
MEDC spokesperson Danielle Emerson said the project is “critical to the onshore battery supply chain and will create thousands of well-paying local jobs, reducing our reliance on overseas disruptions and further protecting our national security.”
However, local residents of Green Charter Township rebelled against the project last year over its Chinese connections, when they five officials removed who supported it in a recall election.
Also in Michigan, Ford’s partnership with CATL, another Chinese battery maker, has been scaled back after backlash over CATL’s possible ties to the Chinese ruling party.
In Worcester, Massachusetts, Chinese biotechnology company WuXi Biologics has halted construction on a large complex, weeks after lawmakers introduced a bill to ban U.S. entities that receive federal funds from doing business with several companies with ties to China, including WuXi Biologics, over data security concerns.
John Ling, who has helped South Carolina and Georgia attract Chinese companies for nearly two decades, said geopolitics has gotten in the way in recent years. Chinese companies have been less likely to consider South Carolina after the state Senate ruled last year a bill approved According to Ling, Chinese citizens are prohibited from buying real estate, even though the bill has not yet been approved by parliament.
Data from the US Bureau of Economic Analysis shows that China’s total investment in the US fell to just under $44 billion in 2023, from a peak of $63 billion in 2017, though first-year spending rose to $621 million in 2023, up from $531 million in 2022 but a dramatic drop from a peak of $27 billion in 2016. The figures include acquisitions, new business establishments and expansions.
Thilo Hanemann, a partner at research firm Rhodium Group, said there has been a rebound in new Chinese investment in the U.S. after a large decline caused by the end of disruptions during the COVID-19 pandemic and the need for Chinese companies to go abroad as margins shrink at home.
U.S. policymakers worry that Chinese companies, which depend on the ruling Chinese Communist Party, could pose a risk to national security, he said, while Beijing worries that foreign investment could lead to Chinese technology leaks.
“Chinese companies are caught between a rock and a hard place, dealing with both domestic governments that won’t let them go abroad and the U.S. or host countries that are concerned,” Hanemann said.
Still, Chinese investors may still find the US market attractive, “because of its high level of consumption and the independence of the judiciary,” said Liu of Georgetown University.
In 2022, Michigan beat out several other states in luring Gotion, according to the governor’s office. The state was looking to revitalize its manufacturing base and offered a package of incentivesincluding $175 million in subsidies and the approval of a new zone that could save the company $540 million. Local municipalities approved tax breaks for Gotion to build a factory to make components for electric vehicle batteries.
In Green Charter Township, the new board dropped support for the project and withdrew an agreement that would have brought water service to the plant site, only to are reprimanded by a US district judge.
The future of the factory remains uncertain as Moolenaar gathers support for his bill that would bar Gotion from receiving federal subsidies. He has accused the company of using forced labor after congressional aides uncovered ties between the company and Xinjiang Production Construction Corps, a paramilitary group sanctioned by the U.S. Department of Commerce for its involvement in China’s forced labor practices.
Chuck Thelen, vice president of manufacturing for Gotion North America, called the forced labor allegations during recent town hall meetings “categorically false and clearly intended to mislead.”
Allowing the Chinese company to build a factory in Michigan would help bring “a technology that has already been adopted in a huge way outside the U.S.,” he said.
It doesn’t amount to “a Chinese invasion,” Thelen said. “This is a global approach, an energy solution.”