Concerns About Chinese Influence on American Industry
For years, both Republicans and Democrats have been sounding alarms about China’s attempts to penetrate American industrial sectors. This raises not just concerns regarding espionage and potential sabotage, but also serious human rights issues tied to Chinese enterprises.
Recently, reports from Reuters highlighted the discovery of unauthorized cellular communication devices embedded in Chinese batteries, electric vehicle chargers, and solar panels already being used in the U.S.
In spite of persistent warnings, China has made significant inroads into the American battery market for electric vehicles, with some help from the Biden administration.
Gotion, a company linked to the Chinese Communist Party, is now constructing facilities in Michigan and Illinois. Local communities have expressed strong opposition to these developments. Former President Trump previously cautioned that Gotion’s factories could effectively place Michigan under the influence of China.
CATL, which the Pentagon has labeled a “Chinese military company,” is also setting up operations with Ford in Michigan and has a presence in several other states.
National security adviser Marco Rubio has previously sought to block CATL’s factory in Michigan, arguing that it would deepen the U.S.’s reliance on Chinese battery technology. He has also pointed out the troubling connections between forced labor in Xinjiang and CATL’s operations, urging the Department of Homeland Security to blacklist the company under the Uyghur Forced Labor Prevention Act.
Both Trump and Rubio are addressing a real issue, yet even with Republican control in Washington, these risks remain unchecked. A significant bill that aimed to address these problems recently failed in the House, leaving loopholes stemming from the Biden administration’s Inflation Reduction Act intact.
A current proposal in the Senate suggests that Chinese firms might still qualify for U.S. tax credits, particularly through advanced manufacturing incentives that lack stringent limitations.
If no amendments are made, American taxpayers could inadvertently fund activities related to the very companies deemed threats. Though Chinese firms can’t directly receive these tax credits, they could exploit joint ventures or similar setups to benefit from U.S. taxpayer money over the next few years.
Ford’s BlueOval Battery Park in Michigan stands to gain from such credits, given its reliance on CATL’s battery technology. Under the current arrangement, Ford pays for licensing CATL’s technology and services.
According to the House’s proposed legislation, U.S. companies that receive substantial support from barred foreign entities, like CATL, could still qualify for tax credits for at least two years. This means federal benefits flowing to Ford also indirectly support CATL.
Ford has been reluctant to share specific details about this partnership, leading to speculation about how much funding may actually be sent to Beijing.
The company is moving forward with the project, despite clear economic and national security warnings. Meanwhile, the Department of Defense has already banned procurement of batteries from CATL, Gotion, and several other Chinese firms. Now, it falls to the Senate to safeguard American interests against China’s efforts to dominate critical technologies.
A vital first step would be ensuring that all manufacturing projects in the U.S. that depend on Chinese-linked companies do not qualify for taxpayer credits, whether directly or indirectly.
This action could help curb further Chinese penetration into American industrial sectors, especially if U.S. companies partner with companies listed as Chinese military operations by the Pentagon.
During his first term, Trump highlighted the risks posed by China. In his second term, he’ll need to confront these challenges head-on using every resource at his disposal.
Fundamentally, the Senate should work towards enacting robust legislation that offers no advantages to China.
