Virginia Governor Glenn Youngkin made national headlines recently when he rejected a Ford Motor
factory in a struggling part of the state, owing to Ford’s partnership with Contemporary Amperex Technology Co.
( CATL), a Chinese electric-vehicle battery manufacturer. Youngkin said the proposed factory was a “front for the Chinese Communist Party.” A month later, Michigan Governor Gretchen Whitmer celebrated that her state landed the plant, saying, “It’s thrilling, it’s thrilling.”
Who is right? The U.S. has always welcomed foreign direct investment (FDI). The U.S. is the largest destination globally for FDI at almost $5 trillion. FDI is a positive for the economy, creating 5.3 million jobs, boosting wages, and increasing productivity. It also — generally — strengthens U.S. manufacturing. But in the case of Ford and CATL, such benefits are unlikely. This joint-venture appears to be constituted to allow Ford to harvest the tax incentives provided in the Inflation Reduction Act without getting FDI or even any technological return. Read: Ford invests $3.5 billion in Michigan battery plant with Chinese partner’s technology Instead, China is deftly manipulating the American system of healthy competition into a a game that sets two states with differing political party leadership against one another, with important consequences. U.S. policymakers, regardless of party, need to think beyond the traditional paradigm that new factories always create good-paying jobs in their districts. China Inc. follows a different economic model: “socialism with Chinese characteristics.” This arrangement does not benefit the host nation, as we have seen repeatedly with China’s Belt and Road Initiative, which has left developing countries drowning in debt accrued for subpar infrastructure projects. China’s behavior on these projects has also been shown not only to have no economic development impact, but also to spread corruption around the community. With Ford, China is trying to penetrate America’s auto and EV battery market, and they would be doing so with hard-earned U.S. taxpayer dollars. Everyone should sit up and take notice: China is not our friend, as if that weren’t abundantly evident from the spy balloon that recently traversed the U.S. Congress and the Biden administration established tax incentives as a way to build domestic battery supply specifically to diversify away from overwhelming Chinese control of this technology. Department of Energy officials recently testified before the Senate, saying that their goal was to create battery and other energy supply chains with non-Chinese suppliers. Yet Ford and CATL are clearly trying to evade the law’s intent and ultimately force U.S. taxpayers to supportCATL. Meanwhile, Ford w …