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The Electric Quarterly: China Inc. in the U.S.?

The Electric Quarterly: China Inc. in the U.S.?

The Biden Administration has allocated about $100 billion to establish a U.S. battery supply chain and thwart a Chinese stranglehold on the industry. Will the U.S. now allow Chinese companies to open factories in the U.S.? This week, we look at an attempt by Chinese battery manufacturer Gotion High-Tech to build a gigafactory in a Michigan county. 

For 15 months, Randy Thelen, an economic development official for Western Michigan, negotiated with Chinese battery manufacturer Gotion High Tech, which was hunting for a U.S. site for a giant factory. With the potential for $2.4 billion in capital spending and 2,350 jobs, the stakes were high for the region, located a 3-hour drive from Detroit and home to little of the auto industry that dominates the state’s economy. Gotion was blowing hot and cold in the talks, but finally homed in on a 523-acre plot near Ferris State University.

In a packed public meeting last week, Thelen and a Gotion executive disclosed their months of hush-hush talks before political leaders of two local townships and the county, gathered to debate whether to grant the company a $2 billion, 30-year property tax exemption on the plot. After two hours of discussion, the three boards unanimously approved the abatement, which now goes for final approval by the Michigan Strategic Fund. If it’s approved there and Gotion proceeds, the plant would manufacture chemical precursors used to make battery electrodes. The cathode and anode precursors would then go to another planned Gotion plant in the U.S., the details of which weren’t disclosed.

Leaders of the local governments and Gotion went silent after the move and did not respond to emails and calls. That’s understandable. The deal is potentially fraught, approved just a month after President Joe Biden signed the Inflation Reduction Act, which allots $100 billion to reduce U.S. dependence on China’s dominant battery industry and establish a U.S. supply chain. In an executive order also aimed at China, Biden last month strengthened federal authority to investigate and potentially block foreign investment in U.S. technology companies. The Gotion deal looks like it’s safe on that score: It involves a Chinese company bringing its know-how to the U.S., not siphoning American technology to China. Yet anti-China fervor runs high in Washington, and the deal could end up under scrutiny. The Treasury Department, which oversees foreign investment, did not immediately respond to an email.

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