China fuels debate in Richmond after Youngkin slams door on battery plant

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China fuels debate in Richmond after Youngkin slams door on battery plant
Story by Gregory S. Schneider, Laura Vozzella • 8h ago

RICHMOND — Gov. Glenn Youngkin (R) caught many lawmakers off guard last month when he raised alarms about China at the start of a General Assembly session in which abortion, gun control and tax cuts had been set to dominate debate.

China fuels debate in Richmond after Youngkin slams door on battery plant
China fuels debate in Richmond after Youngkin slams door on battery plant
© Steve Helber/AP
Republicans quickly pivoted, introducing bills aimed at thwarting Chinese interests and defending Youngkin’s decision to pull Virginia out of the running for a $3.5 billion Ford plant in an economically distressed area near Danville because the electric-vehicle battery factory would use Chinese technology. Youngkin has since used video of his General Assembly speech in a campaign-style online ad proclaiming that “Made in Virginia cannot be a front for the Chinese Communist Party.”

It seemed like a perplexing stance for a former co-CEO of the Carlyle Group private equity fund who made millions off deals with Chinese companies and declared in a 2019 interview: “We are long-term bullish on China.” As governor, he regularly proclaims that “Virginia is open for business.”

Youngkin says he blocked Ford battery plant on China concerns

Democrats say the reason for the China emphasis is clear: raising Youngkin’s national political profile at a time when he is mentioned as a potential 2024 presidential candidate. While Youngkin has said he’s flattered by the attention but focused on Virginia, he has met with national fundraisers, formed a national political action committee and regularly raises issues aimed at the conservative GOP base, such as limiting the rights of transgender students in schools.

“The only plausible explanation for the rejection of this [Ford plant] project is it allows the governor to participate in the China-bashing sweepstakes in the Republican presidential primary with Ron DeSantis and Greg Abbott,” state Sen. Scott Surovell (D-Fairfax) said, invoking the governors of Florida and Texas, respectively, who are also in the 2024 mix.

Republicans counter that recent events such as the downing of a Chinese spy balloon off the coast of South Carolina have shown that Youngkin is right to raise the alarm about China’s threat to domestic interests. But many of the GOP bills — including measures to ban state agencies from doing business with China and to require that schools teach children the evils of communism — were watered down by Republicans and died in the Democratic-controlled state Senate.

And details of this week’s announcement that Ford decided to put the plant and its 2,500 jobs in Michigan challenged Youngkin’s assertions that the project was simply a “front” or “Trojan horse” for China, as he has said in public comments.

Youngkin has cited earlier financial news reports that Ford was structuring its deal with its Chinese partner — Contemporary Amperex Technology Co. Limited, or CATL, which is the world’s largest battery manufacturer — to take advantage of U.S. government tax incentives. Those reports said CATL would operate the plant — something Youngkin claimed Ford had not “fully disclosed … during preliminary work” on the deal, in remarks at a public appearance in January.

Ford said this week, though, that a wholly owned subsidiary of Ford will own the plant and employ the workers, and that CATL will simply license its lithium iron phosphate battery technology to the automaker. CATL, which is a publicly traded company, will provide services as needed on a contract basis and will not receive any U.S. tax dollars, Ford said.

But Youngkin did not back down when asked whether he now has a different understanding of the project.

“All they have done is continue to massage the messaging around the fact that the technology at the heart of this battery is from Chinese Communist Party-influenced CATL,” Youngkin told reporters Thursday at an event in Richmond to tout his state budget proposals. He called the project “an economic arrangement engineered to tap into federal government subsidies paid for with taxpayer money that is going to economically benefit the Chinese Communist Party.”

Youngkin went on to say that China is “manipulating Ford to do something to get access to this market and that is what’s wrong.” CATL is a major supplier to electric vehicle manufacturers worldwide, including Honda and Tesla. The New York Times reported in December 2021 that the company is not owned by the Chinese government, according to its filings, but that major shareholders have government connections.

Ford spokeswoman Melissa Miller pushed back against Youngkin’s characterization. “Here’s the truth: Ford alone is investing $3.5 billion in and will own and run the plant. Ford will hire and employ the team that will build these advanced batteries, using technology licensed from CATL. The batteries will be installed by Ford people into Ford’s breakthrough electric vehicles at Ford plants in North America,” she said via email.

She added that the project “is good for the country, good for the planet and good for Ford’s business. We’re creating 2,500 new U.S. jobs, while helping to strengthen domestic manufacturing and supply chains and reduce carbon emissions.”

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Local officials in the Danville area where the plant was considering a site have kept mum about the outcome, citing nondisclosure agreements signed during negotiations. But the area is desperate for jobs after losing textile and furniture manufacturing industries in recent decades. Sen. Frank Ruff (R-Mecklenburg) said he has “mixed emotions” about Youngkin’s decision — sorry to see the jobs go elsewhere but skeptical that any deal involving China would be in the region’s long-term best interests.

House Minority Leader Del. Don L. Scott Jr. (D-Portsmouth) needled Youngkin about the project in a floor speech last week: “I have been waiting for this day for about a year and a half now. It is the first day that I can give a heartfelt congratulations to our governor, Gov. Youngkin. He has completed his mission of job creation, creating 2,500 new jobs — in Michigan.”

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House Majority Leader Del. Terry Kilgore (R-Scott) responded by accusing Michigan of paying $400,000 per job for the project — an apparent reference to the $1 billion in incentives over 15 years that state approved, including tax breaks.

“We would not have been successful in that bidding war had it come to that,” Kilgore said.

Republicans accused Democrats of being too flippant in their dismissal of the idea of a Chinese threat. Several have pointed out that prominent Virginia Democrats with hefty foreign security credentials — namely Sen. Mark R. Warner, chairman of the Senate Intelligence Committee, and Rep. Abigail Spanberger, a former CIA agent — have voiced broad concerns about China.

“I just don’t find it to be good policy to play political gamesmanship with national security,” Del. Emily M. Brewer (R-Isle of Wight) said Thursday, a day after Senate Democrats killed a bill of hers that would have prohibited state agencies from entering into contracts with any company owned or operated by a foreign adversary.

Brewer had initially targeted the bill specifically at the Chinese Communist Party, but the Republican majority in the House broadened the language to cover “foreign adversaries” as designated by the federal government. With that wording, Brewer’s bill had won unanimous support in the House.

Democrats who control the Senate, though, questioned whether the state could determine which companies are controlled by the Chinese government. And Democrats have also pointed out that China is one of Virginia’s biggest trading partners — one of the top clients of the Port of Virginia in Norfolk, for instance, and one of the top buyers of the state’s metallurgical coal.

Brewer said in an interview that she did not intend her legislation to target one of the biggest employers in her home district: Smithfield Foods, which is owned by the Chinese conglomerate WH Group.

“Anything we can do to protect our agricultural land and interest is good policy,” she said. But “Smithfield Foods is a great employer. I think that they operate the same as they did before [being purchased by the foreign company], and I think that’s a different instance.” WH Group is based in Hong Kong and not owned by the Chinese government.

Some Democrats have raised concerns that all the attention on China could stoke anti-Asian sentiment.

“I think China-bashing is a hot meme in the Republican Party right now … but what really worries me is it could lead to anti-Asian xenophobia or racism,” Surovell said. “We locked up thousands of Japanese during World War II and I worry that these kinds of actions that don’t differentiate between a government and a people can take us to a dark place.”

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The Senate engaged in a long debate Friday on a House bill prohibiting land sales to foreign adversaries — modified from originally banning any foreign government — despite having debated and passed an identical Senate measure earlier in the session.

Democrats opposed to the bills said they were written too broadly, suggesting that it might be appropriate to ban sales of land near military bases or other sensitive sites, but not all sales. They also noted how deeply intertwined the U.S. economy is with China’s.

“I don’t know how serious we are about calling China an enemy,” Senate Majority Leader Richard L. Saslaw (D-Fairfax) said, adding that more than 20 percent of U.S. imports come from China.

Sen. Richard Stuart (R-King George), who’d sponsored the Senate bill, noted that it would not ban all foreign buyers, only “people who want to do us harm, people who want to steal our technology and poison our food.” When a Democrat challenged Stuart to provide one example of a foreign land purchase near a Virginia military base, he could not.

Nonetheless, Stuart’s bill has passed both chambers and is on its way to Youngkin’s desk.

So is a bill from Sen. Bryce Reeves (R-Spotsylvania) that directs the state’s economic development arm to study establishing a Virginia trade office in Taiwan, the self-governing island that claims independence from China.

The measure received unanimous support in the House and Senate and drew Taiwan’s de facto ambassador in the U.S., Hsiao Bi-khim, to both chambers Thursday. She also met privately with Youngkin.

Still working their way through the legislature are a pair of Republican-sponsored bills — House Bill 1911 and Senate Bill 1002 — to prohibit government employees from accepting gifts worth more than $100 from “foreign countries of concern.”

Sen. Mamie E. Locke (D-Hampton) helped defeat another Reeves bill that would have prevented public colleges and universities from participating in Chinese-funded grants and to disclose any payments from foreign governments. It was rejected on a party-line vote in a Senate committee.

“There are all kinds of collaborations that go on between universities,” said Locke, a retired Hampton University professor. “I mean if you stop China, what’s next? … So are we going to stop all kinds of intellectual work that takes place at the university level? … I mean, it’s just getting out of hand as far as I’m concerned.”