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Democrats Kill Effort to Make It Harder For China-Linked Companies to Reap Taxpayer Cash

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Michigan Democrats shot down an effort to significantly expand the vetting process for China-tied companies seeking to cash in on state incentives earlier in May.

Republican lawmakers in both chambers of the state’s legislature pushed budget amendments that would have prohibited the use of state funds to subsidize corporations originating from adversarial countries like China, but neither amendment made it into the budgets that passed on May 9 and May 15. House and Senate Democrats leveraged their control of each chamber to shoot down both amendments.

Specifically, the House amendment would have required a review from the Committee on Foreign Investment in the United States (CFIUS) and various other prerequisites before officials can approve a Strategic Outreach and Attraction Reserve project for entities and individuals linked to nations of concern, a designation that includes China, according to the office of Michigan State Rep. Jay DeBoyer. After Democrats killed his amendment, DeBoyer said that they “chose to pass a budget that lacks crucial security enhancements, abuses taxpayer money, and puts us at risk.”

The presence of China-tied corporations receiving state subsidies has become an increasingly salient issue in Michigan’s local politics in recent months.

Gotion, a company looking to build a subsidized facility in the Grand Rapids area, is one such company that has drawn the ire of Michiganders and local officials. The state announced in October 2022 that it would be providing Gotion with incentives worth $715 million to attract its $2.4 billion factory to Michigan.

The company is tied to China and the Chinese Communist Party (CCP) via its parent company, Gotion High-Tech. The Daily Caller News Foundation has reported extensively on the company’s links to China and the CCP, which include Gotion High-Tech’s employment of more than 900 CCP members as of 2022 and the fact that a visiting delegation of CCP officials set up a talent recruitment work station at Gotion’s California headquarters in 2017.

While the amendment may have passed if Republicans could have peeled off a few Democrats to support it, Michigan’s House procedures effectively allowed Democratic leadership to gavel down the proposed amendment without a roll call vote, according to a Michigan House GOP source.

The Senate amendment, meanwhile, was more broad than the House amendment, and Democrats killed it by unanimous vote, according to Republican state Sen. Jonathan Lindsey, who backed the Senate amendment.

“The Democrats, in Michigan in particular, have repeatedly refused to take the most basic steps to address national security concerns related to these big corporate subsidies. I think the big takeaway from this is that we have raised these concerns for years,” Lindsey told the DCNF. “Governor Whitmer and the Democrats in Michigan are so married to this idea of taking Michigan taxpayer dollars and giving them to these corporations with ties to China, they refuse to budge. Last year they voted against preventing tax dollars from supporting child slave labor in China. This year they voted against reviews and limitations on those dollars flowing toward our global adversaries. What they’re doing is absolutely wrong for the people of Michigan.”

The DCNF contacted the offices of several senior Michigan Democrats, including Speaker of the House Joe Tate, Rep. Laurie Pohutsky, Senate Majority Leader Winnie Brinks and Assistant Senate Majority Leader Darrin Camilleri, for comment. None of their offices responded to those requests immediately.

“A budget details where priorities lie, and clearly the Democrats place foreign corporate handouts over its own citizens,” state Sen. Aric Nesbitt, who leads the republican minority, told the DCNF. “It’s shocking to watch the Democrat majority in Michigan hand over hundreds of millions in tax dollars from struggling Michigan families to multinational corporations who pledge allegiance to the Chinese Communist Party in their corporate documents.  But we aren’t buying it, and neither are the hardworking people of Michigan.”

Additionally, Ford’s licensing deal with CATL, a Chinese battery manufacturer, has also drawn scrutiny. Ford planned to open a facility in the state — with the help of state incentives in excess of $1.5 billion — where it would manufacture batteries using CATL’s technology and know-how, but the company has since scaled down its planned factory, according to CNBC.

“Instead of recklessly gambling on People’s Republic of China (PRC)-based and CCP-tied entities, Michigan needs to be de-risking and prudently de-coupling,” Joseph Cella, a former U.S. ambassador who now leads the Michigan-China Economic and Security Review Group (MCESRG), told the DCNF. “Anything to the contrary does not provide for our common defense.”

Cella and Peter Hoekstra, another former ambassador who serves as principal advisor for MCESRG, advised lawmakers to support the amendments. Both men have been raising their concerns about Gotion’s presence in the state, as well as the process that allowed the company to land lucrative state subsidies to set up shop in Michigan.

“I didn’t spend years in the Navy pushing back against the Chinese Communist Party in the South China Sea only to come to the Michigan Legislature and give them government handouts,” Michigan State Rep. Andrew Beeler told the DCNF. “But House Democrats voted to let hostile foreign powers keep spreading influence and gathering intelligence on Michigan taxpayers’ dime.”

Gotion, Gotion High-Tech, Ford, CATL and the office of Democratic Michigan Gov. Gretchen Whitmer did not respond immediately to requests for comment.

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