Chinese firm says US rejection deters investment

PUBLISHED : Thursday, 18 October, 2012, 6:14pm
UPDATED : Thursday, 18 October, 2012, 6:14pm

The Chinese company suing President Barack Obama for blocking its planned wind farm projects in Oregon accused the US leader and his government of discrimination on Thursday and warned that the case would deter Chinese investment in the United States.

Last month, Obama blocked Ralls Corporation’s plan to build four wind farms near a US Navy base, after the Committee on Foreign Investment in the United States concluded it posed security risks. It was the first time a US president stepped in to halt such a foreign business deal for national security reasons since 1990, when President George HW Bush scuttled the sale of a manufacturer to a Chinese agency.

Company bosses denied that the project posed security risks, said US officials were discriminating against the firm because it was Chinese and filed a lawsuit against the US government last month, adding Obama’s name as a defendant earlier this month. US officials have said the case has no merit and that they will “vigorously” defend against it.

Ralls Corporation CEO Wu Jialiang said at a Beijing news conference on Thursday that his company “would never do anything that threatens US national security”.

Ralls is an associated enterprise of Sany Group, the largest construction machinery manufacturer in China. Sany said that Ralls purchased the Butter Creek wind farm project from a Greek electricity grid company with the development already approved and permits in hand.

Xiang Wenbo, a Sany director, said the company had agreed to transfer, relocate or remove the wind turbines after objections were raised, but they hadn’t been allowed to. He said US authorities had reached unfair conclusions, seized their property and assets and aren’t to be reasoned with, likening their behaviour to that of “thugs”.

The case has handed Obama the opportunity to appear tough on Chinese interests during an US election campaign in which both the president and his Republican challenger Mitt Romney have invoked China as a villain in their arguments about revitalising the US economy. Both have accused the other of policies that send jobs to China.

In a televised presidential debate on Wednesday, Romney said he would label China a currency manipulator “on day one”. Obama said he had saved 1,000 jobs by slapping levies on low-priced Chinese-made tires.

To consternation in China, a US governmental report last week said Chinese telecom equipment makers Huawei Technologies Inc and ZTE Corporation are potential security threats and recommended regulators block them from buying US companies.

“I don’t know really what signal President Obama and his administration wish to give to investors around the world,” said Mei Xinyu, of the Ministry of Commerce’s Institute of International Trade and Cooperation, who also spoke at the news conference. “Maybe the signal is ‘Come and invest in the US and then you will end up pantless and penniless.’”

The news conference panel, which also included lawyers and academics, warned that the Chinese government may be prompted to fight back by targeting US companies operating on its shores.

“If the Chinese government chooses to intervene and retaliate on behalf of this company, for example by taking measures on national security grounds against companies like Apple and Cisco, then perhaps this will endanger the possibility of President Obama’s reelection,” said Zhang Guoqing, a political scientist at Chinese Academy of Social Sciences’ American Studies Institute.

“If the United States loses the Chinese market, then it will become their biggest mistake in history,” he said.

Sany alleges that the US investment committee and Obama have exceeded their authority and deprived Sany of its private property rights without legal procedures. It also says that US officials provided no evidence to show the project threatened American national security and that they emphasised the Chinese character of Sany Group and its Ralls Corporation’s shareholders, violating “the equal rights protected by the constitution”.

“Although a relatively small case, it connects to the fundamental faith of Chinese investors who are looking forward to investing in the US as well as millions of entrepreneurs all over the world,” Wu said. “I firmly believe to mishandle this delicate matter will cause the US thousands of lost job opportunities.”

“At the same time we have full faith in winning this lawsuit,” he added.