Chinese real-estate firm Evergrande denies investing in Faraday Future to secure advanced tech for China
- Source close to Evergrande says the decision to invest in Faraday was done for ‘purely business’ reasons
A Chinese real-estate company cited by the US as having ties to the Chinese Communist Party has denied that a decision to invest in a struggling US start-up was prompted by a desire to acquire advanced technology at the behest of the government.
A person close to Evergrande Real Estate Group said that the investment in Faraday Future was done “purely for business” reasons.
It was not, as a report by the Office of the US Trade Representative (USTR) suggests, an example of a plan by China to obtain advanced technology in new-energy vehicles, a strategic emerging industry that the country has identified for support, the person said.
The deal was done in accordance with US law and approved by the Committee on Foreign Investment in the United States, the agency in charge of reviewing foreign investments in the US, according to the person, who asked not to be named as the matter is sensitive.
Evergrande and its billionaire founder Xu Jiayin found themselves embroiled in the trade war rhetoric between the US and China this week after subsidiary Evergrande Health’s US$2 billion acquisition of a 45 per cent stake in Faraday Future was listed as an “illustrative example” of a Chinese programme of unfair technology transfer and intellectual property theft.
In the updated 53-page report regarding the US agency’s Section 301 investigation of China’s technology and innovation-related policies and practices, USTR questioned the intention behind the deal as Xu, Evergrande’s founder and chairman, has been the Communist Party secretary at the company since 2002.
Xu’s remarks in a public speech that “everything that Evergrande and I have, it is all given by the Party, given by the State, given by society” were also deemed by USTR as evidence to show that Beijing uses outbound investment to obtain advanced technologies favoured by state industrial plans such as the “Made in China 2025” initiative.
Under China’s company law, firms should set up party branches according to the requirements of the party charter, which demands grass-roots cells be set up – including in companies and schools – if there are at least three party members in an organisation.
Released ahead of a scheduled meeting next week between President Xi Jinping and Donald Trump on the sidelines of the Group of 20 Summit in Buenos Aires, Argentina, the report accused China of “conducting and supporting cyber-enabled theft” to gain access to intellectual property and using venture capital investment in US firms to further its industrial policy goals.
