April 5, 2023

The Chinese people and culture are great. Their Communist government? Not so much. There has long been an ongoing ideological war between freedom-based Americanism and authoritarian-based Communism. How can we best operate within the reality of our interconnected economy while this war is being waged?

It is easy to understand why states and local communities look to attract businesses – including foreign businesses – to their jurisdictions with incentives; they seek to reap the benefits of the jobs, development, and revenue such investments bring with them. It also usually makes the politicians that green light the deals look good. Deals are made with this in mind all the time and come in many forms with minimal scrutiny. When attempts to attract a business involve giving approximately $715 million in public funding to a company based in Communist China however, additional scrutiny, criticism, and protest is likely to follow.

Such scrutiny, criticism, and protest is exactly what is happening now in Green Charter Township, Michigan, as a 2022 deal to bring China-based Gotion, Inc. to the community comes closer to finalization. Gotion is set to build and operate an electric vehicle battery factory in the area with the help of $540 million in Renaissance Zone tax abatements over 30 years and $175 million from the Strategic Outreach and Attraction Reserve Fund. Some Conservatives criticize such taxpayer-funded giveaways for businesses in and of themselves (in principle & because of cronyism/corruption) but in this situation the focus has come to be on the company to which the money is flowing.

The deal has begun to attract national attention. Former Michigan Republican gubernatorial candidate Tudor Dixon criticized the deal on Fox News. Republican Congressman John Moolenaar raised concerns about the deal and requested the Committee on Foreign Investment in the United States investigate whether the factory is a security risk. Local activists have begun raising concerns at township meetings. An in-person battery plant discussion panel was scheduled for April 5, 2023 but was recently changed to an online format over disruption concerns due to a predicted large turnout of protesters.

The State of Michigan, Green Charter Township officials, the North American subsidiary of Gotion and regional economic development organization The Right Place (set to receive $50 million in funds related to the project as well) have all been working overtime to put a positive spin on the deal and downplay any concerns about the Chinese aspects of the company. Green Charter Township Supervisor Jim Chapman calls the concern about Gotion “unfortunate” and a result of “internet propaganda,” adding, “I don’t want to say (the criticism is) unenlightened, but there are people that are responding on a visceral level instead of trying to have an open mind and find out the facts.” Similarly, Gotion North America does not see a issue:

“Gotion High Tech is a publicly traded international organization with a diverse board of executive directors including citizens of Germany, USA and China. Within the Gotion Inc North America organization, who is responsible for Big Rapids, Michigan plant ownership, there is no CCP organization influence. No person on the leadership team is a CCP member. There is no CCP organization or influence to the NA operation. There is not a slim chance of influence of any political party to Gotion Inc. while we follow regional and federal regulations and requirements within all of our North America facilities that are in operation since 2015. GOTION INC has current operations in California and Ohio servicing NA customers and is on contract with the Department of Energy USABC to assist establishment of NA battery standards.”

Chuck Thelen, Gotion Inc., VP North America Manufacturing

The problem they face is that the criticism is rooted in discussion much deeper and complex than the surface-level details upon which they must focus. Yes, Gotion is a multinational corporation based in China with investors from around the world. Yes, they already have presence in other states and an American division. Yes, we live in a globalized, interconnected world that makes such cooperation and reciprocal exchange between nations necessary and mutually beneficial. Some may ask, given that there are many American businesses and factories operating in China, why can’t there be Chinese-based factories operating in America? Well there can, and there are. This is why the Gotion project received approval and why it will likely be finalized.

Are both “sides” of this issue missing the overall point? We cannot overlook the fact that the Chinese government is openly, unabashedly Communist. They are not our ideological brethren. In fact, they are our ideological enemies. The relative openness we have seen in Chinese markets over the last decades is not part of a slow path towards eventual liberalization of China. In fact, the exact opposite is true, as we will see.

Tensions are already rising between our nations. American businesses in China are feeling it. The American Chamber of Commerce in the People’s Republic of China (AmCham China) has released their 25th annual China Business Climate Survey (BCS) Report. AMCham China describes the report as, “One of the key barometers of the sentiment of the American business community in China.” The report indicates that after three years of COVID pandemic restrictions in China, fears of eroding US-China relations, and changes to Chinese government policy perceived as less open to foreign companies, members have become more pessimistic in their outlook of future expectations for business in China.

“Tense bilateral relationship continues to stoke uncertainty in business decision making: Half of our member companies are pessimistic about the future of US-China relations in the coming year with three-quarters of members reporting that their companies have been impacted by trade tensions. A positive bilateral relationship is extremely important to member company businesses in China and many hope that future trade negotiations will result in more open Chinese markets and a level playing field for foreign-invested enterprises.”

AmCham China, 2023 BCS Report

Prudence would suggest we be very mindful of China’s activities as they advance into peer competition status. This does not mean we ought to reject deals like the gotion deal outright (even if we could). It just means we must do a better job raising awareness and curbing their influence. This is especially true given the orientation, stated beliefs, and stated goals of the Chinese Communist Party (CCP).

US-Chinese Relations

Search back through foreign policy journals for the last couple decades and you will find countless articles warning about the pending rise of a multipolar world to challenge US/Western hegemony. This is particularly true concerning China, a nation dominated by an authoritarian regime long regarded as a rising power that could some day present a challenge to the liberal world order maintained by western financial/economic dominance and US power projection capabilities. It is no secret that rising China intends to dominate its regional sphere and extend its influence well beyond it. China is steadily making moves to strengthen its position in East Asia and the Pacific region, connect itself further within the Eurasian continent, invest itself heavily in the Middle East and Third World nations and present alternatives to western finance and the dominant US dollar.

There is nothing wrong with any of these actions in principle; it is a natural inclination for a powerful nation such as China. But given their political and ideological orientation that is in many ways contrary to the principles of freedom, Americans ought to be cautious when confronted with their rise. The last thing we ought to want to allow – which unfortunately many within America seem bent on allowing – is loose and/or unconditional business dealings with Communist China, lax enforcement of international rules, and unchecked Chinese expansion that will allow them to promote their brand of authoritarian governance at the expense of liberty-based, democratic systems. To their credit, the Trump Administration attempted to bring awareness of the threat from China more into the mainstream and tried, mostly unsuccessfully, to begin to hold them accountable for some of their sleights on the international stage.

To the extent certain powerful voices in America have been warning about this and opposing it (for the most part) it has often unfortunately been done via the promotion of counterproductive means. We should not seek to oppose China’s authoritarianism by being more authoritarian, its militarism by being more militant, or its skirting of legitimate rules by taking advantage of our powerful position to act contrary to these rules ourselves. It may sound cheesy or cliche, but America’s best weapon against such potentially disruptive challengers is leading by the example of our principles and conducting outreach to other nations in accord with them. If we truly believe our system based on freedom and responsibility is superior, we ought to double down on it. Much of the world laments American hegemony or begrudgingly complies with it. Is this because we have painstakingly stuck to our guiding principles and our rhetoric, or because we have too often hypocritically strayed from it? This is not a sufficient state of affairs to maintain a position of power in the future as these other states and entire regions advance and gain access to alternatives. What’s more, even at home we face the threat from the lure of more powerful top-down systems, as some of our own citizens see it as more practical than our system of limited divided government while the the newer generations are being taught its achievement is desirable. We must be vigilant on this front when faced with the prospects of increased Chinese investment in our communities.

Communist China

China has made great strides militarily and economically while consistently flaunting international norms, repressing internal dissent, and consolidating power under one-party rule. They have also been working overtime to paint a pretty picture of their advancement on the world stage. Even some people in the West have come to admire China’s “efficiency” in getting things done (because of their one-party rule). Look no further than the embarrassing praise they received by some in America regarding their COVID response for an example. Other observers have become distracted by the shiny things China has built (like tons of skycrapers) and touted their shift towards globalization (they have McDonald’s!) as evidence of their willingness to join, or even lead, a modern world based on advancement of shared principles and cooperation. But a facade of modernity means nothing if the foundations in liberty are not there. We should not kid ourselves that the Chinese government is not ideologically an enemy of the (traditional) American worldview. This does not mean we should go out and fight them or shun them. To the contrary, at this point our economies are so interdependent that attempting to cut them out too quickly would inevitably hurt us as well. We of course ought to avoid direct military confrontation if possible given their possession of nuclear weapons and potential for escalation into a devastating worldwide conflict. But we cannot turn into mice and allow ourselves to be eaten by hawks either.

If there is any doubt as to the position and beliefs of the CCP, look no further than the Constitution of the Communist Party of China for clarity.

The revised and adopted version at the 20th National Congress of the Communist Party of China on October 23, 2022 states;

“The Communist Party of China is the vanguard of the Chinese working class, the Chinese people, and the Chinese nation. It is the leadership core for the cause of socialism with Chinese characteristics and represents the developmental demands of China’s advanced productive forces, the orientation for China’s advanced culture, and the fundamental interests of the greatest possible majority of the Chinese people. The Party’s highest ideal and ultimate goal is the realization of communism. The Communist Party of China uses Marxism-Leninism, Mao Zedong Thought, Deng Xiaoping Theory, the Theory of Three Represents, the Scientific Outlook on Development, and Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era as its guides to action.“

The CCP believes the basic tenets of Marxism-Leninism are correct and that they reveal the laws governing the development of the history of human society. By following a Chinese-specific Marxist-Leninist path, the CCP believes they can achieve the ultimate victory of Communism, which would encompass a worldwide “classless society.” According to the CCP Constitution, “The highest ideal of communism pursued by Chinese Communists can be realized only when socialist society is fully developed and highly advanced. The development and improvement of the socialist system is a long historical process.” After the Chinese Revolution, Mao Zedong’s application of Marxism-Leninism in China became the guide for the Party. “Under the guidance of Mao Zedong Thought, the Communist Party of China led the Chinese people of all ethnic groups in the long revolutionary struggle against imperialism, feudalism, and bureaucratic capitalism, securing victory in the new democratic revolution and founding the People’s Republic of China, a people’s democratic dictatorship.” Read more about how Marxists themselves regard Mao’s legacy and his continued importance to their revolution here. Upon the founding of the People’s Republic, learning from experience, Deng Xiaoping “shifted the focus of the whole Party’s work onto economic development and introduced reform and opening up, thereby ushering in a new era of development in socialism. Deng Xiaoping Theory represents a new stage of development of Marxism and modernization in China (read more here).

The Constitution of the CCP reflects their will to keep on the path of socialism guided by Marxism-Leninism and Mao Zedong thought. They strengthen the grip of the Communist Party’s control through exploiting the Marxist concept of the “people’s democratic dictatorship.” Marxism-Leninism is vehemently opposed to “bourgeois liberalization.” Americans hoping the CCP will reform itself given greater market integration and exposure to the world alone are sorely mistaken. Their game is to grow, strengthen, and slowly influence our culture and government, not to allow their people to be influenced by ours.

Back to Gotion and its Michigan deal. It has been pointed out that Gotion Inc. has wording in their “Articles of Association” that expresses their allegiance to the Constitution of the Chinese Communist Party. Their documents also state, “The Company shall set up a Party organization and carry out Party activities in accordance with the Constitution of the Communist Party of China.” This includes creating a “Party Committee” that “shall perform its duties in accordance with the Constitution of the Communist Party of China and other Party regulations.” They must “ensure and supervise the implementation of the Party’s guidelines, principles and policies in the Company, and implement major strategic decisions of the CPC Central Committee and the State Council as well as relevant important work arrangements of the Party organization at the higher level.” The Constitution of the CCP requires this.

Defenders of the Gotion deal will likely argue that the American subsidiary of Gotion is a step removed from Gotion in China and has different leadership. That is noted, however it does not really refute the point of concern. We cannot be so naive to think everyone in China is operating from purely Communist motives any more than we can think everyone in America is operating with intent to preserve freedom and our founding ideals. There are many other motives, simply obtaining profit being one of them. But the influence of the CCP is built into the structure of Chinese culture and business. Their authoritarian tendency is unavoidable. It is just something of which we must always be aware and guard against.

Conservatives in the United States must realize that the enemy is in the ideology. We must oppose the freedom-destroying authoritarianism of the CCP model. We can best do that by bolstering our own principles, leading by example, and showing the benefits of our beliefs. Conservatives cannot get caught up on the petty details of specific interactions between entities operating from the other “side” within our already established interconnected economy. Democrats and Progressives in America may be surprised to learn the CCP does not like them much either. Sure, the CCP will fein solidarity and use their causes to foment domestic division in America, but the bureaucratic mess championed by the Progressives and the undisciplined, decentralized nature of the Libertarian-Left are frowned upon by the CCP. So what should we do? We cannot simply pick up our ball and go home; the international stage is set. We must pick our battles and fight hard for our beliefs. The CCP is thinking of the long game, we must do so too.