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Obama blocks Chinese-owned wind farm in the US

Corinne Purtill

02.10.2012

President Obama's decision to block a Chinese company's purchase of four US wind farms may play well with voters now. But could anti-China sentiment hurt US growth?

Last week, US President Barack Obama barred a Chinese-owned company from buying four wind farms near a US Navy training base in the coastal northwestern state of Oregon, citing national security concerns. The order gives Ralls Corp two weeks to clear its property from the site and 90 days to divest entirely from the project. Ralls is suing the president over the decision, the first of its kind in 22 years.

Presidents rarely interfere in decisions on foreign acquisitions, which are handled by a body called the Committee on Foreign Investment in the US, or CFIUS. The last time a purchase like this was blocked on national security grounds was 1990, when then-President George H.W. Bush shut down China National Aero-Technology and Export Corp's proposed takeover of a motor and generator manufacturer.

But this is election season. As we've discussed here before, there's a lot to be gained by taking a tough stance on China.

But is this aggressive posturing actually harming US interests?

All the farms' owners can do with their product is sell that energy - cheap, renewable energy - back to the US grid. Since both candidates have expressed at least a passing interest in renewables, we would think that would weigh in the project's favour.

Anti-China rhetoric plays well with voters now, but may prove short-sighted in time. If US offshoots of Chinese-owned companies keep up their current pace of growth, China could add 200,000 to 400,000 jobs to the US economy by 2020, according to the US-based Council on Foreign Relations. In an election that's all about jobs, a potential employer of this magnitude would normally get a little more love on the campaign trail.

Chinese businesses are already under the impression that the US holds them to stricter standards than it does other foreign companies. Yet for all the dire warnings of a Chinese takeover of US assets among the US chattering classes,China's direct investment in the US remains a small fraction of Europe's. US investment in China is 20 times greaterthan the reverse.

In 2006, when Congress and the US public erupted over a Dubai company's plans to take control of six major US ports, the deal's supporters (including then-President George W. Bush) argued that heightened scrutiny simply because the company came from the Middle East sent a poor message to future investors. Will a second-term president offer Chinese businesses the same benefit of the doubt?

Image credit Davie Dunn via Flickr

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