JBE’s Chinese Chemical Plant Deal Has The Attention Of The Washington Free Beacon

We got a release Monday from America Rising, the conservative PAC which is doing what it can to highlight examples of John Bel Edwards’ misrule as Louisiana’s governor, castigating Edwards for some unsalutary aspects of the deal to bring a billion-dollar investment to a site somewhere in the state…

Today Governor John Bel Edwards (D-LA) announced that Wanhua Chemical, a Chinese company, will open a chemical manufacturing complex in Louisiana. With the announcement of this deal though, many Louisianans will be shocked to learn that their tax dollars will soon be going to a Chinese company in-part owned by the Chinese government.

As part of the deal Governor Edwards struck, Louisiana will give a $4.3 million grant to Wanhua, as well as generous tax exemptions:

“As part of the deal, Wanhua will tap state tax exemption programs. The Industry Tax Exemption Program exempts a company from property taxes on its new complex for 10 years. The Quality Jobs Rebate program grants a 6-percent rebate for 10 years for up to 80 percent of a company’s payroll for new direct jobs. In July 2018, a company’s entire payroll will be eligible, according to the LED.”

These lavish benefits will directly benefit the Chinese government and the Chinese Communist Party, who owns a good percentage of the company:

“Wanhua Chemical Group Co. Ltd., the world’s largest producer of MDI, is incorporated in Yantai, Shandong province and has been listed on the Shanghai Stock Exchange since 2001. It is 50.5% owned by Wanhua Industrial Group Co. Ltd. (unrated), in turn 39.5% owned by Yantai State-owned Assets Supervision and Administration Commission (SASAC).”

Troublingly, the Assets Supervision and Administration Commission is used by the Chinese Government to “manage” companies like Wanhua:

“Authorized by the State Council, in accordance with the Company Law of the People’s Republic of China and other administrative regulations, the State-owned Assets Supervision and Administration Commission of the State Council (SASAC) performs investor’s responsibilities, supervises and manages the state-owned assets of the enterprises under the supervision of the Central Government (excluding financial enterprises), and enhances the management of the state-owned assets.”

While Edwards will try to spin these facts away, the conclusions are unmistakable. Edwards is sending Louisiana citizens’ tax dollars into the coffers of the Chinese government.

AR’s Scott Sloofman went a little further: “Wanhua Chemical’s board is populated by ‘several’ members of the Chinese Communist Party. Yet somehow Governor Edwards’ spokesman wants you to believe that the CCP isn’t going to benefit from the millions Edwards is steering toward Wanhua’s new project,” Sloofman said. “It’s these types of discredited statements that have earned Edwards the moniker of ‘Accidental Governor.'”

It should be said that pretty much any industrial company from China that Louisiana would do business with is going to be tied to the Chinese Communist Party. Try to start a business of any size in China doing just about anything, much less heavy industry, and you’d better have somebody from the Communist Party as a partner or you’re not going to get very far past the startup phase – if that.

So it’s not a humongous revelation that Wanhua is basically the Chinese government.

So is America Rising’s conclusion that JBE is giving our tax dollars away to China correct?

The Washington Free Beacon covered the controversy in a piece today…

Edwards touted the agreement as “a testament to the strength of Louisiana’s business climate and unmatched transportation logistics” that will bring 170 high-paying jobs to the state.

The deal also will send Louisiana tax dollars to the Chinese government and members of the Chinese Communist Party, which own a sizable percentage of the chemical company. Wanhua Industry Group, a holding company that owns almost a 48 percent stake in Wanhua Chemical, is itself almost 40 percent owned by a Chinese government entity, the Yantai State-owned Assets Supervision and Administration Commission (SASAC),

Richard Carbo, a spokesman for the governor’s office, rejected the idea that China’s Communist Party would receive Louisiana tax dollars as a result of the deal, arguing the grant is tied to private investors rather than the government or any political party. Nevertheless, several associates on Wanhua Chemical’s board are members of the Chinese Communist Party.

Carbo also noted that Wanhua Chemical will only receive the $4.3 million grant if it completes the project and creates the number of jobs it promised.

“If they don’t meet those obligations, they don’t receive the performance-based grants,” Carbo told the Washington Free Beacon. “If they do meet those obligations, the state of Louisiana and its people will be the beneficiaries of billions of dollars of new economic output in our state, as well as the additional infrastructure improvements.”

And just a little extra from the WFB piece…

Edwards and Zengtai Liao, the president and “communist party secretary” of Wanhua Chemical, are expected to announce a location for the complex “in the coming months,” according to Louisiana Economic Development.

This project has been in the works for a while. Wanhua was one of the industrial firms descending on the state back during the 2013-14 industrial expansion boom, but not a high priority customer of Bobby Jindal’s Louisiana Economic Development department at the time. Jindal’s LED did do a deal with another Chinese firm, Yuhuang Chemical, for a nearly $2 billion facility in St. James Parish which is currently under construction. Most of the work to bring Wanhua to the state, on the other hand, has been done by Edwards’ administration.

Economic development people will tell you that the tax breaks given to these major projects as an inducement to local facilities get a bad rap, given the economic impact their construction and operation makes on surrounding communities. That’s probably true, assuming the project actually sticks around and becomes a going concern. Louisiana has had some negative experiences in that regard; one example being the fiasco of Elio Motors in Shreveport, which fleeced state and local governments for years on the promise of a giant factory for fuel-efficient cars.

A chemical plant might be a more reliable partner, simply because we already know there’s a large market for the materials it will make. This plant will make something called methylene diphenyl diisocyanate, which is long for MDI. It’s a component of polyurethane foam like you’ve got on the soles of your Nikes. Carbo is probably right that the state gets a net benefit from this facility coming here even with the freebies thrown their way.

Still, it’s a bit entertaining to see Edwards get roughed up for corporate giveaways to Chinese communists when he’s been a broken record griping about corporate giveaways to American non-communists. There’s more than a little irony in that.



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