ZOLA: Will Escalating US-China Trade War Hurt The Fortunes Of JBE’s Chinese Chemical Plant Deal?

One of Governor John Bel Edwards’ signature business deals could be in jeopardy, thanks to the escalating US-China trade war.

President Trump is traveling to Louisiana on Tuesday to tout Louisiana’s growing energy sector, one of the state’s economic bright spots that has come largely in spite of Governor Edwards’ policies.

While Edwards hasn’t been a friend to job growth in Louisiana – he’s worked to shrink the energy industry and send jobs to Texas – he has made it a point to flaunt a deal the state struck in 2017 with Wanhua Chemical, a Chinese petrochemical company, to bring a manufacturing complex to Louisiana with a $4.3 million taxpayer-funded grant.

At the time, Edwards praised the deal as “a testament to the strength of Louisiana’s business climate,” an investment that would potentially bring new jobs to the state.

The deal, though, has raised concerns in the years since. But more importantly, the escalating trade conflict between Trump and China could put it in jeopardy.

This isn’t the first time the deal came into question. Safety concerns have been leveled against Wanhua, following a 2016 blast at the company’s Yantai, China plant that killed four people and injured another four.



Wanhua’s connections to the communist Chinese government have also raised questions about whether the deal would allow taxpayer dollars to flow to the Chinese government. The Washington Free Beacon reported that members of the Chinese Communist Party “own a sizable percentage of the chemical company” and that members of the company’s board are also tied to the party. Republican State Rep. Beryl Amedée has asked that the Louisiana treasurer “certify no state funds have been used to support” communist countries.

Despite these concerns, the deal appeared poised to move forward – until the US-China trade dispute gained steam in 2018. Last year, the Wanhua deal got caught in the dispute, and the company said it was “reevaluating” the project because of the Trump administration’s steel and aluminum tariffs. In sounding the alarm, Wanhua also confirmed that major components of the plant were actually being constructed in China raising questions about the construction jobs the governor promised.

In December, though, it looked as if Wanhua had moved past these concerns, perhaps under the assumption that a US-China trade deal would be reached. They selected a location and said that construction would begin in the second quarter of 2019.

But now that US and China are again raising tariffs, could the deal be in doubt? And what about the other deals Louisiana has struck with Chinese companies?

The escalating trade conflict is long overdue, as China has engaged in unfair trade practices for decades. Wanhua is one of many Chinese companies in Louisiana, and if the trade war continues, it could be a major headache for the Governor as he campaigns for re-election. Edwards’ efforts to use taxpayer dollars to bring state-linked Chinese companies to Louisiana might not have been a wise economic move, given the current unstable trade landscape, or in our country’s best interest.

More than anything, this shows that Edwards should rely on domestic job growth, particularly in the energy industry rather than hoping for handouts from China. Lessening burdensome regulations will keep Louisiana from being on the hook for Chinese deals that never seem to pay out.

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