A Rural Michigan Town Is the Latest Battleground in the U.S.-China Fight

Yard signs along the quiet country roads of Green Charter Township, Mich., home to horse farms and a 19th-century fish hatchery, blare a message that an angered community hopes is heard by local leaders, the Biden administration and China: “No Gotion.”

The opposition is to a plan by Gotion, a subsidiary of a Chinese company, to build a $2.4 billion electric vehicle battery factory on roughly 270 acres of largely uninhabited scrub land. An investment of that magnitude can transform a local economy, but in this case it is unwelcome by many. Residents fear that the company’s presence is a dangerous infiltration by the Chinese Communist Party and it has led to backlash, death threats and an attempt to unseat the elected officials who backed the project.

The debate over the factory has turned a township of about 3,000 people located 60 miles north of Grand Rapids against each other and into an unlikely battleground in the economic contest between the United States and China. The resistance is part of a broader movement by states to erect new barriers to Chinese investment amid concerns about national security and growing anti-China sentiment.

“It’s the Communist influences that I’m bothered by, because they have shown repeatedly that they don’t care about our rules, our laws or anything,” said Lori Brock, who lives on a 150-acre horse farm near where the battery factory is being built. “They shouldn’t be able to buy here.”

That sentiment has been reverberating in the United States and on the Republican presidential campaign trail this year. In August, the campaign of Nikki Haley called Michigan’s Democratic governor, Gretchen Whitmer, a “comrade” for backing the Gotion factory. On Wednesday, Vivek Ramaswamy, a Republican candidate who has called for banning Chinese investments, will hold a rally at Ms. Brock’s farm.

Gotion has insisted that it has no ideological ties to China. John Whetstone, a company spokesman, said Gotion was “in no way affiliated with any political party,” explaining that it had pledged to the township not to partake in any activity that supports or encourages any political philosophy.

Animosity toward China has been deterring Chinese investment in the United States in recent years. Annual investment by Chinese companies has fallen to $5 billion in 2022 from $46 billion in 2016, according to a recent report by Rhodium Group, as relations between the world’s two largest economies soured. Employment at Chinese firms in the United States has declined by nearly 40 percent since 2017, to 140,000 workers.

But investment is starting to turn around as a result of new federal incentives — included in the 2022 Inflation Reduction Act — that were meant to spur American production of electric vehicles. Foreign companies, including those from China, are trying to capitalize on tax credits for businesses that manufacture renewable energy products inside the United States.

The Coalition for a Prosperous America, which represents American manufacturers, estimates that Chinese companies could gain access to $125 billion in U.S. tax credits related to “green energy manufacturing” investments.

“There are really strong commercial logics driving this, and those commercial logics aren’t going away anytime soon,” said Kyle Jaros, a professor at the University of Notre Dame, who studies Chinese investment in the United States.

The possibility that American taxpayers could subsidize Chinese firms has stoked anger in local communities and in Congress, where lawmakers are scrutinizing transactions involving companies with ties to China and urging the Biden administration to block them.

Senator Marco Rubio of Florida, a Republican, has introduced legislation that would block subsidies to Chinese battery companies. A House committee has demanded answers about a licensing agreement between Ford and the Chinese battery company Contemporary Amperex Technology Co. Limited. Ford has defended the project and described it as an effort to strengthen domestic battery production.

House Republicans have also urged Treasury Secretary Janet L. Yellen to withhold any federal subsidies for the Gotion facility and questioned why the Committee on Foreign Investment in the United States did not block its investment.

Gotion has said that it voluntarily submitted documents to the interagency panel, known as CFIUS, and the committee declined to block the transaction.

The Inflation Reduction Act does restrict American consumers from getting tax credits if they buy electric cars that have parts that come from “foreign entities of concern,” such as China. However, the law does not allow the Treasury to block Chinese companies from securing tax credits if they build factories in the United States.

“We know that the vast majority of investments made through the Inflation Reduction Act are being made by American companies,” said Wally Adeyemo, the deputy Treasury Secretary.

The Treasury estimates that only 2 percent of the electric vehicle and battery investments that have been made during the Biden administration involve Chinese companies.

Gotion already has operations in California and Ohio and plans to open a $2 billion lithium battery manufacturing plant in Illinois. The company chose Michigan last year after securing nearly $800 million in grants and tax exemptions from the state’s strategic fund, whose officials said the investment would bring jobs, customers and economic vitality to the region. At the time, Ms. Whitmer hailed the factory as a win for the state.

Since then, a growing and vocal contingent has been working to halt the project.

Much of that effort has been directed at Green Charter Township’s board of trustees, a group of local Republican officials who voted to allow Gotion to secure the state tax breaks. When residents realized that the company that was coming to town had ties to China, township meetings that usually drew a handful of people attracted hundreds of angry critics.

Jim Chapman, the township supervisor, has heard residents suggest that they would call in the Michigan militia or exercise their Second Amendment rights to stop Gotion from building the factory. Mr. Chapman, a lifelong Republican and former police officer, has found himself in the position of trying to convince his neighbors that allowing Gotion to bring more than 2,000 new jobs to the area will create a housing boom and bring other new businesses to the area.

Yet residents have confronted Mr. Chapman with a host of conspiracy theories including that the plant is a “Trojan Horse” and that it will be used to spy on Americans. Some in town believe that the plant will employ cheap Chinese labor, instead of local workers, and erect cooling towers to conceal ballistic missiles.

“No Gotion” groups active on Facebook and other social media platforms have seized on the company’s bylaws, which say the company operates in accordance with the Constitution of the Communist Party of China.

“I will go to my grave and people will curse me for this project,” Mr. Chapman said during an interview in his office inside the Green Charter Township building.

After researching the company and the actions of other Chinese businesses that operate in the United States, Mr. Chapman concluded that Gotion was not a threat and that the opportunity to invigorate a relatively poor part of the state was worthwhile.

“What are they going to spy on us for in Big Rapids? Are they going to steal Carlleen Rose’s fudge recipe?” Mr. Chapman asked, referring to the owner of a popular confectionery in Big Rapids.

Opponents hope that a November recall election can replace the board and stop Gotion in its tracks. Residents are raising money to file lawsuits and petition against every permit that Gotion will need to construct a factory that is expected to span more than a million square feet.

“I’m worried about environmental catastrophes — there’s going to be 200 to 300 truckloads of chemicals coming in every day,” said Kelly Cushway, who opposes Gotion and is running for a seat on the Green Charter Township board. “We know China has not worried too much about their environment.”

Some community activists such as Ms. Brock are coordinating with counterparts in other states including North Dakota, where Fufeng USA tried and failed to construct a corn mill, to learn how to terminate a Chinese investment.

Ms. Brock said she remained hopeful that the Gotion factory in her town could be halted.

“We haven’t even started,” Ms. Brock said. “We haven’t even hit them with one lawsuit yet, and it’s coming.”