Chinese-owned companies benefit from millions in local tax breaks

Two Chinese companies stand to benefit from millions of dollars in local tax breaks being offered to locate or expand their operations in Grand Forks and Duluth. No one evidently objected as St. Louis County and the city of Duluth teamed up recently to provide $1.2 million in taxpayer-funded breaks for an expansion by Chinese-owned Cirrus Aircraft, the area’s largest employer, according to the Duluth News Tribune.

The seven-member[county] board voted unanimously to approve the tax abatement across 10 years. The decision is contingent on the Duluth City Council approving the same amount at its Feb. 14 meeting, totaling $1.2 million as Cirrus prepares to spend $25 million to $30 million on campus upgrades, including $2.3 million to retrofit the former maintenance building.

But an agreement just okayed between Grand Forks and Chinese company Fufeng Group has raised questions over the financial breaks on the table, national security, ties to the Chinese government and human rights violations. The Grand Forks Herald reports that the city, county and school district joined forces in wooing the agribusiness giant.

The City Council approved a development agreement on Tuesday evening with a subsidiary of Fufeng Group, the Chinese agribusiness that’s long worked to bring a new corn-milling facility to Grand Forks. In recent months, it’s made for an extraordinary debate, pitting the promise of hundreds of new jobs against anxieties about the plant’s smell, its shifts in local traffic and its links to an international rival.

…The city’s side of the deal represents about $96.5 million in spending, which spans engineering and construction and more as the city prepares to link the plant to its infrastructure grid — a major undertaking that will mean road improvements and massive water infrastructure upgrades. City Hall has pointed out that roughly $41 million will be paid for by state loans, COVID funds, special assessments and more; the remaining $55 million would be recouped over decades of utility costs to Fufeng Group, city leaders say.

Local leaders attempted to position the deal as a way to further vet the project and the company. But many attending the pivotal city council meeting were openly skeptical about the $350 million proposed plant, including the smell it might give off.

That’s not enough for many of the citizens who criticized the project at Tuesday’s council meeting though. In a parade of anger, residents from near the plant’s new site and beyond shared their concerns about the plant, just as they’ve done for weeks now as City Hall has weighed Fufeng’s future.

…At times, Mayor Bochenski himself was the object of criticism; one man said Bochenski had promised support for small business when he ran for office.

“And the first thing that comes down the pipe — a how-many-million or billion-dollar company comes in, and they’re not paying their own way,” one speaker said. “People like me that have been in business here for (decades), they get the bad part of the deal, and pretty soon they’re not in business.”

Fufeng’s top official in the meeting also found himself on the defensive.

Eric Chutorash, COO of Fufeng Group’s American subsidiary, spoke briefly to the council at multiple points on Tuesday evening. In response to city leaders’ questions, he said that he was not aware of any Chinese government ownership in the company, and said that his company “spent the better part of January talking to general contractors,” focusing on hiring from the Grand Forks area.

He also said Fufeng Group is not using forced labor at its facility in northwestern China, where the Chinese government has repressed a minority Muslim population and forced them into detention centers. Doubts about Fufeng’s connection to the practice, and other worries about ties to China, have dogged the project for months.

The Epoch Times reports that concerns have surfaced over the company chairman’s connections to the Chinese Communist Party.

Li Xuechun has been the top executive at Fufeng Group since November 2016, fulfilling the roles of the company’s principal founder, executive director, and chairman. He’s also the controlling shareholder of the company.

Li once served as a member of the People’s Congress of Shandong Province, China. The People’s Congress is a rubber-stamp legislature of the CCP. According to Kennedy, Li served in this position for five years.

Senator Kevin Cramer, R-ND has also expressed alarm over the plant’s location 13 miles from the sensitive Grand Forks Air Force Base.

Sen. Kevin Cramer (R-N.D.) recently expressed similar concerns.“The critical missions our military executes at Grand Forks Air Force Base must be protected,” Cramer said in a statement to the Grand Forks Herald. “The jobs and economic benefits for Grand Forks and North Dakota farmers must be balanced with the long-term concerns of China infiltrating our food supply chains.”

For Cramer, the Fufeng Group project “requires due diligence,” because “China is not a reliable partner.”

Fufeng still has several more hurdles to clear before breaking ground. But the growing number of Chinese-owned companies in our region has necessarily begun to attract heightened attention. That includes Rochester, where national security considerations were behind the U.S. government’s recent flagging of a Chinese entity with ties to a Chinese company in a joint biotech joint venture with Mayo Clinic.