The U.S. Department of Treasury is reviewing a dubious Chinese company’s acquisition of an Ohio-based manufacturer that supplies aluminum to the American military, including aluminum for armored vehicles.
Several federal investigations have recently targeted the Chinese aluminum giant Zhongwang.
If approved, the Chinese company’s takeover, which the U.S. Commerce Department and American lawmakers argue may pose a threat to national security, could deal a blow to President Donald Trump’s “Made in America” pledge.
“We will once again discover our heritage as a manufacturing nation,” proclaimed President Trump on Monday, marking the beginning of his administration’s Made in America Week.
In a rare show of bipartisanship under the current and previous administrations, U.S. lawmakers have voiced opposition to Zhongwang’s buying the American aluminum manufacturer Aleris for about $2.3 billion, recently dismissing the takeover as a “strategic misstep” that could negatively affect the U.S. military.
Twenty-seven members of the U.S. Congress urged U.S. Treasury Secretary Steven Mnuchin in a June 9 letter to reject the merger.
“It is critical that [the U.S. Treasury’s] CFIUS (Committee on Foreign Investment in the United States) exercise extreme caution when a foreign investment transaction includes the transfer of military proficiencies and sensitive technology to China,” wrote the lawmakers.
“Chinese entities, including state-owned or state-controlled enterprises, often maintain relationships with China’s military, compounding the risk that US technologies will fall into the wrong hands,” they added.
Zhongwang has denied the allegations.
In November 2016, a bipartisan group of a dozen U.S. senators also urged then-Treasury Secretary Jack Lew to “ultimately reject” the deal.
The South China Morning Post quoted a statement from Aleris as saying, that “less than 1 percent of our sales go into defense applications, and none of those goods are produced in the US.”
“The technology to produce aluminum plate, which is used in some military applications, is standard production technology widely used in the aluminum industry,” the American company reportedly added.
Nevertheless, Trump’s Commerce Department already believes the U.S. consumption of aluminum made by Chinese and other foreign companies may threaten America’s security.
In April, the Trump administration opened an inquiry into whether the influx of aluminum from China and other foreign companies is hurting U.S. manufacturers enough to pose a threat to national security, reported CNN, noting that “China has been accused of dumping steel in the U.S. market, hurting U.S. manufacturers of the product.”
“Here’s why we did it,” declared Commerce Secretary Wilbur Ross. “Imports have been flooding into the aluminum industry and the defense angle is that high-purity aluminum is used in the F-35’ as well as other military aircraft and vehicles. In the event of a war, domestic manufacturers might be unable to meet the Pentagon’s needs.”
The Chinese company has already filed an approval for acquisition application.
In October 2016, the U.S. Department of Homeland Security (DHS), in coordination with the Department of Justice, launched investigations for “violations that could include smuggling, conspiracy, and wire fraud,” reported the Wall Street Journal (WSJ).
The Commerce Department also determined last November that Zhongwang had “circumvented antidumping restrictions imposed By U.S. trade authorities on the company in 2010.”
Moreover, Zhonwang billionaire founder Liu Zhongtian and his family have reportedly been accused of defrauding investors.