Biden admin unveils new green subsidy guidelines that could allow China to cash in

The Biden administration released proposed rules for green manufacturing tax credits on Thursday, leaving the door open for Chinese companies to capture their value.

The proposed guidance, published by the Treasury Department, clarifies the eligibility requirements for Inflation Reduction Act (IRA) grants intended to incentivize domestic manufacturing of products such as solar panels and electric vehicle (EV) parts, according to the your text The guidelines include no restrictions on entities linked to adversarial foreign countries and would allow companies linked to China to capture the value of the tax credits if they establish US operations that meet all other eligibility requirements.

Manufacturing tax deductions, known as 45X credits, are among the most generous included in the IRA, and are a key pillar of the administration's green energy agenda. The administration is banking on the subsidies both to build the green energy economy they envision and to spur a wave of job growth in America's manufacturing sector.

Because of the language in IRA, President Joe Biden's signature climate bill, the Treasury Department could not impose restrictions on foreign companies in the tax credit guidelines. Eligibility rules for the consumer tax credit for electric vehicles from the administration specified restrictions on companies linked to “foreign entities of concern” such as Russia, China, North Korea and Iran.

Biden administration officials expressed that they will scrutinize foreign investments despite the lack of explicit restrictions in the guidance through other means, such as the Treasury Department's Committee on Foreign Investment in the United States (CFIUS), seconds in the New York Times. Businesses have announced $140 billion in green manufacturing investments since the IRA became law in August 2022. seconds to Reuters.

The promise of robust manufacturing tax credits prompted companies to announce a slew of new projects, including several that have drawn the ire of local residents and elected Republicans over their connections to Chinese companies.

Gotion, a wholly American subsidiary owned and controlled of China-based Gotion High-Tech wants to build subsidized manufacturing facilities Michigan i Illinois. Gotion High-Tech has wide connections to the Chinese Communist Party (CCP) and local residents in Green Charter Township, Michigan, voted out local officials in November to support the Gotion facility planned to be built in their neighborhood.

Congressional Republicans sent Treasury Secretary Janet Yellen to letter in September demanding a CFIUS review of Gotion's plans in Michigan and Illinois due to the company's connections to the CCCP through Gotion High-Tech.

Gotion's projects aren't the only ones looking to capture the value of the tax credit that has drawn criticism for ties to China.

Ford planned to build a new plant in Michigan where it would use technology licensed from CATL, a Chinese battery company that could pose major national security and espionage problems. seconds to a recent report by the Foundation for the Defense of Democracies. Ford announced in September that had stopped the works on the plant, which have not yet resumed. Several weeks before this announcement, House Republicans sent a letter to Ford asking for details about its relationship with CATL.

The White House did not immediately respond to a request for comment.

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