Another shady Chinese deal

How do the Chinese continually get away with it?  America has been victimized by trade imbalances in the $100s of billions, intellectual property theft of an estimated $600 billion yearly, and attempts to increase espionage opportunities via malware-infected hardware that Chinese companies have distributed globally.

It has gone too far.  And now an unchecked deal between Chinese-owned Tsingshan Group and U.S.-based Allegheny Technology Incorporated (ATI) threatens to render the military and aerospace industries in America dependent on China.

ATI specializes in advanced materials, and over half of its output is distributed within the aerospace and defense sector.  They produce items ranging from airframes, jet engines, and naval systems to armor, as well as other products purchased by the U.S. armed forces and defense contractors like Boeing.  The company also partners with the Army Research Laboratory (ARL) to produce cutting-edge materials and new alloys.

China's Tsingshan Group is the world's largest stainless steel–producer.  It is viewed as a low-end manufacturer but has strong ties to the Chinese government and is a confirmed supplier to state-owned enterprises and the Chinese defense industry.  The company was also instrumental in the creation of China's first aircraft carrier.

According to a February letter addressed to Treasury secretary Steve Mnuchin, the Committee on Foreign Investment in the United States (CFIUS) may not have been advised of the deal, and it is not known whether the transaction was ever reviewed for national security implications.  Mnuchin is also the Chairmen of CFIUS.

The letter, which was sent by a coalition of almost 20 different think-tanks and political organizations, asked Mnuchin "to fully examine the national and economic security issues raised by this joint venture."

The letter continues, "[W]e believe you [Mnuchin] will find that there is enough evidence in the public domain alone for CFIUS to conclude the risks are simply too large and too significant to allow a state-backed Chinese company to integrate itself into such a significant player that is critical to the U.S. defense industry."

If this transaction truly failed to receive the appropriate scrutiny, this certainly sounds like a monumental "dropping of the ball" during a time when a potential breakdown in denuclearization talks with North Korea has led to talk of new weapons testing by the Kim regime.

Conflicts of interest exist, including China's intelligence agencies obtaining potential access to ATI's sensitive intellectual property, including plans for proprietary materials produced for the United States armed forces.  Chinese law allows the government to seize the records of private corporations arbitrarily in the course of what is considered in the interest of national security.

This arrangement also allows China insight on the American defense market as Tsingshan becomes acquainted with ATI's customer base of federal defense and aerospace contractors.  Worst of all, it makes ATI and by extension our armed forces dependent on a Chinese entity for the critical raw materials that our military relies upon.

There are some avenues available for additional vetting after the fact, but we really don't know exactly how much deeper into the American trove of military secrets this deal has already taken China.

New bipartisan legislation, referred to as the Foreign Investment Risk Review Modernization Act (FIRRMA), along with additional U.S. export control reforms signed into law last year, empowers the U.S. government to review transactions like the ATI-Tsingshan agreement for potentially posing a national security risk.  Congress should immediately demand that CFIUS conduct a full review of this dangerous joint venture.

China gouges the United States to the tune of almost one trillion dollars annually and has already shown a propensity for defiantly assisting the North Korean regime, contrary to sanctions.  With the Huawei mess and talk of tariff elimination still pending, Americans deserve answers during this complicated juncture in Sino-American relations.