Louisiana Gov. John Bel Edwards (D.) pledged a $4.3 million taxpayer-funded grant to a chemical manufacturing company owned in part by the Chinese government.
Edwards announced Monday that Wanhua Chemical had agreed to invest $1.1 billion to build a plant in Louisiana in exchange for the grant and a series of tax breaks, including an exemption from property taxes on the plant for 10 years.
The company also will benefit from the state's Quality Jobs Rebate program, which will grant a 6 percent cash rebate for up to 80 percent of the company's payroll for new jobs over the next decade. Wanhua Chemical's entire payroll will be eligible for the rebate beginning in 2018.
Edwards touted the agreement as "a testament to the strength of Louisiana's business climate and unmatched transportation logistics" that will bring 170 high-paying jobs to the state.
The deal also will send Louisiana tax dollars to the Chinese government and members of the Chinese Communist Party, which own a sizable percentage of the chemical company. Wanhua Industry Group, a holding company that owns almost a 48 percent stake in Wanhua Chemical, is itself almost 40 percent owned by a Chinese government entity, the Yantai State-owned Assets Supervision and Administration Commission (SASAC),
Richard Carbo, a spokesman for the governor's office, rejected the idea that China's Communist Party would receive Louisiana tax dollars as a result of the deal, arguing the grant is tied to private investors rather than the government or any political party. Nevertheless, several associates on Wanhua Chemical's board are members of the Chinese Communist Party.
Carbo also noted that Wanhua Chemical will only receive the $4.3 million grant if it completes the project and creates the number of jobs it promised.
"If they don't meet those obligations, they don't receive the performance-based grants," Carbo told the Washington Free Beacon. "If they do meet those obligations, the state of Louisiana and its people will be the beneficiaries of billions of dollars of new economic output in our state, as well as the additional infrastructure improvements."
The plant will produce methylene diphenyl diisocyanate, or MDI, which is commonly used in the production of products containing polyurethane foams such as refrigerators, furniture, and shoes.
Edwards and Zengtai Liao, the president and "communist party secretary" of Wanhua Chemical, are expected to announce a location for the complex "in the coming months," according to Louisiana Economic Development.
The agreement marks the second-largest Chinese investment in the state's chemical manufacturing industry. Yuhuang Chemical, a subsidiary of China's Shandong Yuhuang Chemical Company, is developing a $1.85 billion methanol complex in St. James Parish, Louisiana, located some 50 miles west of New Orleans.