Strategic Materials Advisory Council Opposes Chinese Acquisition of US Defense Supplier


Strategic Materials Advisory Council Opposes Chinese Acquisition of US Defense Supplier

Strategic Materials Advisory CouncilJeffery A. Green, Founder & Member202-546-0295

The today urged the (CFIUS) to oppose the acquisition of U.S. battery manufacturer by Chinese automotive parts manufacturer, Wanxiang Group Corporation. In a to Timothy Geithner, the Council warned that “[t]his transaction would no doubt result in the loss of American jobs and the transfer of technologies critical to our nation’s infrastructure and military hardware to China.”

The Council further noted, “For over thirty years, China has pursued an overt economic strategy of acquiring both natural resources and promising technologies. This strategy creates Chinese dominance of entire supply chains for selected materials and related technologies. Allowing Wanxiang to acquire A123 Systems would continue this trend and make the U.S. dependent on an unreliable foreign source for yet another critical defense component. For example, China has a near monopoly of rare earth production that allows it to manipulate the supply for a range of defense and renewable energy products, including nickel-metal hydride battery production. The U.S. must not allow China to acquire a similar position with A123’s lithium-ion battery technology and dominate its supply chain as well.”

The Council also expects Wanxiang to share A123 Systems’ technologies with the Chinese military if the sale is approved.

A123 Systems manufactures advanced lithium-ion batteries that provide critical electrical storage for various applications, including civilian and military vehicles, renewable energy sources, and deployable power systems. Recognizing the strategic importance of this capability, the U.S. Government has awarded nearly $250 million in stimulus grants to A123 Systems and the Department of Defense entered into multiple research and development contracts with the company.

The Council called on CFIUS to oppose this proposed acquisition to protect U.S. economic and national security interests. The letter notes that typical risk mitigation would be ineffective, as any transfer of intellectual property could be reverse-engineered.

The Strategic Materials Advisory Council is a coalition of former U.S. Government leaders and industry experts who have significant experience with strategic and critical materials through decades of service in the public and private sector. The Council was formed with the clear objective to promote policy solutions that ensure continued access of both U.S. industry and military to those materials needed to support a robust 21st century economy and military.