US government suffers from another bout of Chinese paranoia

Super-paranoid US Senators are apparently worried that a Chinese company’s moves to buy a battery firm could be a Communist plot to take over the world.

Chinese engineering outfit Wanxiang is thinking of buying the troubled battery maker A123 which makes lithium ion batteries for electric cars.

According to Reuters, senators are worried that A123 batteries are used used by the military and to support the US electrical grid and could mean that the Chinese could rig each battery to do something terrible to America.

Writing a stiff letter to Treasury Secretary Timothy Geithner, Energy Secretary Steven Chu and other top cabinet officials called on the government to make sure that the sale does not threaten domestic security.

Of course, the fact that the Chinese Wanxiang, which is buying bankrupt A123 is daring to compete with a US company called Johnson Controls for the sale is nothing to do with it.

Signing the leter were eight senators and one senator-elect including Republican Rob Portman of Ohio and Democrat Dick Durbin of Illinois.

Buying A123 requires approval from CFIUS, a US inter-agency panel that vets foreign deals for security concerns.

Also on the list was the lawmakers concerned that Wanxiang could receive taxpayer funded assets from A123, which was awarded a $249 million grant by the Obama administration.

But if Johnson Controls buy the company, apparently the transfer of assets, technology and intellectual property is less of a problem.

This is a repeat of a line that the US government used in court that A123 cannot be sold without its consent since it received a grant from the Energy Department.

It said at the time none of the government’s grant would be allowed to fund facilities abroad.

But the company had only received about half of its grant when it applied for Chapter II. The government knew that a sale was happening, but thought Johnson Controls was the buyer.

What appears to be happening is that the US government delivered a huge aid package to Johnson Controls through A123 and is furious that a Chinese company might sweep in and take it.

Quite why A123 and Johnson Controls should be given government grants is a little strange. If the US government was really serious about security concerns from Chinese companies they would ban all Chinese goods and blacklist companies who outsourced their factories to China.