Former U.S. Official Warns Industrial Revival Impossible by Excluding China

On September 8, the U.S. Department of Transportation released a letter from Secretary Sean Duffy to Ford Chief Executive Officer Jim Farley. The letter criticized Ford for tying its future too closely to Chinese companies. It singled out battery technology licensing from CATL and the partnership with Geely in Europe, calling for reduced dependence on China. Ford immediately rebutted, explaining that its battery plant in Michigan is fully owned and operated by the company. It stressed that its relationship with CATL is limited to technology licensing. On September 9, Farley said the criticism reflected a fundamental misunderstanding. He argued the effort is about bringing advanced manufacturing capabilities into the United States. Against this backdrop, Brian Deese, former chair of the White House National Economic Council, contributed an article to a foreign affairs journal on September 10. According to reporting by Huxiu’s IPP Review©, he argued that U.S. foreign investment restrictions are weakening industrial policy.

Criticism of the Ford-CATL Partnership

Secretary Duffy’s letter questioned Ford’s battery strategy from the standpoint of national security and industrial self-reliance. Under the Michigan battery plant plan, Ford assumes ownership and operation of the factory. CATL remains in the position of providing a technology license. Nevertheless, the Department of Transportation judged the ties with China to be excessive. It also singled out cooperation with Geely in Europe for criticism. It urged prioritizing the strengthening of domestic manufacturing capacity.

Ford’s explanation has been consistent. It says the plant’s assets and jobs belong to the United States. It aims to accelerate the launch of mass production through technology adoption. Farley reiterated this point in his September 9 remarks. He said the goal is to establish advanced battery manufacturing methods domestically. He described it as a way to absorb know-how without relinquishing ownership.

While retaining ownership of the plant and control over its operation, it shows the potential to learn Chinese technology and build autonomous production capacity

Deese praised this model as exemplary. He saw value in the process of U.S. companies learning while retaining control. He argued it should serve as a template for industrial strategy.

Stagnation Caused by a Risk-Focused Review System

At the center of Deese’s criticism is the operation of the Committee on Foreign Investment in the United States. The Committee specializes in assessing national security risks. The technological gains and productivity improvements brought by investment fall outside its scope. As a result, companies struggle to obtain the expertise needed in electric vehicles and energy storage. He said the United States is blocking its own access to critical means.

The CHIPS and Science Act, enacted in 2022, set out to strengthen the domestic manufacturing base. It includes historic investment in semiconductors and science and technology. But its effects will diminish if exclusion of foreign capital and technological cooperation advances. He argued this is a pattern of undermining the achievements of industrial policy itself.

Exclusion targets more than equity acquisitions. It extends to joint ventures, intellectual property licensing, and all cooperation involving knowledge transfer. The chair of the Council of Economic Advisers proposed fees on holdings by foreign investors. In both houses of Congress, bipartisan bills seeking to tax inflows of foreign capital have also emerged. Exclusionary moves overlap from the federal to state and local levels. This makes it harder to use cutting-edge technology in data storage, critical mineral processing, and semiconductor manufacturing. He said it is ultimately a strategy that harms U.S. interests.

History of U.S.

Industry Developed with Foreign Technology

Looking back at U.S. industrial history, Deese emphasized the use of foreign knowledge. The gunpowder industry in the early 19th century is a prime example. At the time, the United States needed to move away from dependence on Britain. Backed by investment from France, chemist Eleuthère Irénée du Pont came to the United States. He brought knowledge of France’s advanced manufacturing technology. The company founded in 1802 became the government’s largest supplier of gunpowder. It subsequently remained at the core of innovation in chemicals and materials.

The auto industry in the early 1980s underwent a similar transformation. Major U.S. automakers had fallen behind Japanese competitors. GM and Toyota jointly reopened a closed plant in Fremont, California. They introduced Japanese manufacturing methods while largely retaining U.S. workers. This led to improved production quality and efficiency. He described it as a precedent in which foreign investment and expertise lifted domestic industry. He argued that what is needed is not decoupling from global technology but replicating it.

Perspective on Learning from China’s Use of

Foreign Capital

Deese focused on China’s methods for attracting foreign capital. China attracted Tesla’s wholly owned plant with cheap land and tax incentives. Domestic automakers absorbed technology through supply chains and manufacturing processes. They eventually gained competitiveness that overtook foreign players. He described it as the process by which China once absorbed overseas investment, technology, and production experience.

He sees the United States as being at a similar stage. In electric vehicles and energy storage, China stands at the technological frontier. He said catching up requires making use of technology licensing and joint ventures. He said conditional cooperation that leaves ownership and operational control at home is effective. He argued it should be designed not as imitation but as a mechanism for learning.

Reform Proposal to Create a Concrete

Approval Pathway

Deese called for a shift from a system for denial to a system for approval. He noted the current system is skewed toward means of saying no to investment. He said pathways to support beneficial cooperation are scarce. He said a framework is needed to accept foreign capital premised on ensuring transparency and protecting information. He said control by Americans should be a condition in critical situations.

For allies, he proposed simplifying reviews and expanding exemptions. For countries of concern such as China, he said the Defense Department’s FOCI system should serve as a model. The establishment of an independent U.S. board of directors would be a condition. Information barriers and separation of authority would also be required. It is a way to allow investment while thoroughly enforcing security isolation. He argued risks can be managed while leveraging foreign capital and technology.

Editorial Opinion

On the short-term impact. Over the next three to six months, scrutiny of Ford’s battery plant plan and the political exchanges are expected to be the focus. If the Department of Transportation’s letter leads to additional conditions or investigations, mass-production timelines and procurement plans could be affected. Debate over domestic sourcing of batteries and parts is also expected to intensify.

On the long-term perspective. Over the next one to three years, whether technology licensing is accepted will determine competitiveness in batteries and energy storage. If the model of keeping ownership at home takes hold, it could spread to semiconductors and critical mineral processing. Measures to reconcile industrial policy with national security will be tested.

Questions from the editorial team. Where is the line separating national security risks from the benefits of technology acquisition? Can information barriers and board composition sufficiently contain risks? Are indicators needed to distinguish whether dependence on Chinese technology is temporary learning or permanent subordination?

References

• “ 全面排除中国？美国前经济高官：要重振工业，就无法将中国拒之门外 “, by IPP评论© — 虎嗅网, 2026-09-12T11:40:39.000Z (ARR)
• Source URL: https://www.huxiu.com/article/4890701.html?f=rss