We see that you have javascript disabled. Please enable javascript and refresh the page to continue reading local news. If you feel you have received this message in error, please contact the customer support team at 1-833-248-7801.

ADVERTISEMENT

ADVERTISEMENT

Connection to China troubles Grand Forks’ Fufeng deal

Proponents of local corn mill factory can’t shake community suspicion that Fufeng is up to no good.

Fufeng1.jpg
Eric Chutorash, COO of Fufeng USA Inc., discusses Fufeng's proposed corn wet milling plant in Grand Forks during a city council meeting Monday, April 19, 2022.
Eric Hylden/Grand Forks Herald
We are part of The Trust Project.

GRAND FORKS — If there’s one sticking point for skeptics of Fufeng Group’s plans in Grand Forks — one big concern that stands above the rest — it’s the company’s ties to China.

There are others, of course. Ever since Fufeng’s plans for a massive new north-end corn-milling plant was announced, neighbors have worried about the traffic or the smell. Others have fretted about carbon emissions or the water supply.

But the loudest and most consistent voices have often returned to the same fear: that there’s an unseen risk to doing business with China.

The match that lit that debate was struck on Jan 10, when consultant Ross Kennedy published a new post on his “Fortis Analysis” blog, raising a 1,500-word alarm about the deal with Fufeng Group.

Kennedy’s post spun a concerning story about the company. Not only would the company’s tax breaks and expensive infrastructure make for a financial boondoggle, he argued, but the company’s ties to the Chinese Communist Party, its apparent operation near a Chinese forced labor camp and the new Grand Forks plant’s proximity to Grand Forks Air Force Base all made for a profound threat.

ADVERTISEMENT

More on Fufeng
South Dakota U.S. Rep. Dusty Johnson, one of 51 U.S. representatives who signed the Sept. 26 letter, told Agweek in a prepared statement, “China is not our friend, and if a purchase such as the one near the Grand Forks Air Force Base is a strategic move by the Chinese Communist Party to intercept sensitive U.S. military communications, this would cause serious problems."

“Taken together, this absolutely follows the playbook of China’s ongoing expansions of the Belt and Road Initiative,” Kennedy wrote, referring to a Chinese foreign policy initiative to invest in infrastructure projects abroad. “And perhaps for the first time, (it) represents a stealth implementation of the project on the United States’ own soil.”

The news moved fast. In coming weeks, it bounced from the blog’s website, through social media and around Grand Forks, planting some of the earliest seeds of the anti-China fervor that would come to characterize the plant’s arrival. In a matter of weeks, angry Grand Forks residents started showing up at City Hall.

“You people want to bring communist China to Grand Forks,” one speaker told the City Council in early March. “They kill people in communist China who say where they live, who do anything the state doesn’t want. And I don’t want to be killed. So you people are scaring the heck out of me.”

In his January blog, Kennedy noted the Fufeng Group chairman’s involvement in provincial Chinese politics and some Chinese government praise for the company. He said that a Fufeng facility is located near a labor camp. (Fufeng has provided a third-party report denying forced labor at a northwest China plant, though the Wall Street Journal has raised concerns about such reports’ reliability in recent years).

There was no evidence in the blog that conclusively linked Fufeng with U.S.-based espionage or other aggression.

Fufeng meeting.jpg
A pickup truck parked across from City Hall ahead of a City Council meeting displays one view of the proposed Fufeng corn wet milling plant.
Eric Hylden/Grand Forks Herald

Kennedy identifies himself on social media as a senior fellow with the right-wing Security Studies Group. In an interview with the Herald this week, he traced his logic back to one basic, unifying argument: that China is a serious national threat.

Since January, Kennedy has closely followed Fufeng Group, posting a follow-up blog in March. He argued that the project still hadn’t been vetted properly and that benefits to local farmers are overstated. He hammered local leaders for downplaying the plant’s links to China. He’s made a slew of media appearances since then, from local outlets to a hit on Blaze TV.

But as Kennedy has spoken out against the project, top Grand Forks leaders have grown frustrated with what they see as wild speculation that fueled opposition in the community. Some have publicly wondered about Kennedy’s motives, even skirmishing with him on social media.

ADVERTISEMENT

“Who's paying his bills, who paid him to fly to Grand Forks (from Ohio) … who's paying him to put out the garbage, conjecture, speculation, innuendo that he is?” City Council President Dana Sande said in an interview this week.

At a November Bitcoin conference , a biography page for Kennedy noted that he is “director of global logistics and supply chain for an international food and animal feed ingredient manufacturer.” Kennedy acknowledges that relationship, but said it is part time and not a competitor to Fufeng. He said he has “a number of strategic advisory relationships and roles in the agribusiness industry.”

He denied working as a paid operative and said he paid for his own travel to Grand Forks.

“This idea of saying ‘motive is the only thing that matters,’ and (that) motive can discredit truth, or accuracy of facts, is indeed probably the silliest talking point ever,” he said.

Vetting concerns

The Herald sought to vet China concerns earlier this year with James McGregor, a former Wall Street Journal reporter in Asia and former Washington correspondent for the previous parent company of the Herald. He downplayed worries about Chinese investment and joked that a Chinese businessman not having a communist party connection would be “like being a Catholic and not being connected to the Vatican.”

“What are they going to do? Are they going to take over the city of Grand Forks and make it part of China?” McGregor, who is now a consultant for APCO Worldwide, asked in a January interview. “Come on.”

But anxieties about China have been part of the press of concerns at City Hall. They’ve helped buoy a petition that was filed earlier this year with roughly 5,000 valid signatures, demanding a referendum on the plant’s future. City leaders deemed it invalid for a range of technical and legal reasons, but they have not yet shaken the criticism.

110621.n.gfh.Fufeng2.jpg
The future site of the Fufeng group project on the north end of Grand Forks. Eric Hylden/Grand Forks Herald

And it’s not just Kennedy that’s worried. The FBI devotes a page on its website that outlines “The China Threat,” which says that China “is employing tactics … to influence lawmakers and public opinion to achieve policies that are more favorable to China.”

ADVERTISEMENT

“When we tally up what we see in our investigations — over 2,000 of which are focused on the Chinese government trying to steal our information or technology — there is just no country that presents a broader threat to our ideas, our innovation, and our economic security than China,” FBI Director Christopher Wray said in a speech delivered in California in late January.

CIty leaders have acknowledged that threat, discussing the matter with Grand Forks Air Force Base leaders and hosting a presentation from the head of the North Dakota Trade Office. A briefing from the FBI came in late April; attendees said it offered a broad briefing on Chinese agriculture investments that allayed their concerns about Fufeng Group (an FBI spokesperson said this week that “we do not generally comment on our discussions).

RELATED: Attendees of meeting with FBI say agency did not raise concerns about Fufeng’s expansion in Grand Forks

City leaders say they haven’t heard any concerns. But they’re often frustrated to find that this isn’t enough for critics, who insist that Grand Forks pursue the process further, or prove a negative about a corporation headquartered half a world away.

“Unless you find something that says definitively, yes, they are linked to espionage or forced labor or something like that you don't really get a satisfying answer,” City Council member Jeannie Mock said. “Because the only answer you get is, ‘Well, we've found no evidence that they're linked to that.’”

The city is under significant economic pressure to take the deal, too. The Fufeng plant is estimated to bring 233 jobs, and according to figures circulated by the local Economic Development Corporation, that could induce hundreds more jobs in the community. That would be a boon for a city that’s still at roughly the same civilian labor force size it had in the 1990s, while other North Dakota cities have grown.

City leaders have also wondered about the lack of subtlety to the idea of espionage at the Fufeng plant. Alex Reichert, a member of the city’s Planning and Zoning Commission, asked at a meeting this week why it wouldn’t be easier to spy out of a nearby home, instead?

“Quite frankly, I think it would be harder if you have 150 John Smiths running around saying, ‘What is this room we can’t go into with all the antennas coming out of it?’ As opposed to the house I have next door where I would have no idea,” he said.

Others have opted for more direct skepticism. City Council member Bret Weber compared China concerns to “Hogan’s Heroes,” the 1960s sitcom about Allied soldiers in a Nazi prisoner-of-war camp.

“Occupants were kind of able to control all of Germany from the tunnel they dug under their cots,” Weber said at a March City Council meeting. “It’s a very funny show. But the idea that the entire security of the future of the United States is hinging on the decision of seven council members from a city of less than 100,000 (people) — if that were the case, we’d have a whole lot more to worry about than the development of a plant.”

The city has been exploring another option: review before the Committee on Foreign Investment in the United States, a body that vets national security risks for foreign investments in the United States.

But it’s unclear whether the project will ever make its way through that process. Both City Hall and Fufeng Group have questioned whether the project fits the standards for CFIUS examination.

“Fufeng is not opposed to a CFIUS review,” Fufeng USA COO Eric Chutorash wrote in an email to the Herald. “However, in order to submit to a CFIUS review, Fufeng would be required to consent to a CFIUS review and state the reason per the specific CFIUS regulations why it is requesting the project in Grand Forks to be reviewed. Since the project does not fall under those regulations, Fufeng cannot provide a reason for the request to review and therefore would not expect to receive any response from CFIUS on a submission.”

City Administrator Todd Feland said the city is pursuing a third-party legal review of that discussion.

In his email to the Herald, Chutorash did not comment on security concerns linked to China. But he’s previously told City Council members that Grand Forks beat out two dozen other options based on easy access to crops, natural gas, rail lines and the like.

“I know we’re not going to be asked to be collecting any intelligence on Grand Forks Air Force Base,” Chutorash told the Herald during a forum in March . “I can’t stress it any more than that. (But) me personally, I wouldn’t provide it. I don’t believe the team being built there would provide it. … Our HR director, commercial director and sales team and engineer, they're from here – they're not people transferred from China. The workers in the plant will be Americans. I can't imagine that anybody in the facility would participate in that.”

Concerns elsewhere

This has all happened before – the Chinese investment, the panic over security, the expressions of concern from Washington leaders. It all unfolded in recent years in southwest Texas as a Chinese billionaire launched investment plans in Val Verde County.

The project there was a wind farm, located not far from Laughlin Air Force Base. In 2019, when news of the project spread, concern set in.

“What began as a mild-mannered campaign to protect a local river soon escalated into a political maelstrom around national security and foreign investment,” Forbes reported in August. “(Chinese billionaire Sun Guangxin’s) U.S. critics alleged that a wind farm controlled by a Chinese company would seek to tamper with, or even shut down, the embattled Texas energy grid; some speculated the turbines would be used to gather military intelligence on the activities of nearby Laughlin Air Force Base.”

The result was a thorny political problem that echoes nearly every beat of the debate now raging in Grand Forks. Texas Republican Sens. Ted Cruz and John Cornyn sounded the alarm in a letter to a top Treasury Department official. By June 2021, state officials had passed a law barring “hostile nations” from accessing “critical infrastructure” like Texas’ electricity grid.

“The Chinese Communist Party has demonstrated time and again they’re willing to invest billions of dollars to expand their espionage capabilities and their global reach, including through land purchase schemes near military bases,” Cruz told Forbes.

But the story pointed out that some of the China panic came from a group with environmental concerns, which found national security rhetoric gained more traction than “wonky ecological talking points.” Forbes also pointed out that wealthy Chinese elite are under pressure to move money outside the country — especially after Jack Ma, an outspoken Chinese billionaire, briefly disappeared from public view in late 2020.

“I think many more wealthy Chinese will fear their future based on what has happened to Jack Ma and others,” Hong Kong-based Alicia Garcia Herrero, an economist at a French investment bank, told the publication. “I think the U.S. is going to receive a lot of money.”

The story is notable because so much of it now rings true in North Dakota — right down to the worries about Chinese espionage. This week, Sen. Tom Cotton, R-Ark., raised concerns about Fufeng Group to Gen. Charles Q. Brown Jr., Air Force chief of staff, asking broadly about Air Force plans to confront Chinese espionage.

“Maybe it’s just a corn mill,” Cotton said. “But it would also provide the potential, at least, for Chinese intelligence to engage in intelligence collection of various kinds.”

Gen. Brown responded that he couldn’t discuss counterintelligence matters publicly.

“I recently just became aware of this one, in particular, but it’s something we do pay attention to across the board,” Brown added.

The project had also drawn concerns from North Dakota’s senators, both of whom urged due diligence on the project earlier this year, citing security concerns. Sen. Kevin Cramer, R-N.D., has relaxed his security concerns about the plant.

“If the FBI has given it the all clear, if the Air Force hasn't expressed an objection, I guess from a security standpoint, they've done the vetting they need to do,” Cramer said.

But Cramer is uneasy with the plant for other reasons — notably, that the plant will put North Dakota and the United States deeper in China’s economic sphere.

“When I say China's behavior, it's really their behavior in using economic tools to gain economic advantages, particularly in food supply chains, pharmaceutical supply chains, energy supply chains,” he said. “We’re having this debate right now over critical minerals, and China provides 75% the lithium that will be used in batteries.”

And Sen. John Hoeven, R-N.D., has continued to keep a close eye on the project’s vetting.

“Sen. Hoeven believes that security concerns need to be addressed up front. We understand the city is undertaking that process now and has spoken with Air Force and law enforcement officials to determine and address potential issues,” read a statement provided by his office. “They should then provide information so the public knows those security issues have been addressed before they decide whether or not to move ahead.”

City Council member Katie Dachtler, who is Korean-American, said the process has been frustrating. She recently took a call from a member of the national media about the debate over Fufeng, and said she’s sad to think that Grand Forks might be known for a debate that, in recent months, has seemed to cross the line from sober judgment into something that’s seemed to dovetail with rising hate against Asian-Americans.

No matter what the city does, it’s caught in a high-stakes decision — one that doesn’t seem to have a popular answer.

“There’s no choice that’s going to make the community happy,” Dachtler said.

Related Topics: FUFENG
Sam Easter is a freelance reporter who has been a regular contributor to the Herald since 2019. He covers a variety of topics, including government and politics.

In 2015, he joined the Herald’s staff as City Hall reporter, covering North Dakota politics at all levels and conducting Herald investigations through early 2018, when he began his freelancing career.

Easter can be reached at samkweaster@gmail.com or via Twitter via @samkweaster.
What to read next
His change of plea hearing is scheduled for Oct. 10.
During the event, attendees enjoyed yard games and music in downtown's Town Square, the site of several improvements.
When Jay Clark and Tammy Soma Clark began Rochester's Apples R Us in 2009 they only had 300 trees planted, now in 2022, they have over 12,500 with plans to plant a third orchard section by 2024.
The induction ceremony begins at 1 p.m. Sunday, Oct. 2 at the Red River High School Theater, with a dessert reception to follow.