Capital Hill: Not Down with A123 Systems Chinese Bailout 0

Since when did China become an enemy of the United States?

Since it started bailing out U.S. green technology companies that have backing from the Obama administration, that’s when.

Such would appear to be the logic of U.S. Rep. Cliff Stearns, R-Fla, who came out strongly last week against the proposed $450 million deal that would give Chinese auto parts giant Wanxiang Group an ownership stake in the financially struggling — and federally funded — lithium-ion battery maker A123 Systems.

“It appears the Department of Energy and the Obama administration have failed to secure sensitive taxpayer-funded intellectual property from being transferred to a foreign adversary, which raises serious national security issues,” Stearns said in a statement.

Let’s break down that accusation into its constituent parts. First of all, it’s a bit hyperbolic to call China a “foreign adversary” in terms of the energy storage industry. After all, much of the advanced battery manufacturing today is carried out in China, including batteries from U.S.-based companies like A123 and rival lithium-ion battery maker Boston-Power, which announced a big Chinese partnership last week.

A123 does have more than $20 million in contracts with the U.S. military, which could provide some concern among lawmakers that its technology will now be available to a foreign company to study. Indeed, Energy Secretary Steven Chu has said that the federal government must keep a close eye on U.S.-China trade relations and technology sharing, to ensure that sensitive or protected technology remains free from foreign interference or capture, particularly in the realm of the power grid and other critical infrastructure.

But China is also going to be a huge market for energy storage and electric vehicle technologies, presenting a pathway for the two countries to cooperate, rather than compete, on those technology fronts. Given the relatively small market share U.S. companies now have in advanced batteries — big players like Panasonic, LG Chem, Saft and BYD hail from Japan, South Korea, France and China, respectively — it seems unwise for the government to pick a fight that could lead to a trade war like the one the solar industry is experiencing today.

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