Why one of China's richest men is squaring off against Obama in court
Wu Jialiang, CEO of Ralls Corp. is challenging Obama's refusal on national security grounds to let him build a wind farm in America, marking the first such high level case in the US from a Chinese firm.
One of China’s richest men squares off against President Obama in a Washington federal court today, challenging the US leader’s refusal, on national security grounds, to let him build a wind farm in the US.Skip to next paragraph
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“We are suing the president because we do not accept his finding that we are a national security threat. It is not true,” says Wu Jialiang, CEO of Ralls Corp., whose deal to buy land for a wind farm in Oregon near a US Navy weapons training facility ran into a presidential veto in September.
US and Chinese lawyers say it is unlikely Ralls will win its case, but that the high profile challenge is a landmark in Chinese companies’ increasingly bold strategy of investing abroad. It could also serve as a test of Chinese allegations that US investment rules are biased against Chinese companies.
Ralls Corp. is affiliated to Sany Group, one of China’s biggest private companies, whose president, Liang Wengen, ranks sixth on Forbes 2012 China Rich List. Ralls co-owner Mr. Wu is Mr. Liang’s deputy and proxy.
Ralls bought four plots of land on which it planned to build a wind farm in March 2012. The deal was later blocked by the Committee on Foreign Investment in the United States (CFIUS), a government agency empowered to review foreign purchases of US assets to ensure they entail no national security risk.
CFIUS said it had found “credible evidence” that Chinese ownership of land near a military facility posed a risk. Ralls challenged that finding, prompting Mr. Obama to issue the first presidential order in 22 years backing a CFIUS ruling.
He issued the executive order at the climax of his presidential campaign, when he was under fire from Mitt Romney for being soft on China. Ralls then filed a suit against the president for exceeding his authority.
Lawyers do not expect the case to go far.
“The government has a pretty good case that once the president issues an executive order, that is the end of the story,” says David Fagan, an expert on cross-border investment with Covington & Burling, a Washington law firm. “The statute is pretty clear that the president has the authority to prohibit a transaction to safeguard national security.”
‘When you challenge the Titan’
But the lawsuit has symbolic and psychological value, says Hao Junbo, an independent expert on transnational legal cases. “It will be good publicity in China,” he says. “When you challenge the Titan, the US, you appear a hero.”
At the same time, Mr. Hao adds, “the case presents a confident Chinese company insisting it has not done anything wrong. This case’s meaning is psychological.”