Shanghai group says US has ‘xenophobic’ view of Chinese investors

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A Shanghai-based manufacturer of advanced laser sensors for cars has accused the Biden administration of fostering a “xenophobic” environment for Chinese investors that will leave the US at risk of losing out on automotive innovation.

Louis Hsieh, chief financial officer of Hesai, said “hostile” attitudes towards Chinese investment had prevented it from opening a $60mn manufacturing plant in the US. 

“The temperature is so high. It doesn’t matter what you want, if you’re trying to be a global corporate citizen and help America, they don’t care. The label China turns them off,” Hsieh said, calling for a “level playing field” for Chinese investors. 

His comments came hours before a high-profile meeting between US President Joe Biden and Chinese leader Xi Jinping that aims to alleviate tensions between the world’s two largest economies. Worsening US-China relations have curbed Chinese investment in the US, with investors worried their projects will become political flashpoints. 

Chinese investment in the US plunged 58 per cent to $2.5bn last year — its lowest level for more than a decade and down from a record $48bn in 2016, according to an analysis by Rhodium Group, a think-tank. Business activity, including revenue and local employment, at Chinese companies that were already present in the US market has also declined.

In February, Hesai became the largest Chinese company to go public in the US since 2021, in a $2.4bn initial public offering that executives hoped would ease tensions that had caused Chinese listings in the US to grind to a halt. This followed a regulatory crackdown by the US Securities and Exchange Commission linked to accounting oversight rules and the forced delisting of ride-hailing group DiDi. 

Last month, the US International Trade Commission sided with Hesai in a dispute filed by US rival Ouster that accused Hesai of patent infringement. Hesai called the accusations from Ouster “un-American” and part of a “national origin based” smear campaign. 

The company also faces high tariffs to supply US vehicles and is not seeking tax credits in Biden’s landmark climate law, the Inflation Reduction Act. Upcoming rules for the IRA’s electric vehicle tax credit will ban vehicles from sourcing from China, which critics say risks slowing the US electric vehicle rollout given Beijing’s dominance in the sector.

“The US just seems to think that if it’s a Chinese company bringing that technology, you must have an ulterior motive, you may be a threat to national security, which is not true,” said Hsieh. “We thought Biden would be better, he’s actually just as tough if not worse.”

While foreign investment from Korean and Japanese companies has surged since the IRA was passed, Chinese investments have been few and infrequent, often drawing local and national backlash. Last month, Republican presidential candidate Vivek Ramaswamy criticised Chinese battery company Gotion’s planned factory in Big Rapids, Michigan, arguing “we will not let our children become Chinese serfs”.

Hsieh warned that by excluding Chinese investment the US could risk falling behind China and Europe in automotive innovation. While US automotive companies have focused on hardware, China is leading the industry on automotive software, particularly in autonomous driving.

“For America, the cost will be high . . . You’ll fall behind China and Europe and other parts of the world in intelligent driving. Their cars will be much smarter than the cars in America, much safer and much more desirable,” Hsieh said.