Indiana’s Republican Government Funds Contractor to Attract Chinese Businesses

Indiana’s speedy passage of House Bill 1183 in March, prohibiting certain land sales to companies from China and other adversarial countries, has halted a pending real estate deal with the China-owned company Fufeng, according to LaPorte County Assessor records. Fufeng was looking for real estate in Indiana after being booted out of Grand Forks, North Dakota, following a U.S. Air Force memo that called it a “significant threat to national security.”

Fufeng managed to implant itself in North Dakota with a land purchase before being tarred and feathered out of the state. Fortunately, it was legislated out of Indiana — for now.

Fufeng’s short-lived appearance in Indiana was a smoking gun. What else is going on? The Indiana Economic Development Corporation (IEDC), an unelected upgrade to the traditional commerce department, helps select and develop businesses in Indiana. The IEDC has set up many China-owned companies in the state, including 25 currently operational, according to the IEDC general counsel.

The trend of China-based companies in Indiana has not developed organically but through centralized planning with the help of a Chinese Communist Party-linked nonprofit. A contract on the IEDC’s website shows that it has been paying the America China Society of Indiana (ACSI) to facilitate deals with China-owned businesses. The contract outlines IEDC’s interest in “identifying and creating a pipeline of [foreign direct investment] prospects in China” and preparing trip itineraries, among other tasks.

A state contract to fill a requested “pipeline” of China-owned businesses wishing to engage in foreign direct investment, including the purchase of U.S. land, is concerning. The 2017 National Intelligence Law of the People’s Republic of China directs that “any organization or citizen shall support, assist, and cooperate with the state intelligence work” and “state intelligence work institutions shall collect and handle the acts or acts of foreign institutions, organizations, and individuals….”

In other words, China-owned companies operating in the United States are expected to collect intelligence on the United States. Further, most large Chinese companies, especially those allowed to expand into the United States, have CCP members or even party committees within them ensuring loyalty to the CCP’s goals.

Beyond the concerns with Chinese companies taking root in the United States, an organization such as ACSI introduces additional issues when attached to state-level government. ACSI has implemented a series of influence operations and public relations events that may have compromised state decision-making through pressure, gain, or both.

You Will Know Them by Their Fruits

ACSI’s 2018 board of directors paints a picture of the IEDC’s exposure to CCP influence.

• A member of the IEDC is on the board, guaranteeing that the IEDC is not only aware of, but actively has influence in, ACSI’s activities.
• Westfield Outdoors is one of the China-owned businesses that ACSI brought in as part of the “pipeline.” Westfield Outdoors, along with other China-owned businesses, is one of ACSI’s member sponsors, which in turn influence businesses ACSI recommends to Indiana.
• Dr. Zao (Joe) Xu, founder of the Confucius Institute at Indiana University-Purdue University Indianapolis, was on the ACSI board until 2018. The U.S. government defunded Confucius Institutes (CI) following expert testimony identifying CI as part of a CCP influence operation. The Confucius Institute at IUPUI closed in 2019 along with nearly all others in the United States.

A board that convenes Indiana government representatives alongside CCP-linked influence operators and oversees a society whose members include China-owned businesses with an intel-gathering mission is a recipe for compromised decision-making.

The Deepening

In 2019, Indiana Governor and IEDC Board Chairman Eric Holcomb took a trip to China likely arranged by ACSI “to renew the Indiana-Zhejiang sister-state relationship” established back in 1987. The Indiana legislature has since banned sister-city agreements with China, so Holcomb had to sign a bill that deeply criticizes the same kind of agreement he celebrated just five years ago.

During that trip, Holcomb visited with the president of the China People’s Association for Friendship with Foreign Countries (CPAFFC), known as the “‘public face’ of the CCP’s United Front Work Department.”

In contrast to ACSI’s description of CPAFFC as “focused on deepening international friendships,” the CPAFFC’s mission in its own words is “to make the foreign serve China.” This stunning whitewashing is readily available on Wikipedia.

Why did Indiana’s governor meet with the leader of the part of the CCP’s influence operation concerned with making other countries serve China? ACSI would have added the CPAFFC stop to the itinerary as part of its role arranging IEDC’s China-bound trips, at the direction of the CCP. It is possible that Holcomb thought he was innocently “deepened” by a nice lady with a panda plate. But from the CPAFFC’s and CCP’s point of view, he declared his subservience.

‘Mask Diplomacy’

During early Covid days, China hoarded masks while companies like MyPillow diverted production to manufacturing masks for donation. Then China decided it was time to share. ACSI worked diligently to ensure Indiana participated in the geopolitical phenomenon later coined “Mask Diplomacy.”

Mask diplomacy, the CCP’s effort to look generous and deflect suspicions that Covid came from the Wuhan Lab, involved distributing small quantities of masks for a photo op. Indiana was among the favored states and countries to receive the honor of free masks, per the July 2020 news story on ACSI’s website.

In reality, this publicity stunt was a favor the CCP called in, likely among those trusted partners who have pledged allegiance to the CCP’s head of foreign submission (the CPAFFC) and could be counted on to promote this effort. With both the general public and the carefully selected recipients, the self-serving “favor” was an investment that would be expected to produce a return.

To the recipients, it was likely a nuisance. In context, 100,000 masks is a very small number. The IEDC reported in 2020 with macabre glee that it took fiduciary charge of spending $49 million on 27 million masks for the state, the smallest order of which was 1 million masks. The Chinese gift came with a very detailed receipt — the only mention of this event on IEDC’s website:

The IEDC likely had little “desire” for such a small quantity of masks, other than to satisfy the CCP’s desire to give masks and take credit. But in doing so, the state of Indiana (through its contractor ACSI) accepted a public gift from the Zhejiang Provincial Government of the CCP with an approximate value of nearly $200,000. What are the odds that the CCP would parlay that “favor” into a return gesture?

Far-Flung Fufeng

These are some of the more interesting elements within a long pattern of CCP-linked business development activities, advertised little if at all by the IEDC. It may also explain why the IEDC accepted the disgraced Fufeng earlier this year after its Department of Defense-directed expulsion from North Dakota.

Will the IEDC cancel its contract with ACSI for a “pipeline” of China-based companies in light of the HB 1183 restrictions? Do other states have similarly low-profile links to the CCP buried deep within unelected departments? The nearly two-thirds of all U.S. states currently advancing anti-China bills similar to HB 1183 may be doing so at odds with influence operations hidden within their own governments.