An aerial view of Grand Forks, North Dakota. [Image: FEMA Photo by Brenda Riskey / Wikimedia Commons]

China's Fufeng Group Plans to Build its First US Plant in North Dakota's Grand Forks

China Asia

Grand Forks' Local Government Advisory Committee met at City Hall on January 12, 2022, and expressed support for big tax breaks for Fufeng Group, a Chinese agribusiness that will build its first US plant in the community. The proposed tax breaks would eliminate the majority of Fufeng Group's early property tax bill which would discount costs on the plant for the first 20 years. City Hall leaders argue these tax breaks are an essential incentive to attract Fufeng Group to the community, where their wet corn milling plant would create hundreds of jobs.

Tax breaks are the most recent part of Grand Forks' plan to lure Fufeng Group's investment. During earlier talks in November 2021, the city planned to invest $91 million in infrastructure improvements to accommodate the new facility and to put Grand Forks above other candidates Fufeng Group was considering. Grand Forks expects a major payout for its efforts. When the Grand Forks Public Information Center reported on November 6, 2021 that Fufeng Group selected Grand Forks, it stated the project could be the largest private investment in the city's history. Grand Forks Region Economic Development Corporation President and CEO, Keith Lund, expects the project will create 233 direct jobs and 525 indirect jobs in the region.

Although Grand Forks acquired a prospective deal from Fufeng Group, some observers are wary to welcome the China-based company. Major concerns about Fufeng Group include its relationship to China's government and its impact on the US food supply. Senator Kevin Cramer, expressed his suspicions of Fufeng Group stating China is not a reliable partner and the project in Grand Forks requires due diligence. University of North Dakota economist, David Flynn, suggests Fufeng Group ties the local economy and local jobs to China, and North Dakota's economy could experience pressure if China talks about changing corn-buying practices.

However, others emphasize the benefits of Fufeng Group to North Dakota's economy and the private ownership of the Chinese company should put concerns at ease. Governor Doug Burgum, who traveled to Grand Forks to help attract Fufeng Group leaders, believes North Dakota reaps the benefits of jobs, facilities, economic activity, and tax revenue from the project. Mayor Brandon Bochenski stated Fufeng Group is publicly traded on the Hong Kong Stock Exchange and he is not aware of any government ownership in response to local officials' questions about the company's ownership. Agricultural economist at North Dakota State University, Frayne Olson, also argues China's presence in US agriculture is not a threat to the US food supply and points out how the same concerns arose when Japanese companies entered the US agricultural sector.

Other concerns about ties between state and business – such as China's mistreatment of its Uyghur population and Fufeng Group's Xinjiang Province facility – may arise as Grand Forks prepares for the largest private investment project in its history. However, North Dakota is no stranger to investment from Asia. Asian greenfield projects have invested $1.2 billion and created 1,220 jobs in the state since 2003. Nonetheless, Grand Forks moves forward with Fufeng Group, as North Dakota stresses the need to pair the incoming economic benefits of Chinese business with due diligence and caution.

Mimi MacKilligan is a Research Intern at the East-West Center in Washington. She is a first-year graduate student at the George Washington University studying International Affairs with a double concentration in International Security Studies and Asia.