Massoud Hayoun

China’s Louisiana Purchase: Who’s building a methanol plant on the bayou?

Al Jazeera investigates ties between Louisiana and the Chinese government in a proposed $1.85 billion methanol plant

This article is part one of a three-part series on China’s role in redeveloping southern Louisiana called China’s Louisiana Purchase. The second part explores allegations of environmental racism by the predominantly black community where the plant will be built. The third part examines New Orleans' controversial bid for EB-5 investments.

ST. JAMES PARISH, La. — A prominent Chinese tycoon and politician — whose natural gas company's environmental and labor rights record recently started coming under fire in the Chinese press — is parking assets in a multibillion dollar methanol plant in a Louisiana town. And he appears to be doing it with help from the administration of likely GOP 2016 presidential ticket contender Louisiana Gov. Bobby Jindal.

Not many locals in a predominantly black neighborhood of St. James Parish — halfway between New Orleans and Baton Rouge — know that Wang Jinshu, the Communist Party Secretary for the northeastern Chinese village of Yuhuang and a delegate to the National People’s Congress, is the man at the helm of a $1.85 billion methanol plant to be built in their town over the next two years with a $9.5 million incentive package from the state. The details of the project are unclear, residents say, largely because they were not told about the project until local officials, amid discussions with state officials and Chinese diplomats, decided to move forward with the project in July 2014.

“We never had a town hall meeting pretending to get our opinion prior to them doing it,” said Lawrence “Palo” Ambrose, a 74-year-old black Vietnam War veteran who works at a nearby church. “They didn’t make us part of the discussion.”

The Chinese company has filed for expedited permits to construct and operate a plant on a sprawling 1,100 acres — situated between a high school, two churches and an assisted living facility for senior citizens — from the Louisiana Department of Environmental Quality, which is set to study the impact on the local environment and deliver its decision on March 6, 2015. 

The plant is part of a recent push by New Orleans–area officials to reach out to Asia’s growing economic powerhouse to redevelop communities still devastated by the effects of natural disasters like Hurricane Katrina. Some of those projects, it appears, have since gone sour. In one instance, which Al Jazeera will explore in the third installment of this series, a company contracted by the city government stands accused of stealing millions of dollars from Chinese investors seeking U.S. citizenship in exchange for building businesses in an underserved neighborhood.

Local economic development authorities told Al Jazeera that St. James Parish is an ideal location for the methanol plant because of readily accessible deep water and cheap fuel from the shale oil boom that will help cut production costs. But it remains unclear what the impetus is behind a methanol plant that plans to send the lion’s share of its product back to China, which is struggling to find a market for the methanol already being produced.

What is clear is that there are links between Wang’s U.S. subsidiary — Houston-headquartered Yuhuang Chemical Inc. — and the Chinese government and the Jindal administration.

Yuhuang Chemical’s CEO is Charlie Yao Chaoliang, a former Shell employee. A resident of the Houston suburb of Bellaire, he was the president of a registered Louisiana nonprofit, Chinese Professionals Association in New Orleans, until its license was revoked in 2000. It is one of scores of Chinese professional groups in the southern United States established by the Houston-based nonprofit Chinese Association of Professionals in Science and Technology (CAPST) in the 1990s.

CAPST bills itself as a nonpolitical organization, but according to a book recently published on the organization, among its ranks are powerful members of China’s leadership who have facilitated the transmission of industrial knowledge and expertise back to China. 

A 2013 book, “Chinese Industrial Espionage,” says CAPST “works with [People’s Republic of China] technology transfer organizations … to send specialists to China, receive delegations from China and organize technology ‘exchange’ conferences in both countries.” Each year, the book says — and Al Jazeera confirmed through China’s Foreign Affairs Ministry Web posts — “the Houston Consulate General delivers the keynote speech at CAPST’s annual meeting.”

CAPST lists Yao as one of its “consultative members.” Several National People’s Congress delegates and People’s Liberation Army members are also named as affiliates on CAPST Web archives.

Gov. Bobby Jindal meets with Li Qiangmin, China's consul in Houston, on Nov. 21, 2014. Yuhuang Chemical Inc. CEO Yao Chaoliang was also in attendance.
Consulate-General of the People's Republic of China in Houston

Listed along with Yao on Yuhuang Chemical’s Louisiana-based filings as a “registered agent” is Jerald N. Jones, a Baton Rouge lawyer who, according to his website, was “recently reappointed to Louisiana’s Board of Commerce and Industry by Gov. Bobby Jindal after serving as board chairman and vice chairman. He was also appointed by Gov.-elect Jindal to the Government and Fiscal Reform Transition Committee.”

In November of last year, Jindal left his home state for a Houston meeting with not just Yao but also Consul of the People’s Republic of China Li Qiangmin, where Jindal expressed interest in furthering economic relations with China, which has become the state’s leading overseas trade partner, according to Chinese government reports.

But just a month earlier, Jindal vilified the very administration he would laud, at least by Chinese accounts, in Houston. “The Chinese regime, for nationalistic, political and economic reasons, is seeking a sphere of influence — a kind of hegemony — in the East and South China Seas and wants the option of using coercion to achieve their ends,” he told the press.  

Wang, his company and its U.S. subsidiary, Yao, Jones, the Jindal administration, CAPST and the St. James Parish Council did not respond to interview requests by time of publication.

Under pressure?

Wang made significant U.S. investments at the same time as an anti-corruption campaign in China picked up steam, suggesting that he may have a motivation to park his assets outside the country. He is one of many Chinese politicians who in recent years have planted assets across the Pacific in the United States.

Wang doesn’t live in either of the two more than $1 million homes he purchased in the Houston suburbs in 2013. His mail is almost invariably returned to sender, and his U.S. subsidiary pays his bills, local tax authorities told Al Jazeera.

In 2013, around the time Wang purchased his Houston homes, Chinese President Xi Jinping turned up the heat on an anti-corruption campaign targeting Communist Party officials, launched at the start of his administration in November 2012. In particular, the conviction and life sentence of onetime rising political star Bo Xilai for sweeping graft scared officials. Many hurried to put their assets in more stable climates. In particular, Canada and the United States saw influxes of property purchases and investor immigration applications from China’s wealthy, immigration lawyers told Al Jazeera at the time.

At this key point in China’s crackdown on corruption, Wang started coming under fire in the Chinese press — not a common occurrence for a politician at his level — for allegedly violating environmental law at the plant at the headquarters of his umbrella company, Shandong Yuhuang, in Heze.

In a June 2013 report from state-run newspaper People’s Daily, China’s National Audit Office said that Shandong Yuhuang misreported energy efficiency measures, illegally obtaining nearly a million yuan (about $160,000) in energy credits. The money was eventually returned. A report later that year said that the petrochemical industry in Heze, where Shandong Yuhuang has the largest plant, had created unlivable environmental conditions for villagers in the area, with rising cancer rates, undrinkable water and polluted air. The problem “could take years to resolve,” the report said.

Most recently, in mid-December, local environmental regulators dealt Shandong Yuhuang heavy fines at its Heze plant after reports from locals of strong odors led authorities to find that the company, in the course of an annual maintenance shutdown, released hazardous pollutants into the atmosphere, local media reported.

Prior to 2013, Wang’s U.S. subsidiary, Yuhuang Chemical Inc., listed his address on corporate filings as the Missouri City, Texas, residence of the company’s registered agent, Harry T. Sun. The company was registered in December 2012, just a month after Xi took office.

Wang didn’t come under fire in state-controlled media for previous complaints lodged with authorities prior to Xi's anti-corruption campaign, including blog posts written by employees alleging labor violations at one of the company’s subcontractors. Migrant laborers, who traveled from faraway Hunan to work on a project in Shandong in 2010, have yet to receive what they say are months of stolen wages after they were forced to work in dangerous conditions without proper gear. One 40-something man told Al Jazeera, on condition of anonymity so that he wouldn’t face repercussions for speaking out against powerful officials, that the workers attempted to file a complaint, but it never went to trial — he said that at that point, it was impossible to take on a local Communist Party official.

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