RICHMOND — Gov. Terry McAuliffe scored an economic coup and expanded Virginia’s already substantial business ties with China on Wednesday as he unveiled plans for a major manufacturing facility in the Richmond suburbs.
The announcement caps a string of recent economic development deals involving China and Virginia, highlighting the country’s growing importance in the commonwealth’s economy as both a trading partner and an investor.
Under a deal that state officials called the largest ever between a Chinese investor and Virginia, Shandong Tranlin Paper Co. will create 2,000 jobs with a $2 billion plant that makes paper from corn stalks and other agricultural field waste.
McAuliffe (D) approved a $5 million grant from the Governor’s Opportunity Fund to help lure the company, reflecting the former entrepreneur’s push to expand and diversify the state’s defense-heavy economy.
In May, China lifted a ban on Virginia poultry, which had been put in place seven years ago in response to an avian flu outbreak at a Virginia farm. The first shipment of Chinese-bound Virginia poultry left Perdue Foods’ export facility in Norfolk on Tuesday, with McAuliffe there to help pack up frozen chicken feet.
Last week, McAuliffe was at Dulles International Airport in the Northern Virginia suburbs to celebrate the start of nonstop Air China flights to Beijing. Virginia welcomed 22,000 visitors from China last year, a 69 percent increase over the previous year.
Some of the biggest trade deals announced under former governor Robert F. McDonnell (R) also involved China, including the export of nearly $300 million worth of Virginia soybeans and the controversial sale of Smithfield Foods to a Chinese firm. China already ranks second among Virginia export markets and first as a buyer of state agricultural and forestry products.
“I believe that China has made a concerted decision to spend billions of dollars outside of mainland China, to invest in the United States of America,” McAuliffe said. “I think that’s a strategic geopolitical decision they’ve made. And if they’re going to be spending billions of dollars in the United States of America, we want those dollars to be spent here in the Commonwealth of Virginia.”
The deal, which Commerce and Trade Secretary Maurice Jones described as “a project of historic proportions,” represents a big economic development win for the governor at a time when his prospects with the legislature have hit a low point.
Last week, the General Assembly came fully under Republican control, as the surprise resignation of Sen. Phillip P. Puckett (D-Russell) handed what had been an evenly split Senate to the GOP. The legislature then passed a budget plan that did not expand Medicaid — McAuliffe’s top priority. In an additional blow to McAuliffe, Republicans tacked on an amendment intended to make it harder than ever for the governor to try to get around the legislature to expand the federal-state health-care program on his own.
Several of the biggest players in the Medicaid drama were at the Capitol on Wednesday for the Tranlin announcement, including House Majority Leader M. Kirkland Cox (R-Colonial Heights), one of McAuliffe’s chief adversaries on the issue. Also present were Sens. Walter A. Stosch (R-Henrico) and John C. Watkins (R-Powhatan), two moderates who had been in McAuliffe’s camp but came back to the Republican fold last week out of a desire to avert a state budget shutdown July 1.
The paper plant deal has been in the works for 11 months, since before McAuliffe took office. But state and company officials said McAuliffe helped bring the project over the finish line, reaching out to Tranlin officials just days after his election.
Tranlin Chairman Jerry Z. Peng said McAuliffe’s “passion” and “can-do attitude” helped seal the deal for the company, which had considered several other states.
McAuliffe has business experience in China, most visibly through the electric car company GreenTech. The venture came under intense scrutiny during the governor’s race, in part because of its use of a special investor visa program known as EB-5 to attract Chinese capital. Critics characterized GreenTech, which at that point had failed to produce many cars, as a visa-for-sale scheme, something the company disputed.
The deal announced Wednesday does not involve the EB-5 program, although Peng said it was “very possible” that it eventually will. He added that any funds that investors might supply the company through the visa program would represent only a small portion of overall investment in the project.
“The nice thing is, the potential funds coming out from the EB-5 would be a very small portion, probably less than 10 percent . . . of the entire project,” he said.
Tranlin will use corn stalks and straw normally left in the field after harvest to make paper. That will create a new cash crop for area farmers and make for more environmentally friendly paper products, said Todd Haymore, Virginia’s secretary of agriculture and forestry. Unlike conventional paper production, the process does not involve the use of trees or bleach. The residual plant material left over after production is turned into organic fertilizer.
Haymore estimated that the economic benefit to area farmers alone could top $50 million a year once the project is complete.
Plans call for building a new manufacturing facility on an 850-acre campus in Chesterfield County, just south of Richmond. The project is expected to create 2,000 new jobs, some of them indirect agricultural jobs, by 2020.