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In this November 2017 photo, President Donald Trump and President Xi Jinping of China arrive for a state dinner at the Great Hall in Beijing.
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China hits pause on Appalachian energy investment citing trade war concerns

Doug Mills/The New York Times

China hits pause on Appalachian energy investment citing trade war concerns

Brian Anderson was hoping not to be alone at the podium at the Westin Convention Center on Monday morning. He was hoping to be flanked by officials from China Energy Investment Corp. and to watch the crowd’s eyes widen as the CEO of the Chinese giant announced its first few projects in the U.S.

This was to be the first tangible milestone of a bombshell agreement announced in November between China Energy and West Virginia — one that promised the possibility of nearly $84 billion in Chinese investment in the tri-state area in shale gas and chemical manufacturing industries over two decades.

What better venue for the mic-drop than the Northeast U.S. Petrochemical Construction Conference, perhaps even upstaging the much-anticipated annual update from Shell Chemical Co. on its ethane cracker complex in Beaver County.

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Three weeks ago, Mr. Anderson, who directs the West Virginia University Energy Institute, got the call he was expecting. The trip to Pittsburgh was canceled. The reason: a pending trade war between the U.S. and China.

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Following weeks of threats, the Trump administration announced $50 billion in tariffs on Chinese goods last week, and China retaliated with tariffs on U.S. products.

Also canceled -— or postponed — was a training program that WVU prepared for a group of about 30 China Energy officials in May. Its intent was to familiarize the Chinese with how to operate in the U.S.: how to navigate tax structures, get permits, build a workforce. 

Mr. Anderson has been working closely with China Energy, a company he said has “a vision to become a much more Western corporation,” but is still 60 percent state-owned.

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“Their orders and their travel authority comes from the Chinese government,” he said.

Given escalating talk of more tariffs, “It was not the time that they were going to show up and announce the project,” Mr. Anderson said.

West Virginia officials helped the Chinese investment firm map out a portfolio of possible projects to fill up that $84 billion bucket.

The projects range from $600 million to $20 billion each and include anything that happens downstream from the fractionator, Mr. Anderson said. That means that however natural gas and natural gas liquids are used once they are separated in a natural gas processing plant is on the table, including chemical plants like the one Shell is building.

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“The pending trade war has put this project in jeopardy,” Mr. Anderson said.

But what he actually believes is “this too shall pass” and that this is a temporary halt.

“They’re making a business decision, not a political decision,” Mr. Anderson explained. “Once the political waves settle, it goes back to the return on investment.”

Mr. Anderson said other companies evaluating the region for large petrochemical investments, which require a large volume of steel, have also been crunching the numbers on proposed tariffs figuring they would add between 10 and 20 percent to the capital costs.

Anya Litvak: alitvak@post-gazette.com or 412-263-1455.

Correction, posted June 19, 2018: The amount of tariffs on Chinese goods that the Trump administration has been corrected.

First Published: June 18, 2018, 4:11 p.m.

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In this November 2017 photo, President Donald Trump and President Xi Jinping of China arrive for a state dinner at the Great Hall in Beijing.  (Doug Mills/The New York Times)
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