When COVID-19 broke out in the United States, New Jersey was soon hit severely, and now ranks second across the country just after New York for the highest number of confirmed cases and deaths. As of May 15, New Jersey had 143,905 confirmed cases and 10,138 deaths.
The Why and the How
People started to wonder why is New Jersey, in particular, so severely hit in the pandemic? How can we solve this problem?Dancing With the CCP
New Jersey has a history of closeness to the CCP economically, technologically, and in business. Could this be a deeper reason that New Jersey has been so severely hit in this pandemic?New Jersey hosts many high-tech businesses, and is the headquarters of 20 Fortune 500 companies. Among the large, medium, and small-sized companies, many have close business contacts with the CCP.
Honeywell’s Big Capital Infusion
Darius Adamczyk, Chairman of the Board and CEO of Honeywell International, said to Chinese state-run media Xinhua in 2017, “‘The strategy of the east serving the world’ and China’s ‘One Belt, One Road’ are very well matched.”“To me, the ‘One Belt, One Road’ is an important measure for China to open to the outside and to further merge into the world. To Honeywell, we will apply the results of R&D, design, and production in China to other regions in the world,” said Adamczyk. One Belt, One Road is China’s flagship foreign policy project, a bid to gain geopolitical power through financing infrastructure projects around the world.
Honeywell was ranked 77 among the Fortune 500 companies in 2018. Its annual revenues were $41.8 billion. Its headquarters had been in NJ since 1958 and moved to North Carolina in 2019, but it has kept several R&D facilities in New Jersey.
Honeywell’s products range from masks, air conditioner thermostats, air purifiers, and water purifiers, to petrochemicals, and automotive materials, among others.
Honeywell is also the world’s leading integrator of avionics systems.
Presently, the CCP has been bragging of its “independently developed” COMAC C919 civil aviation aircraft. But without Honeywell’s parts, that aircraft could not have made it off the ground. Honeywell provides the C919 with fly-by-wire flight control systems, wheel and brake systems, auxiliary power units, and other equipment. Honeywell could not supply the products directly, but became a supplier of C919 through four joint ventures with Chinese firms.
The “joint venture” is a common tactic used by the CCP to force technology transfer. In light of this, how long can Honeywell maintain its advantage in the field of automatic controls and aerospace technology?
Honeywell was one of the first American companies to enter China. After President Richard Nixon’s visit to China in 1972, UOP, a subsidiary of Honeywell, entered China and installed China’s first conversion unit in the Gansu Yumen Oilfield, opening a new era for China’s oil refining industry.
The last two decades saw explosive investment and expansion from the West into China. Likewise, Honeywell moved the Asia-Pacific headquarters of all business units to China. In 2016, Honeywell invested $100 million in Zhangjiang Hi-Tech park in Shanghai to expand its Asia-Pacific head office and its China R&D Center. Its total investments in China has exceeded $10 billion and it owns more that 50 enterprises, either joint ventures or wholly-owned, including more than 20 factories. Honeywell has established R&D centers in Beijing, Shanghai, Nanjing, Suzhou, and Xi'an.
‘Pro-China’ Stance From New Jersey’s Pharmaceutical Sector
New Jersey is known as the heart of the pharmaceutical industry in the United States and the world. Twelve of the country’s top 20 pharmaceutical companies have headquarters or regional headquarters in New Jersey, including Merck (known as Merck East outside the United States and Canada), Johnson & Johnson, and Celgene.During the financial crisis of 2008, pharmaceutical companies were in dire straits. In order to maintain market share and stock prices, improve efficiency, and reduce R&D costs, international pharmaceutical giants started to transfer their R&D centers to low-cost areas, or adopted the CRO (contract research organizations) model, outsourcing to other countries.
Merck’s Contribution to Chinese Society Kept Under Wraps
Merck had revenues of $42.3 billion in 2018. In terms of revenues, Merck is the fourth-largest pharmaceutical company in the world.Merck entered the China market shortly after the Tiananmen Square Massacre on June 4, 1989. In September 1989, under its president Roy Vagelos at the time, Merck decided to transfer the latest genetically engineered hepatitis B vaccine technology to China for only $7 million. That price was not enough to cover the cost of dispatching employees to assist China to install equipment and train local employees, which cost far more than $7 million.
In 1993, China successfully produced the first batch of genetically engineered hepatitis B vaccines. Data from 1994 to 2015 show that Merck’s hepatitis B vaccine helped nearly 200 million Chinese children avoid the threat of hepatitis B. However, Merck’s generosity and role were deliberately concealed by the CCP. The average Chinese person knows nothing about it.
Johnson & Johnson’s Huge Investments into China
Johnson & Johnson, a manufacturer of health care products, medical equipment, and medicine, is also the largest company based in New Jersey.Janssen, a subsidiary of Johnson & Johnson, entered China in 1979 and established a chemical and pharmaceutical workshop in China that meets international GMP (good manufacturing practices) standards. The workshop at Hanjiang Pharmaceutical Factory in Hanzhong, Shaanxi Province, produces mebendazole. In 1985, a joint venture pharmaceutical company, Xi‘an Janssen, was established in Xi’an, which became a model for China’s modern pharmaceutical factories.
Johnson & Johnson (China) Co. was incorporated in the Shanghai Minhang Economic and Technological Development Zone in January 1992, with a registered capital of more than $100 million.
Over the past decade or so, Johnson & Johnson has become known for large acquisitions and investments in China.
For example, in 2008, Beijing Dabao Cosmetics Co was acquired for 2.3 billion yuan.
In May 2012, Johnson & Johnson acquired Guangzhou Beixiu Biotechnology Co. for 360 million yuan.
In January 2013, Shanghai–Johnson & Johnson acquired a 100 percent stake in Shanghai Aoya Maternal and Baby Products International Trade Co. for 650 million yuan.
Celgene Put in Huge Sums but Got No Market Share in China
Celgene Pharmaceuticals in New Jersey, founded in 1986, kept pace with China investments too. In 2017, Celgene invested $1.393 billion for the authorization of the PD-1 inhibitor BGB-A317, which was still in clinical trials at Chinese biopharmaceutical company BeiGene. During this transaction at that time, in order to obtain the global authorization, excluding Asia, of BeiGene BGB-A317—an antibody that can be used to treat tumors—Celgene paid $263 million down payment in cash, $150 million in equity investment at a 35 percent premium, and $980 million for research and development expenses and sales royalties for future sales of BGB-A317.But in 2019, Celgene Pharmaceuticals was acquired by Bristol-Myers Squibb. Because Bristol-Myers Squibb already had a PD-1 inhibitor Opdivo, Celgene Pharmaceutical once again paid $150 million to cancel the global cooperation with BeiGene. So far, Celgene Pharmaceutical has thrown away hundreds of millions of U.S. dollars, all to the CCP’s foreign exchange reserves.
China as a Chemical Plant for the World
While Chinese enterprises received money and technology from multinational companies, the Chinese regime also supported the development of its pharma sector. China became the world’s chemical plant with small gram-scale laboratories and large-scale chemical projects that can mass-produce polyethylene, polyester, polypropylene, and PX Active Pharmaceutical Ingredients (API).Chinese pharmaceutical companies rely on dumping goods at low prices in overseas markets, with the government supporting them with export subsidies.
About 80 percent of U.S. APIs are imported from foreign countries, especially from China and India. Many raw chemical materials in India are also purchased from China. China is the world’s largest supplier of APIs and of basic chemical materials needed to produce many prescription and non-prescription drugs and vitamins.
New Jersey Has Close Business Ties With China
Beyond the companies mentioned above, New Jersey has a close business and economic relationship with China.The value of goods imported into New Jersey from China in 2017 was about $18.17 billion, and in 2016 it was nearly $17.7 billion. The most-imported products from China include petroleum, fossil fuels, pharmaceuticals, and auto parts. According to data from the International Trade Administration, as of 2016, about 131,900 jobs in New Jersey depended on trade with foreign partners, of which 15 percent (about 19,000 jobs) originated from trade with China. During the pandemic, the CCP virus has severely damaged companies that rely heavily on China.
New Jersey Is One of the Bridgeheads for Chinese Companies
In the past 20 years, due to its convenient transportation, similar climate to Shanghai, excellent school districts, and cheaper housing prices than Manhattan, New Jersey has become a bridgehead for Chinese companies to enter the United States.China UnionPay US is headquartered in Jersey City, New Jersey. For the first time in 2015, China UnionPay card surpassed Visa, Inc. in transaction volume and card issue volume, becoming the world’s largest bank card clearing organization. China UnionPay announced on April 9, 2020 that UnionPay International and Huawei launched Huawei Payments in Hong Kong and Macau.
China Construction America, a subsidiary of China Construction Corporation (China Construction), was established in 1985. In 2013, China Construction America spent more than $70 million to acquire an office building in Morris Township, New Jersey. In 2016, it renovated two buildings on the waterfront of Jersey City to become its headquarters office.
In addition, New Jersey established a “sister state” relationship with Zhejiang Province as early as 1981. In 2008, it reiterated its “sister” relationship with Zhejiang Province. That same year, New Jersey established a “sister” relationship with Shandong Province.
Conclusion
History and lessons drawn from past experience tell us that the epidemic is not accidental.Where there are close ties with the CCP or where capital infusion is given to the CCP, the area is severely hit by the virus.
Perhaps the pandemic serves as a warning to stay away from the CCP. It is worth a sober look.