Is there a legal risk to criticizing Chinese companies?

Strand Consult is honored to feature the first part of a groundbreaking story by Bethany Allen in The Wire China, “Libel Lawfare: Is there a legal risk to criticizing Chinese companies?”

Allen, fluent in Mandarin and Head of Program for China Investigations and Analysis at the Australian Strategic Policy Institute, investigates lawsuits filed in the US and Europe by top-flight law firms on behalf of Chinese corporations in electric vehicles, railroads, energy, electronics, and other high-tech industries. The suits charge respected individuals, academics, non-profit organizations, and small businesses and associations with “libel” or “defamation.” Allen examines the fallout from each as well as potential legal changes that would make such lawsuits more difficult to pursue. 

Read the introduction to the breathtaking story below courtesy of The Wire China. To read the whole article, please click here.

Libel Lawfare Is there a legal risk to criticizing Chinese companies?

On the day after Thanksgiving in 2020, Scott Paul got some bad news. BYD, the Chinese electric vehicle giant, was suing his organization and several of its employees in a defamation suit filed in U.S. federal court. 

BYD, Paul knew, had deep pockets. The EV giant had a market cap of $75 billion at the time, with a staff of around 224,000 employees in China alone. By contrast, his organization was the Alliance for American Manufacturing (AAM), a D.C.-based non-profit advocacy group that had a staff of around 20 and an annual budget ranging between $4.8 million and $6.5 million.

As AAM’s president, Paul was immediately concerned not just for the future of the organization, but also for the communications staffers who were named in the complaint and could be held personally liable.

“These staffers have families with young kids. I was thinking about how this would hit them as well,” Paul told The Wire China. “It caused an enormous amount of anxiety right away.”

He had good reason to be worried. BYD had hired Charles Harder, a celebrity libel lawyer who had represented Hulk Hogan in the lawsuit against Gawker Media that eventually resulted in a $140 million judgment, forcing Gawker into bankruptcy. Harder had also won First Lady Melania Trump’s defamation suit against The Daily Mail, and defended Donald Trump against defamation lawsuits filed by Stormy Daniels. 

AAM, by contrast, was hardly a big name or media heavyweight. It was formed in 2007 as a partnership between U.S. manufacturers and the United Steelworkers, the country’s largest industrial union. But AAM did have a fair amount of political sway. 

In the year before the lawsuit, it had argued that federal transit dollars shouldn’t go to entities of concern or companies that are headquartered in non-market economies — such as China. Paul was invited to give congressional testimony at a May 2019 hearing on transportation and infrastructure, where he singled out BYD and China Railroad Rolling Stock Corporation (CRRC) as “state-owned, state-subsidized, and state-supported enterprises” that have “begun securing lucrative, U.S. taxpayer-supported contracts to supply our major cities with transit rail cars and electric buses,” part of a trend that is “systematically destroying the competitive national landscape for U.S. rolling stock manufacturing.”

BYD’s lawsuit accused AAM of engaging in a “malicious, fraudulent, outrageous, and reckless campaign to damage BYD’s reputation and brand with false allegations and misleading rhetoric.” The complaint pointed to several AAM statements it claimed were defamatory, though none of them came from Paul’s testimony to Congress. One was a statement Paul had made that BYD is “simply an arm of China’s military and government,” responding to new research into the Chinese government’s extensive subsidies and other support for BYD. Another was a blog post published to AAM’s website that called BYD “a company controlled by the Chinese state.” Another AAM blog post listed BYD as among 83 companies whose supply chains were linked to Uyghur forced labor in China, citing findings in a report that had received widespread media coverage. 

In a national debate full of China critics, Paul believes that BYD was targeting AAM in particular as punishment for its successful advocacy. In December 2019, Congress enacted a ban on the use of federal transit funds to purchase rolling stock from Chinese-owned companies, which prevented BYD from winning valuable contracts in California and elsewhere. 

“It felt like retribution for the public policy work that we had done to limit BYD’s access to tax dollars,” Paul says. 

To read more about the BYD case as well as other examples of Chinese companies filing defamation suits against small organizations or individual researchers, read the entire Wire China article here.