President Barack Obama on Friday blocked a privately owned Chinese company from building wind turbines close to a Navy military site in Oregon due to national security concerns.
The rare presidential order to block the project comes as Obama campaigns for a second term against Republican Mitt Romney, who has accused him of being soft on China.
Ralls Corp, which had been installing wind turbine generators made in China by Sany Group, will now be forced shelve its plans and divest its interest in the four wind farm projects it acquired earlier this year.
The wind farm projects were all within or in the vicinity of restricted air space at a naval weapons systems training facility in Oregon, the administration said.
"There is credible evidence that leads me to believe" that Ralls Corp and Sany Group "might take action that threatens to impair the national security of the United States," Obama said in the order issued by the White House.
The Committee on Foreign Investment in the United States (CFIUS) had ordered Ralls to stop all construction and operations at its wind farm projects while the government completed its investigation and provided its recommendation to Obama.
Although CFIUS reviews dozens of foreign investment deals for potential national security concerns, the president is rarely called upon to issue a formal order as companies usually abandon their deals or divest assets when the panel takes issue with their transaction.
The last time a president formally blocked a deal on national security grounds was in 1990 when then President George H.W. Bush stopped a Chinese aero-technology company from acquiring a U.S. manufacturing firm.
Obama's decision comes as two other Chinese companies are vying for CFIUS approval.
Ralls Corp had hired the George W. Bush administration's top lawyer Paul Clement to help represent the company as well as a former U.S. assistant attorney general, Viet Dinh, who helped the Republican administration develop the Patriot Act.
But that appeared to do little to convince the current administration to allow the company to resume operations.
Ralls Corp, which is owned by two Sany Group executives who are Chinese citizens, now has 90 days to divest all its interests in the project companies.
Ralls Corp had no immediate comment.
The Treasury Department said Obama's decision was not a precedent for other investments from China or any other country. Acting Commerce Secretary Rebecca Blank said the United States generally welcomed investment from China but not in every case.
"Particularly when you're talking about China, but there's other countries where this is true too, one has to be worried about national security concerns," Blank said in remarks at the Council on Foreign Relations earlier on Friday.
CFIUS is chaired by the treasury secretary and includes Blank and other Obama cabinet members, including his secretaries of state, defense and energy.
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