“States Push Anti-China Measures Amid Attempts to Reset US-China Relationship”
In an effort to decrease economic dependence on China and address national security risks, states across the United States are pursuing anti-Chinese sentiment by implementing stringent rules aimed at severing economic ties with Beijing. Although the Biden administration shares concerns regarding China’s influence, these state efforts have the potential to exceed the federal government’s actions, causing concern among business groups about protectionist policies and a retreat from welcoming foreign investment.
Nearly twenty right-leaning states, including Florida, Texas, Utah, and South Dakota, have proposed or enacted legislation to restrict Chinese purchases of land, buildings, and houses. Some of these laws go beyond the capabilities of the federal government, preventing China, and in some cases other “countries of concern,” from acquiring farmland or property near critical infrastructure. These measures come amidst a resurgence of anti-China sentiment, fueled by incidents such as a Chinese spy balloon crossing the United States and heated political rhetoric leading up to the 2024 election.
The growing state restrictions pose challenges for the Biden administration, which has been dispatching officials to China to stabilize economic ties. However, state and local officials seem determined to sever economic relationships with China, despite Washington viewing this relationship as a necessary evil.
Some of the most significant targets of these restrictions have been Chinese landownership. However, China owns less than 400,000 acres in the United States, which accounts for less than 1% of all foreign-owned land in the country according to the Agriculture Department. Momentum for these restrictions began in 2021 after Fufeng USA, an American subsidiary of a Chinese company, faced backlash for its plans to build a corn mill near a U.S. military base in Grand Forks, N.D.
Since then, states have been developing or strengthening their restrictions on foreign investment, some blocking land acquisitions from a range of countries including Iran and North Korea. While these moves have attracted criticism from business groups and opponents, some proposals have been watered down to address these concerns.
For instance, Texas lawmakers proposed a ban on infrastructure projects funded by investors with direct ties to China and aimed to block Chinese citizens and companies from purchasing any real estate. However, this proposal was ultimately scaled back to just prohibit purchases of agricultural land, quarries, and mines by individuals or companies with ties to China, Iran, North Korea, and Russia.
Similarly, South Dakota Governor Kristi Noem’s push for a state version of the Committee on Foreign Investment in the United States (CFIUS) to review and investigate agricultural land purchases faced opposition from farming groups and lawmakers who believed it granted too much power to the governor.
Florida Governor Ron DeSantis signed a law in May prohibiting Chinese companies or citizens from purchasing or investing in properties within 10 miles of military bases and critical infrastructure. However, the law’s broad language potentially violates the rights of investment funds or companies with even minimal Chinese ownership. The law is currently being challenged in federal court, with the Justice Department arguing against its legality.
These state restrictions create uncertainty for investors and fund managers looking to invest in Florida, as they must now determine whether to proceed with their plans or exclude Chinese investors. Additionally, these measures could have unintended consequences for state revenues and property markets while failing to address actual national security concerns.
These state actions align with Congressional efforts to block Chinese businesses from purchasing U.S. farmland and impose new mandates on American investments in China’s national security industries. While the Senate has approved these measures, they still need to pass the House to become law. This combination of actions is likely to complicate diplomacy with China and could lead to retaliatory measures.
Officials in Beijing are concerned about the rising antipathy toward China and state-level restrictions on Chinese investments in the United States. These actions are viewed as a sign of increasing hostility towards China, potentially exacerbating tensions between the two nations.