Questions Follow Foreign Purchase of U.S. Land

WASHINGTON – China’s government is systematically buying U.S. farmland as part of a strategy to meet soaring domestic demand and bolster an agricultural sector beset by decreasing arable land and polluted water.

The push, detailed in a congressional report, is raising security concerns and adding to tensions between Washington and Beijing on a host of economic and security fronts.

Wealthy Chinese private investors also have resumed real estate purchases in the United States, mainly in California and New York, to park money safely away from the control of the ruling Chinese Communist Party or to provide housing for family members attending U.S. universities, according to a real estate survey.

The recent flight of a Chinese surveillance balloon that passed over sensitive military sites in the United States is fueling efforts in federal and state governments to take action against the Chinese buying spree.

Marshall Billingslea, a former assistant secretary at the Treasury Department, which is in charge of monitoring foreign land transactions, said the Chinese government for at least two decades has been trying to buy real estate near national security installations, including naval air stations and submarine bases. The Chinese also are buying office buildings in New York near the offices of sensitive law enforcement operations.

“China is also now trying to buy up U.S. farmland to get a chokehold on our agricultural production,” Mr. Billingslea said. “Congress urgently needs to enact a prohibition on land purchases in the U.S. by Chinese entities.”

Last year, Congress debated legislation regarding foreign purchases of U.S. land but passed only minor measures requiring improved reporting by the Agriculture Department.

The federal government has no legal restrictions on the amount of private U.S. agricultural land that can be foreign-owned, but Congress and several states are considering legislation to ban or restrict Chinese purchases and investment in the United States over concerns that the transactions are undermining U.S. security.

Legislation introduced in Texas, Florida, Arkansas and several other states also would prohibit Chinese citizens from buying real estate, based on national security concerns.

A total of 14 states prohibit or restrict foreign ownership of private agricultural land: Indiana, Iowa, Kansas, Kentucky, Minnesota, Mississippi, Missouri, Nebraska, North Dakota, Oklahoma, Pennsylvania, South Carolina, South Dakota and Wisconsin.

Nine of the states are considering greater restrictions on foreign land purchases.

In Missouri, current law limits foreign ownership. Pending legislation would lower the limit on foreign ownership of state farmland from 1% to 0.5% and ban further investment by China, Iran, North Korea, Russia and Venezuela beginning in late August.

A Chinese Embassy spokesman did not immediately respond to a request for comment, but Chinese Foreign Ministry spokeswoman Mao Ning said in February that U.S. restrictions on Chinese purchases of property violated principles of a market economy and international trade rules.

The Treasury Department and the interagency Committee on Foreign Investment in the United States that it oversees did not respond to several requests for comment on the department’s position on Chinese land and real estate investment.

Shopping in North Dakota

The most recent example of a Chinese government-linked effort to buy an agricultural facility near a sensitive Air Force base in North Dakota was shut down in January.

Air Force Assistant Secretary Andrew P. Hunter stated in a letter that the efforts by a Chinese company, Fufeng Group, to build a large corn-milling plant near Grand Forks Air Force Base represented “a significant threat to national security.”

The milling plant could double as an electronic spy base for the Chinese because Grand Forks is “the center of military activities related to both air and space operations,” Mr. Hunter said.

Long-range Global Hawk surveillance drones operate from the base.

Military officials have said the main concern about Chinese civilian entities operating near sensitive U.S. sites is China’s 2015 national security decree that requires all Chinese companies to cooperate with intelligence and security services. The mandate has complicated efforts by Chinese-owned companies such as Huawei and TikTok from operating in the U.S. and many allied countries.

Even though Fufeng said it planned to invest $700 million in the local economy and create some 200 jobs, the Grand Forks City Council voted 5-0 on Feb. 6 to deny the company the right to develop the 300 acres of land it purchased.

An effort to prevent a Chinese firm from operating near a military base in Texas was less successful. The Air Force was unable to stop the building of a wind farm by GH America Investments Group, owned by Sun Guangxin, a former People’s Liberation Army officer and China-based businessman.

The company bought more than 130,000 acres of land in Val Verde County, Texas. The area, known as Devils River, is about 30 miles from the U.S.-Mexico border and close to Laughlin Air Force Base, a key Air Force training base.

Reflecting support for the Biden administration’s green energy agenda, the Committee on Foreign Investment in the United States approved the wind farm after reaching a mitigation agreement with the company.

The Texas government then stepped in to ban Chinese companies from gaining access to the state’s electrical power grid. That forced GH America to sell its stake in the project to a Spanish renewable energy company, Greenalia.

Efforts by environmentalists to halt the wind farm over concerns that the 700-foot-tall propellers would harm the ecosystem are continuing.

Chinese commercial real estate investments have not rebounded since the mid-2000s and declined after 2016, according to trade news reports. The Department of Agriculture estimates that Chinese companies own just 383,935 acres, less than 1% of foreign-held acres, about half the size of Rhode Island.

With China running a major trade surplus annually and the government holding more than $800 billion in U.S. government debt, Chinese firms have been looking for lucrative U.S. investment opportunities to put their cash to work. The buying spree included marquee buildings in New York with Fosun’s $725 million purchase of One Chase Manhattan Plaza in 2013 and Anbang’s $1.95 billion purchase of the Waldorf Astoria in 2015.

Pressure from neo-Maoist Chinese President Xi Jinping sharply curtailed Chinese business real estate investment in New York.

The COVID-19 pandemic left large luxury towers owned by Chinese in New York nearly empty. In New York alone, Chinese buyers spent $5.4 billion on properties in 2015 and $8.8 billion in 2016, but by 2018, Chinese real estate buys in New York fell to $336 million, according to The Real Deal.

A report by the congressionally chartered U.S.-China Economic and Security Review Commission stated that China’s decreasing arable land, large-scale water pollution and domestic livestock diseases are prompting the Chinese government to seek U.S. farmland, animal husbandry and agricultural intellectual property.

“The United States is a global leader in all of these fields, making it a prime trading partner and often a target of China’s efforts to strengthen its agriculture sector and food security, sometimes through illicit means,” the report said. Chinese investment targets have included land, livestock, seeds and supporting infrastructure such as grain elevators and mills.

“In owning these assets in both the United States and within China, Chinese agricultural producers diversify supply and mitigate risks from events like natural disasters,” the report said.

A major purchase by China that the Obama administration approved in 2013 was Smithfield Foods Inc., the largest pork producer in the United States. The transaction accounts for much of the U.S. farmland now owned by Chinese interests. The Chinese government supported the $4.7 billion purchase by Shuanghui International Holdings Ltd., a subsidiary of the Chinese company WH Group.

“Investing in a major foreign pork operation like Smithfield allows China to hedge against uncertainty in its domestic pork production,” the report said.

The commission report, citing Agricultural Department annual reports, said Chinese purchases “surged” from 13,720 acres in 2010 to 352,140 acres in 2020, mainly from the Smithfield deal.

The China commission report says the Chinese are buying cropland, some pasture land and a category called “other land,” generally defined as swamps, marshes, bare rock and wetlands with water running through it.

The report said U.S. genetically modified grains have “dual use” capabilities for improving crop yields and for biological warfare.

“Similar to hacking a computer code, Beijing could easily hack the code or DNA of U.S. [genetically modified] seeds and conduct biowarfare by creating some type of blight that could destroy U.S. crops,” the report said.

The report concluded that as more Chinese investors purchase land, including for agricultural use, the Committee on Foreign Investment in the United States should use its oversight to safeguard vital military assets.

“The committee has a right to refuse the transaction being considered, but it rarely conducts oversight post hoc,” the report said.

Congressional concern

Rep. Elise Stefanik, New York Republican, has sponsored the Promoting Agriculture Safeguards and Security (PASS) Act, which would ban China, Russia, Iran and North Korea from buying U.S. agriculture companies and designate agriculture and agriculture-related biotechnology as critical infrastructure. It would also add the secretary of agriculture to the Committee on Foreign Investment in the United States review process.

“The United States cannot allow malign ownership bids of American assets by communist China to undermine the efforts of our farmers, whose hard work feeds and fuels our communities,” Ms. Stefanik said. She said efforts must be made to prevent foreign control over food supplies.

Ms. Stefanik also is pressing the Agriculture Department to conduct more aggressive oversight of foreign purchases of U.S. farmland.

A separate House bill introduced this year by Rep. Dan Newhouse, Washington Republican, and backed by numerous farm-state Republicans would prohibit purchases of public or private land by Chinese nationals.

In the Senate, Sen. Jon Tester, Montana Democrat, and Sen. Mike Rounds, South Dakota Republican, have introduced a bill to block China, Iran, North Korea and Russia from buying or leasing farmland.

Sen. Ted Cruz of Texas and three other Republican senators have introduced a bill that would block China and other adversaries from buying land near military bases.

David Day, chairman of the Global Risk Mitigation Foundation in Hawaii, said the definition of national security should be expanded to include food security and must go beyond protecting farmland near military bases.

“Given the Smithfield Farms and the many, many other Chinese agricultural acquisitions that impact our own internal supplies and are not located near U.S. military facilities, we need to consider ‘food security’ as part of our ‘national security,’ as we learned the hard way during the pandemic with our [personal protective equipment] and pharma supply chains,” Mr. Day said.

The most recent annual survey conducted by the National Association of Realtors found that Chinese investors were the most active foreign buyers of real estate in the United States in 2021, spending a record $6.1 billion on homes mainly in Florida and California.

The average price for the homes purchased by the Chinese, including those from Hong Kong and Taiwan, was more than $1 million, and 31% were bought in California and 10% in New York.

The survey of 150,000 Realtors found that Canada and Mexico were other major real estate buyers at $5.5 billion and $2.9 billion, respectively.

Chinese homebuyers are coming back, at least in the San Francisco Bay Area, The Real Deal reported. Average buyers in the area are paying $1 million to $3 million for houses, and some pay more than $10 million, the newsletter said.

“More wealthy Chinese buyers are finding everything they’re looking for in the tony towns of the Peninsula,” the newsletter reported on March 23.

Beijing cut the ability of wealthy Chinese to buy properties in the U.S. by restricting the amount of yuan, the Chinese currency, that can be converted into dollars.

Virginia Gov. Glenn Youngkin, a Republican, has indicated that he will sign legislation to impose restrictions on some foreign ownership. The state bill was passed with bipartisan support last month. Although the headquarters of Chinese-owned Smithfield Foods is in Virginia, the governor took an active role in discouraging U.S. automaker Ford from building an electric car battery plant in the commonwealth with a major Chinese company as its lead partner.

Mr. Youngkin said recently on Fox News that he has negotiated with Chinese Communist Party leaders during his career in business.

“I know exactly what they’re doing. And they are using their economic coercion tactics in order to gain access to our supply chain,” he said.

South Dakota Gov. Kristi Noem, a Republican, said Chinese buyers do not have a foothold on farmland in her state, but “we’re determined to stop them before they do.”

“South Dakota will be the home of the next-generation bomber that will be protecting the United States of America for the next 25 to 30 years,” Ms. Noem said on Fox Business Channel. “We’re not going to allow China to purchase land anywhere near that Air Force base so they can conduct surveillance on us or own an asset that is within our borders that they could use to destroy the United States of America. I hope every state takes it as seriously as South Dakota has.”

Florida Gov. Ron DeSantis, a Republican, is fighting Chinese efforts to buy land as well.

“We want no CCP land purchases, and obviously, they are not going to do it directly. They will have shell companies, so we’re going to have to have a system in place to scrutinize this,” Mr. DeSantis told Fox.

“American policymakers for a generation have been empowering the CCP,” the governor said. Like Mr. Youngkin, Mr. DeSantis is a potential candidate for the 2024 Republican presidential nomination. “They said it would end up working out. China would become a democracy. In fact, this is a very serious threat to our country. Why would we want them to have even more influence over American society than they already do?”

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