At the federal level, lawmakers should ensure that national security agencies are able to identify front companies, owned or controlled by foreign adversaries, that purchase U.S. real estate. Laws requiring disclosure of foreign ownership of farmland need to be enforced.
The Committee on Foreign Investment in the United States, charged with scrutinizing foreign investments for national security concerns, needs to have jurisdiction over Chinese land purchases and to police that jurisdiction thoroughly. The interagency committee also needs to treat Chinese ownership of critical capabilities such as food production as the national security threat it is.
Dozens of states already restrict foreign land ownership, and many have taken action against land purchases by foreign adversaries in just the past two years. As state legislators continue to address real estate-related threats, here are three principles to help ensure that new laws effectively address threats without being overly broad or causing undue hardship for businesses and individuals.
Reviewing individual transactions can lessen the need for blanket bans, allow states to preserve opportunities for economic development that don’t present national security threats, and prevent the need to legislate loopholes when a state has an existing reliance on a corporation owned by a foreign adversary.
All Chinese companies are legally required to obey the dictates of China’s communist regime, and real estate restrictions should address ostensibly private Chinese companies as well as their subsidiaries.
Similarly, some state bills apply only to agricultural land. Although this is a sensible category to address first, China-related national security threats are present in purchases of nonagricultural land and those also should be addressed.
States should also be mindful not to damage the integrity of land records and chain of title. They should ensure that forced divestments should be undertaken only through regular judicial processes and properly recorded.
Chinese ownership of critical real estate would exacerbate all of these threats and heighten long-term risks such as adversary control of the U.S. food supply.
States are right to be concerned, and the federal government is failing to support them. Both state and federal governments can and should take action to address Chinese purchases of U.S. real estate before this problem becomes a crisis.