Escalating State Regulations Targeting China Expose the Extent of Mistrust within the U.S.

22 Aug, 2023

Escalating State Regulations Targeting China Expose the Extent of Mistrust within the U.S.

Amidst Washington's efforts to recalibrate strained relations with China, several U.S. states are embracing anti-Chinese sentiment by enacting regulations to reduce economic ties with Beijing. States like Florida, Utah, and South Carolina are taking steps to address national security concerns tied to Chinese investment. These moves align with the Biden administration's goals of boosting domestic manufacturing and trade alliances to decrease reliance on China. However, some fear these state-level initiatives might overshadow federal strategies, leading to protectionism and deterring foreign investment.

Around two dozen predominantly right-leaning states are proposing or implementing laws to restrict Chinese acquisitions of land, properties, and residences. Some state laws could be more stringent than federal oversight, which is managed by the Treasury Secretary's committee. The proposed state laws go beyond federal regulations, seeking to prevent China and other concerning countries from acquiring assets near broadly defined "critical infrastructure."

This trend accompanies a resurgence of anti-China sentiments due to events like a Chinese surveillance balloon in the U.S. and political rhetoric ahead of the 2024 elections. These state-level actions could complicate the federal administration's efforts to stabilize economic relations with China.

Mario Mancuso, an attorney specializing in international trade and national security, highlights the growing phenomenon of state-level actions, supported by strong bipartisan backing for sharpening the U.S.'s China strategy. Despite China's relatively small land ownership in the U.S., it remains a focal point.

The wave of restrictions started in 2021, gaining momentum after backlash against Chinese company Fufeng USA's plans in North Dakota. State-level actions are targeting not only China but also other countries like Russia, Iran, and North Korea, leading to objections from business groups and concerns about discrimination.

In Texas, proposed bans on Chinese-linked infrastructure projects were refined to limit purchases of agricultural land, quarries, and mines. South Dakota's attempt to establish a state-level version of CFIUS faced opposition due to concerns about land restrictions. Florida's Governor Ron DeSantis signed a law barring Chinese investment near military bases and critical infrastructure, leading to legal challenges and concerns about its scope.

These state-level actions coincide with congressional efforts to limit Chinese businesses' purchases of U.S. farmland and impose new requirements on American investments in national security sectors. This combination of measures could complicate diplomatic relations with China and trigger retaliatory actions, potentially impacting Chinese companies' access to American markets and technology transfers.