US Senate bill would ban Chinese investment in US agribusiness, citing national security
- The legislation would also prohibit investment in US agriculture by entities from Russia, Iran or North Korea
- The bill is a response to a proposal by China-based Fufeng Group to build a corn milling operation 12 miles from a US Air Force base in North Dakota
Weeks after a Chinese company’s proposed US$700 million agribusiness facility in North Dakota sparked national security suspicions, legislation has been introduced in the US Senate to “blacklist China” from investing in or acquiring any US farmland or agricultural businesses.
Senator Mike Rounds, a Republican from neighbouring South Dakota, said he had been “alarmed” by the China-based bio-fermentation giant Fufeng Group’s acquisition of 370 acres for a corn milling plant in Grand Forks.
The project is located 19 kilometres (12 miles) from the Grand Forks US Air Force Base, which houses top intelligence, surveillance and reconnaissance capabilities.
Rounds contended that what local Grand Forks officials had described as a development plan for the project would allow the “Chinese Communist Party to closely monitor the operations and communications at a very important military facility”.
The bill, the Promoting Agriculture Safeguards and Security Act (PASS), proposes to prohibit all investments in the US agriculture industry from entities with ties to Russia, Iran and North Korea as well.
It would add the farm sector to the 1950 Defence Production Act, which empowers the US President to force private companies to manufacture goods and provide services to safeguard national security.
The legislation, which has no cosponsors yet, also calls for including the Secretary of Agriculture on the Committee on Foreign Investment in the US (CFIUS), an inter-agency group that assesses the national security risk of any proposed foreign merger or acquisition of an American company.
“In my travels around South Dakota, I’ve heard from many farmers and ranchers who are concerned about foreign adversaries owning American farmland,” Rounds said in a statement.
“It’s time to put a stop to this and take action. This legislation makes certain American interests are protected by blacklisting foreign adversaries from purchasing land or businesses involved in agriculture.”
01:20
What is CFIUS, anyway?
Representative Elise Stefanik, Republican of New York, introduced companion legislation in the House of Representatives last month. It has one co-sponsor.
A US-China Economic and Security Review Commission report in May linked Chinese companies investing in US agriculture industry to China’s “food security crisis”.
“These efforts present several risks to US economic and national security,” the report warned, reviewing “China’s food security challenges and how these vulnerabilities drive interests in US-China agricultural relations”.
Frayne Olson, a crops economist at North Dakota State University, said that the issue of land ownership had been politically sensitive for years and that the bill would not have any economic implications given the meagre size of direct corporate investment from some of the countries the bill targets, including China.
“This will be really more of a political debate, it won’t be an economic debate,” he said.
Chinese investors’ holdings of US agricultural land jumped from 13,720 acres in 2010 to 352,140 acres in 2020, department data shows. But that still accounts for less than 1 per cent of the 35.8 million acres of US farmland and forest land owned by foreigners.
Canadian companies are the largest foreign owners, at 29 per cent; the Netherlands are next at 14 per cent.
Ji Li, a law professor at the University of California at Irvine specialising in US-China business, reckoned that in the short term the new bill only adds to the already fierce anti-China narrative that is a feature of the campaign season in the run-up to the US midterm elections in November.
“The politicians will get credit for standing up to China. It’s mainly a signal to their constituencies,” he said.
