House Bill Would Block China from Buying U.S. Farmland

Tension between the U.S. and China has spilled into the U.S. real estate market, with specific concern about the ownership of American farmland. There’s new legislation by two House members that would prohibit the purchase of farmland by Chinese citizens. There’s also an increasing number of states that are approving or considering similar limits or bans, including one that’s creating a lot of controversy right now in Texas.   Hi, I'm Kathy Fettke and this is Real Estate News for Investors. If you like our podcast, please subscribe and leave us a review.   As a headline in Fortune warns: “Forget the Chinese balloon – selling farmland to foreign nationals is the real worry.” You’ve probably been following the balloon incident. It was first spotted by a cattle rancher in Washington state, although defense officials said the next day that they were tracking what they suspected was a Chinese spy balloon. (1)   Chinese Surveillance Balloon Shot Down   U.S. officials allowed it to float all the way across the U.S. before it was shot down with a missile off the coast of South Carolina. They reportedly felt it wasn’t a threat as it made its way over the American heartland, but they also wanted to prevent injuries as the mammoth balloon and its equipment fell to earth.   Officials say the balloon created a huge debris field from what they are estimating was a 200 foot tall balloon carrying surveillance equipment. One article by CBS News described the equipment as the size of two or three school buses. The article cites intelligence officials who believe the balloon was operated by the People’s Liberation Army which is the main military arm of the Chinese Communist Party. (2) China initially claimed the balloon was being used to monitor the weather and accused the U.S. of overreacting to its presence.   Bill to Ban China-Owned Farmland   Legislation that would ban the purchase of farmland by individuals or entities linked to the Chinese government was introduced shortly after this incident. It’s called: “Prohibition of Agricultural Land for the People’s Republic of China Act,” introduced by Congresswoman Cathy McMorris and Congressman Dan Newhouse, both Republicans from Washington state.   McMorris said on her website: “Agriculture is Eastern Washington’s number one industry. We simply cannot allow companies from China to lock down our resources and undermine our farmers and ranchers’ ability to feed the world.” She says: “Prohibiting the Chinese Communist Party from purchasing farmland in the United States is a no-brainer.” (3)   McMorris says that six states have already enacted laws prohibiting the foreign ownership of farmland, including Hawaii, Iowa, Minnesota, Mississippi, North Dakota, and Oklahoma. The New York Times reports that 11 states are considering legislation restricting the ownership of farmland or real estate in general by foreign entities. That information comes from the National Conference of State Legislatures. (4)   Texas Proposal to Ban China-Owned Real Estate   Texas is one of the states wrestling with that issue right now. The proposed legislation would expand on a bill passed a few years ago called the Lone Star Infrastructure Protection Act. That bill was a response to the purchase of 140,000 acres by a Chinese billionaire to build a wind farm close to a U.S. Air Force Base. There was concern that the turbines could be used to spy on U.S. military operations, or that the generation of electricity of the wind farm could be withheld and then used for ransom at some point. (5)   Now, with the balloon issue making headlines, a Texas state senator is proposing an expanded version of that law that would ban the purchase of land, homes or any kind of real estate by any Chinese company or individual. The issue is generating controversy because the legislation also targets people who are simply Chinese immigrants.   Texas Governor Greg Abbott reportedly plans to sign the bill if it passes. It would “not” impact any Chinese immigrants who already own property.   There have been protests by people who say the bill is discriminatory. The American Civil Liberties Union and legal scholars are tracking it, and many don’t believe it will hold up, legally. One University of Texas law professor says the bill would “raise a host of constitutional issues.”   Protecting the Future of U.S. Farmland   As for how much farmland is already owned by Chinese entities, government data shows that ownership has been growing slowly over recent years. At the end of 2020, Chinese owners controlled about 350,000 acres of farmland, which isn’t a huge amount. It’s only about 1% of the 3% of farmland owned by all foreign entities and individuals. (6)   The big concern is how to safeguard our farmland for the future. If the House bill becomes law, it would prohibit “the purchase of public or private agricultural real estate located in the United States by nationals of the People’s Republic of China.” (7)   You can read more about this issue by following links in the show notes at newsforinvestors.com. Please hit the join link for up-to-date news and data on the U.S. real estate market. It’s free to join, and takes less than a minute. And don’t forget to subscribe to the podcast and follow me on instagram @kathyfettke for real estate market updates and commentary.   Thanks for listening! I’m Kathy Fettke.   Links:   1 - https://fortune.com/2023/02/08/forget-chinese-balloonselling-farmland-to-foreigners-concerns-us-lawmakers/   2 - https://www.cbsnews.com/news/chinese-spy-balloon-shot-down-over-atlantic-taller-than-statue-of-liberty/   3 - https://mcmorris.house.gov/posts/mcmorris-rodgers-newhouse-introduce-bill-to-block-china-from-purchasing-american-farmland   4 - https://www.nytimes.com/2023/02/07/us/texas-china-ownership-real-estate-ban.html   5 - https://www.dailymail.co.uk/news/article-9885259/Secretive-Chinese-billionaire-buys-140-000-acres-Texas-wind-farm-blocked-governor.html   6 -  https://www.fsa.usda.gov/Assets/USDA-FSA-Public/usdafiles/EPAS/PDF/2020_afida_annual_report.pdf   7 - https://newhouse.house.gov/sites/evo-subsites/newhouse.house.gov/files/evo-media-document/2.2.2023-china-act.pdf