Priorities for Economic Policy Toward China

American suspicion of China has . . . ballooned. Increasing suspicion is causing many states to consider banning Chinese acquisition of US land. State governments can ban if they choose, and it may prevent future problems. It will do almost nothing to address our current economic vulnerability. That’s not found in land, but in American supply chains running through China and the loss of technology, including agriculture supply chains technology.

Land grabbed attention when China’s Fufeng bought 300 acres for corn milling near Grand Forks Air Force Base in North Dakota. The Committee on Foreign Investment in the United States (CFIUS) reviews investments that may threaten national security, but determined it did not have jurisdiction to block the transaction. This is presumably because the land is not near enough to the base—CFIUS doesn’t explain much.

While CFIUS may not have jurisdiction, local governments do. One possibility is local rules in many areas limiting foreign land acquisitions. The notion of reciprocity certainly permits this, since only the Chinese state can own Chinese farmland. A national option is simple—Congressional legislation to authorize CFIUS’ review of land purchases at a greater distance from military facilities.

But the People’s Republic of China (PRC) owns less than one percent of just the foreign share of US farmland. Chinese land purchases have been very small for five years. Large acquisitions are impossible to hide unlike, say, the PRC’s role in private equity investment here. Land acquisition is not a difficult or even urgent issue. In agriculture alone, the Chinese place in supply chains is more important, as is theft of intellectual property (IP).

The biggest U.S. vulnerability to the PRC, inside or outside agriculture, is in supply chains. Heavy American reliance features key pharmaceutical products such as antibiotics and painkillers. The federal government is subsidizing semiconductor production here, but has done nothing yet to ensure new plants aren’t dependent on Chinese materials or packaging services.

In agriculture, perhaps the biggest supply chain concern is our publicly stated dependence on Chinese chemical inputs for animal feed. The PRC is the dominant global producer of vitamins and has the dominant share of US vitamin imports. In a confrontation over Taiwan, all these supply chains could be cut. The US should bar the PRC from our most important chains, evaluating if vitamins and animal feed should be among them.

Chinese theft of agriculture IP can seem comical, with seeds taken from the ground and hidden in popcorn boxes. But it reflects the very high priority Beijing attaches to agriculture self-sufficiency, with technology seen as the way to achieve it. The PRC may switch from digging up seeds to digging into computer networks but it will continue to try to steal American agriculture’s trade secrets.

The US puts total losses from Chinese IP theft in the tens or even hundreds of billions of dollars annually but does almost nothing to retaliate (since Trump’s broad tariffs punished everyone, why not keep stealing?). The US should compile a list of the biggest Chinese beneficiaries of IP theft and coercion, then sanction them. Without some sort of action, there’s no reason for the PRC to stop stealing any kind of American IP.

There are additional issues more pressing than acquisition of farmland. For example, from 2017 through 2020, $780 billion in new American funds went into Chinese securities. We don’t know what happened in 2021, much less 2022, because the Department of the Treasury is slow in providing numbers. Treasury also says nothing about where the money went—remote sensing, artificial intelligence, biotechnology?

Land is easy—Congress should make a call on changing CFIUS and states should decide what’s best in their individual cases. But spending a lot of time talking about land and not taking on supply chains or IP would not protect America, it would just be playing politics.