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Citing security risks, US states move to bar Chinese land purchases and projects with China ties

  • Virginia governor nixes a US$3.5 billion battery plant, and 2,500 new jobs for his state, because Ford Motors has a Chinese partner on the project

  • Legislative bans on Chinese land ownership, and in some cases even real estate, are pending in three states, and others have limited farmland purchases

By Mark Magnier in Danville, Virginia

February 13, 2023

Illustration: Henry Wong

Odell Hutson let out a sigh as he recalled his nearly four decades employed at the massive Dan River textile mill here in southern Virginia, watching it slide from revered icon to bankrupt hulk, leaving in its wake rising crime, unemployment and shattered dreams.

Since its 2004 bankruptcy, local officials have worked hard to reboot Danville – recently ranked Virginia’s poorest city – only to receive a major setback last month when Gov. Glenn Youngkin nixed a potential Ford Motors project with thousands of well-paying jobs because of its Chinese partner.

“This Ford plant would’ve been a big deal,” said Hutson, an engineer with a grizzled beard and self-possessed smile. “I don’t like the idea of foreign companies owning all of our assets. But that plan was to hire 2,500 people. That would’ve been a big kick in the pants to get this place going.”

Ford’s partner in the prospective US$3.5 billion project, Fujian-based Contemporary Amperex Technology (CATL), was a “front” for the Chinese Communist Party, a “dictatorial political party that only has one goal: global dominance”, said Youngkin.

“This Ford plant would’ve been a big deal for this town,” says Odell Hutson of Danville, Virginia. Photo: Mark Magnier

Danville’s industrial “megasite” park remains empty more than a decade after it opened, part of a wave of recent legislation, executive action and rhetoric aimed at excluding Chinese from securing US property or farms, from Virginia to Texas to Congress, where a newly elected Republican-led House is flexing its muscle.

That leaves Asian-Americans fearful that overly broad national security provisions will boomerang, subjecting them to more violence and discrimination.

Behind the political groundswell are deep US-China divisions over technology, Taiwan, espionage – and recognition that anti-China measures resonate with US voters. Some 80 per cent of Americans in recent polling express an “unfavourable opinion” of China.

Last month, in rapid succession, Republicans Texas Gov. Greg Abbott, Florida Gov. Ron DeSantis and Youngkin vowed to support legislative bans on Chinese land ownership, even condominiums in some cases. Theirs join eight other states considering laws to limit farmland purchases by Chinese and several that have already passed.

Federally, former president Donald Trump promised to ban Chinese investment in US farmland if elected again in 2024, lawmakers have vowed to further bills tightening oversight and limiting purchases of farmland by Chinese, and House Speaker Kevin McCarthy has pledged to make the farm issue a priority for a new committee aimed at checking Chinese Communist Party influence.

“It doesn’t matter who’s in office … anti-China is a real bipartisan issue, one of the few,” said Leo Yu, a law professor at Southern Methodist University in Dallas. “I really don’t see a way out. It’s just getting worse.”

Fear of foreigners “buying up America” is hardly new. Race-based alien land laws were imposed in the late 19th and early 20th centuries. The 1970s saw added restrictions fuelled by fears that foreign buyers were driving up prices.

Some of the measures, including the Texas bill, target Russia, Iran, North Korea and China. But analysts say the real focus is China, with others added to blunt a constitutional challenge against laws directed at a single race or nation.

State Representative Gene Wu of Texas denouncing a bill that would prohibit citizens from China and three other countries from buying land in Texas. Photo: Dallas Morning News/TNS

“They throw in scary-sounding places to justify what they want,” said Texas state Representative Gene Wu, a Democrat. “Abbott, DeSantis, they’re vying to be president, trying to outdo each other.”

Asian-American groups and civil rights critics say legitimate espionage and national security cases should be fully investigated and prosecuted, including spying activity from farms near airports and sensitive military sites. China’s Fufeng Group, among others, faced opposition to its bid to buy land for a corn-milling operation in North Dakota 12 miles from a military base that the air force recently termed a “security risk”.

The recent Chinese surveillance balloon flight, which traversed farm states housing nuclear missile sites, has fuelled further distrust. On Thursday, the US State Department declassified information that the balloon “was clearly for intelligence surveillance”, and the US House in a rare display of unanimity voted 419-0 to condemn China for the incursion.

Farm states have also been wary of Chinese buyers inflating land prices, upending supply chains and pilfering technology. Chinese nationals were convicted of stealing valuable hybrid corn seeds in 2016 and farm algorithms in 2022.

But Asian-Americans contend politicised arguments demonise their communities and risk attacks on individuals.

“It’s anti-China sentiment. The root really is racism,” said Yu, adding that mainstream America has long intimidated immigrants by denying land rights. “This country is about property rights. No property, no rights.”

Another issue has been jurisdiction, with the federal government responsible for national security but state officials – who, critics say, should know better – pushing many initiatives. DeSantis graduated from Harvard Law School, Youngkin from Harvard Business School, and Abbott is a former Texas attorney general and judge.

Nor has there been much clarity on how any law would be implemented or enforced, critics add.

“It is just a gross overreach of power. We have separation of branches … for a reason,” said Florida state Representative Anna Eskamani, a Democrat. “So much of this is designed for the headlines.”

Gov. Glenn Youngkin of Virginia has rejected plans for a Ford battery plant in his state, saying China’s involvement was a security risk. Photo: AP

Others have said any threat is overblown. China accounts for 383,935 acres of total foreign-owned US agricultural land, according to federal Agriculture Department figures, with nearly 40 per cent owned by Chinese-held pork producer Smithfield Foods. Canada holds more than 30 per cent of the foreign farmland share in the US, compared with 1 per cent for China.

China’s overseas farmland investments increased after 2000, driven by shifting demographics, rising wealth and reduced acreage, making the US a “target of China’s efforts to strengthen its agriculture sector and food security, sometimes through illicit means,” according to the US-China Economic and Security Review Commission.

“It’s easy to politicise. We’re talking about food, a sensitive issue,” said Daniel Rosen, a White House adviser from 2000 to 2001 and partner with the Rhodium Group, which tracks Chinese investment. “We’ve seen politicians step in and try to ‘make hay’.”

The anti-China climate has at times upended conventional political logic. Abbott has railed against Chinese land ownership even though China is Texas’s second-largest trading partner and third-largest export customer, including natural gas and machinery.

And Youngkin’s decision to wave off 2,500 jobs – as outlined, Ford would have owned the lithium battery plant and CATL operate it and own the technology – was highly unusual for a state politician. Michigan immediately offered to step in.

“We cannot refuse to do business with any company simply because they have ties to China,” said Virginia state House Minority Leader Don Scott, a Democrat.

Analysts have said Youngkin appears wary of looking soft on China given his past as co-chief executive of the Carlyle Group, a private equity firm with China ties. Trump recently called him “Young Kin”, adding on social media that it “sounds Chinese”.

Investment cooperation should not be “weaponised”, and Beijing encourages its companies to invest overseas in compliance with local laws, the Chinese embassy in Washington said. “Playing the China card and sensationalising the ‘China threat’ is irresponsible and harms the US’ own interests,” said spokesman Liu Pengyu.

For Wu, who helped lead protests against the latest Texas legislation, it is personal. Born in Guangzhou, his immigrant family’s Texas home provided a base in applying for jobs, green cards and citizenship. “We’re Americans. We have no control over what happens in China,” he said. “But if people look for a scapegoat, logic has no role.”

It is unclear what direct threat CATL represented to Danville, where Asians make up 1.4 per cent of the population. Incorporated in 1830, the southern Virginia city developed into a vibrant rail and tobacco hub, serving briefly as capital of the Confederacy at the end of the Civil War.

After the 1880s, the Dan River mill grew rapidly, Danville’s faded mansions evoking its belle epoch.

Former employees recalled good times through the 1980s when morale was high, pay was good and the mill navigated fashion trends, from jeans and shirts to Looney Tunes-themed sheets for Brooks Brothers, Levi Strauss, Liz Claiborne and others.

As production shifted overseas and Asian competition stiffened, however, Dan River doubled down, borrowing to acquire struggling competitors at bargain prices. Overextended, it changed owners a few times and fended off corporate raider Carl Icahn, its workforce declining by two-thirds from its peak of about 17,000 employees.

“My whole family worked there. It was a bedrock of the community,” said Terry Towler, 63, a two-decade veteran. “China, Japan, Taiwan flooded the US with linens and textiles. And they’ve got cheap labour over there. We couldn’t afford to compete.”

Hutson, whose job took him to multiple plants across several states, recalled cracks appearing by the late 1980s, with upgrades delayed, production lines idled, corporate decisions fumbled.

“It’s like you have this big huge company, you take away 90 per cent of your customers and do away with them and try to keep running,” he said over lunch at Danville’s Checkered Pig barbecue restaurant. “It’s been a tough road.”

A 1920s-era mill building is being converted into residential housing in Danville, Virginia. Photo: Mark Magnier

Dan River’s 2004 bankruptcy coincided with the decline in railroads and tobacco, followed by the 2008 global financial crisis. Between 2000 and 2010, the city lost 15 per cent of its residents. Violent crime in some years surged 30 per cent.

This started a decade-long effort to regain its economic vitality.

When Lee Vogler returned to Danville after college, friends questioned his judgment. “About 2010, we essentially hit rock bottom,” said Vogler, a city councilman. “Your downtown was kind of your living room, and you take care of your living room, and this isn’t somewhere you wanted to be.”

Hoping to stem the decline, the city razed a decrepit hotel, sought tenants for old mill buildings and converted tobacco warehouses into condominiums. Another project under way is turning a massive 1920s-era White Mill building, with its peeling paint and pooled water, into apartments. And Caesars plans to open a casino in 2024 despite some local opposition.

But the bigger challenge is finding tenants for the ambitious 3,500-acre (1,416 hectare) industrial “Southern Virginia Megasite”, a joint project of Danville and adjoining Pittsylvania County launched in 2008.

Gov. Ron DeSantis of Florida, widely expected to seek the Republican presidential nomination in 2024, has vowed to support legislative bans on Chinese land ownership. Photo: Getty Images

Over a decade and US$200 million later, it remains unoccupied after Youngkin rejected the Ford deal before any formal outcome was announced. Vogler avoided commenting on the Ford negation but said the city and county learned from every near-miss, choosing his words carefully about whether Danville would welcome another Chinese tenant.

“You weigh the merits of any project on its own,” he said. “Obviously, in general, I hear this nationally from both parties, any company that has ties to the Chinese Communist Party is concerning.”

“It’s not going away any time soon. Nationally, it’s going to be the big issue of our time.”

Others were less guarded. “Ford, it would’ve helped the local economy,” said Towler. “Anything would help.”


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