Last week, two Democratic Florida state legislators announced that they had introduced legislation that would "block the purchase or acquisition of real property by the Chinese Communist Party (CCP) and any related third party, in locations close to military bases and locations deemed to be strategic assets in the State of Florida." In an exchange with China Trade Monitor, one of the legislators laid out her views on some of the broader issues related to economic relations with China.
Senator Lori Berman and Representative Katherine Waldron announced that their proposed legislation (SB 924/HB 835) would "in effect, protect our business industry, our national security, our agriculture sector and our tourists and residents from any potential covert influence of the CCP and their partners."
Their press release notes that "[t]he CCP and their partners, has already successfully purchased more than $2 billion in land throughout the United States, or close to 200,000 acres." Because some of this land is "located close to our military bases," "[w]ithout any legislation in place, the leadership in those states were often unable to halt these purchases."
The key part of the proposed legislation reads as follows:
beginning July 1, 2023, any company or development owned or controlled by a company that is owned, in whole or in part, by, or is a subsidiary of, a company that is owned by the People's Republic of China or the Chinese Communist Party or whose principal place of business is located within the People's Republic of China, or any intermediary acting on behalf of such company or development, may not:
(a) Purchase or acquire any real property or strategic assets located within miles of a military base in this state; or
(b) Purchase or acquire any real property or strategic assets located within 50 miles of strategic assets in this state; or
(c) Purchase more than 50 acres of agricultural land within the state, including any contiguous agricultural land that equals more than 50 acres in total.
Under the legislation, strategic assets include: power plants, water treatment facilities, emergency operation centers, military bases, telecommunications towers, law enforcement facilities and other structures used for similar purposes or deemed strategic by the state.
Berman and Waldron noted that their bill "complements President Biden's recent Executive Order, signed September 22, 2022," which "helps define additional national security factors for the Committee on Foreign Investment in the U.S. (CFIUS) to consider when evaluating transactions."
CTM asked Rep. Waldron for her views on some of the underlying policy and political issues here, and we had the following exchange:
Can you walk us through how this became a concern of yours as a legislator in Florida? Were there specific worries about actual or proposed Chinese purchases of land or property or assets in Florida? Or was it the attention on this issue at the national level and in certain other states that drove you to take action in Florida?
The State of Florida is an attractive target for CCP investors. There are risks to our state associated with the CCP owning our farmland and land close to our strategic assets. This bill is meant to protect our interests and mitigate this risk.
As a legislator I have found this issue to be a very concerning issue across multiple sectors, particularly it is a concern for the business community and our government. For example, President Biden's September 2022 Executive Order expanding CFIUS' review of foreign investments as these investments pertain to national security risks.
On October 20, 2022, the Committee on Foreign Investment in the United States (CFIUS), which is chaired by US Department of the Treasury, issued its first-ever Enforcement and Penalty Guidelines (the Guidelines) for entities that violate mitigation agreements with CFIUS or otherwise run afoul of Section 721 of the Defense Production Act of 1950 and the regulations promulgated thereunder. This bill was designed to further discourage violations of CFIUS - and China and Chinese businesses are subject to these guidelines.
Further, as a businesswoman who has led and has participated in infrastructure projects in the Caribbean and also has also been involved in the telecommunications industry (I was previously an executive at major telecommunications companies), I know first-hand the risks posed by undue Chinese influence and asset ownership within countries.
As you referenced in your question, there is a lot of interest from other states for restrictions and prohibitions related to China and Chinese businesses, including Texas, California, Virginia, North Dakota and others. Fourteen states currently have restrictions or prohibitions of some sort and others have introduced bills to restrict or prohibit purchases.
While China owns less than one percent of the U.S. land owned by foreigners, it is important that our state be as proactive as possible to mitigate their ownership in certain sensitive locations. I assume you are aware of the Fufeng purchase in North Dakota and the purchase of the 130,000-acre ranch near Del Rio, Texas. Both of these purchases caused grave concerns due to the location of these properties; of particular concern was the ownership structure of the Chinese company involved in the Texas purchase.
In part the focus of the legislation is on companies that are owned by the Chinese government or the CCP, but then the legislation seems to go beyond this when it talks about a company "whose principal place of business is located within the People's Republic of China." Is there a concern with all Chinese companies, and, if so, why?
This bill is aimed at mitigating the risks associated with the Chinese government owning property that could negatively impact our nation's security.
The CCP coverage of party and party building within large private companies is close to 100% -- due to their 1993 Company law and, later, Jiang Zemin's call for the CCP to represent the entire "advanced productive force". As a result, China's largest 500 companies have at least three party members -- the minimum to form a "cell" and smaller companies, with more than 50 employees, have a least one-party member embedded in their company. This is all to say that Chinese businesses are often closely linked to the government, and all are certainly monitored by it.
Do you see any difference between how the Democratic and Republican parties are approaching the issue of China in general and Chinese property purchases specifically in Florida?
This issue is a bi-partisan one, not only in Florida but in other states. I look forward to working on this as a bi-partisan effort in the legislature to move this important issue forward.