China owns 450,000 acres of land in the U.S.

 

In 2021, a Chinese company bought land near an Air Force base in Grand Forks, N.D., sending lawmakers into a frenzy.

Lawmakers feared that China, which many policymakers view as a strategic adversary even though it's the country's top trading partner outside North America, could gain control over the U.S. food and energy supply, as well as a hold on markets and critical infrastructure.

Although Chinese-owned land is a tiny fraction of all foreign-owned land in the U.S., its purchases have raised fears that the Chinese government could have control, through the Chinese corporations, over U.S. assets or gain access to U.S.-based information. Indeed, during the past four decades, Chinese companies and investors have bought up land in the U.S. as well as purchased major food companies like Smithfield Foods, the United States' largest pork processor. Corporations own the majority of that land. Now legislation in Congress would restrict Chinese ownership of U.S. land.

"I don't know that we know for sure all the foreign land that potentially is owned by Chinese individuals or folks controlled by the Chinese government," Sen. Jon Tester, D-Mont., who is skeptical of Chinese land ownership in the U.S., told NPR.

Those fears come amid broader tensions between the two countries on issues as varied as Taiwan, trade and Chinese intelligence gathering. Chinese acquisitions in the U.S., no matter how benign or how minor, are being viewed through that same lens.

Some of these fears exist because of a gap in data on where Chinese-owned land is, and whether it's near military installations. In the case of the transaction in North Dakota, the government agency that must approve such purchases said at the time that it could not act because the matter was "out of its jurisdiction."

"What's missing here is a lot more information about where these specific locations or farmland purchases are located in close proximity to the military base," said Craig Singleton, China program deputy director and senior fellow at the Foundation for Defense of Democracies. He said one big fear is that Chinese telecommunications equipment could be used to disrupt U.S. military communications.

He said he believes it's best to pause Chinese purchases "rather than wait years before we determine that this equipment or these purchases are being used for other purposes."

Mark Kennedy, director of the Wilson Center's Wahba Institute for Strategic Competition, said that the Chinese government has laws that allow the government to access information held by its citizens and corporations.

"That ability by the government to gain access to information is one of the reasons why people view the risk of dealing with a Chinese corporation similar to what they would view as the risk of dealing with the Chinese Communist Party or the government," Kennedy said.

Still, Chinese-owned land accounts for a tiny share of foreign-owned land in the United States. Chinese firms and investors own just over 383,934 acres in the U.S., less than the state of Rhode Island, and far less than how much Canada, Netherlands, Italy, the U.K. and Germany, in that order, each own. China is No. 18 on the list of foreign investors. But China's rise — coupled with its geopolitical heft and its strategic goals that are sometimes at odds with Washington's — has raised questions over who owns this land and how much control the Chinese government has over the ownership.

"Any company and any individual living in China that comes and tries to buy land can be controlled by the Chinese Communist Party because they have that kind of control over their people," Tester said. "In this particular case: guilty until proven innocent — let's put it that way."

According to the most recent U.S. Department of Agriculture data, from 2021, foreign governments do not directly own land in the U.S. But for the purposes of this story, we're using the name of the country as shorthand for companies or investors from that country.

Data pertaining to China shows corporations own the bulk of the land.

Chinese ownership of U.S. land is highly concentrated. USDA data obtained by NPR shows more than 80% of Chinese-owned land is held by Smithfield Foods, and a billionaire named Sun Guangxin, through Brazos Highland Properties LP and Harvest Texas LLC. Sun used the companies to buy more than 100,000 acres in Texas for a wind farm. But the project was ultimately halted by a state law designed to prevent foreigners from accessing the Texas grid.

Breakdown of the land

Overall, foreign entities own just a tiny fraction of all U.S land. They account for just over 3% — or 40 million acres — of all privately held agricultural land in the U.S., as of 2021. Canadian investors own the largest amount — 12,845,210 acres, or slightly less land than the size of West Virginia — much of it for forestry land used for timber production.

Chinese investors owned an even tinier fraction – about 383,934 acres, according to 2021 data requested by NPR. In fact, based on the data, Chinese land holdings account for less than 1% of farmland in any given state where there have been purchases.

Three large entities — Sun's companies, Smithfield Foods and Walton International Group, a global land investment firm — own large parts of Chinese-bought land.

Indeed, Sun owns about 40% of Chinese-owned land in the U.S. He owns over 100,000 acres of land in Val Verde County, Texas, through his two companies: Brazos Highland Properties and Harvest Texas. His purchases in 2016 and 2017, his plans to build a wind farm, as well as his purported ties to the Chinese military, drew scrutiny in Texas several years after his acquisitions. He ultimately was denied permission to proceed with his wind farm plans.

Over another third of Chinese-owned land in the U.S., including most of what is marked North Carolina and Missouri, belongs to Smithfield Foods. Known for being one of the top four meatpackers in the U.S., the Virginia-based company was acquired by Chinese pork company WH Group in 2013.

Since Smithfield is a publicly traded company, there is less legislative scrutiny of its land assets, according to the company.

Walton International Group, a Scottsdale, Ariz.-based real estate management firm, represents 8% of Chinese-owned land. The company also represents buyers from other countries. Dozens of investors around the world invest in these acres. USDA assigns a country based on the investor with the largest share, even if that amount is less than 1%. Walton, which is privately held, did not respond to a request for comment on concerns over the land it owns.

The acquisition of Syngenta Flowers, Syngenta Seeds and Syngenta Crop Protection, the Swiss-based agribusiness company, by state-owned ChemChina also drew widespread scrutiny. It owns 0.2% of the land.

USDA tracks foreign purchases, but doesn't investigate them

USDA has a strict reporting requirement for land purchases 90 days after a transaction. But it doesn't have the authority to investigate these purchases, and can only assess penalties for late, incomplete or false filings.

Buyers who don't report their transactions face a penalty of up to 25% of the market value of their land. But penalties are rarely that high. USDA says penalties are generally only 1% of market value.

Only one penalty was assessed between 2015 and 2020 due "to very limited staffing and a decision to prioritize the annual report to Congress," according to a USDA fact sheet on the Agricultural Foreign Investment Disclosure Act, a self-reporting mechanism that tracks foreign investments, within USDA.

Buyers have to complete a USDA form, indicating if they are purchasing land for themselves, or for a government or some other entity.

Lawmakers in Washington have raised concerns over the delays in the reporting — the latest data is on land acquisitions from 2021 — and over the self-reported nature of the data.

"There's a lag in reporting. I think in a lot of cases we don't have good reporting because people don't know when they purchase land in the United States that they have to report," said Sen. Tester, who has introduced bills to help bolster foreign ownership reporting efforts.

His legislation would ban individuals or companies that can be controlled by the Chinese Communist Party.

Republican and Democratic leaders of the House Agriculture Committee agree that the systems are "sorely in need of updating," as ranking member Rep. David Scott, D-Ga., put it.

Lawmakers mandated USDA create an electronic filing system to streamline the process and create a database. But Congress' failure to approve funding to create an updated system to allow electronic filings means it may be a while before USDA can update its reporting process.

Still, lawmakers from both parties want to limit purchases by Chinese companies, especially those with ties to the Chinese government, and individuals. To this end, there are several bills in Congress aimed at limiting Chinese ownership. Separately, the Biden administration is tightening its rules over who can buy land near military bases.

Which brings us back to the land purchased near the airbase in North Dakota. That land was bought by Fufeng Group, a Chinese chemical manufacturing company, which is currently being fined by USDA for late filing and disclosure.

The Committee on Foreign Investment, a government panel that reviews foreign investments and real estate transactions, said at the time it did not have jurisdiction over this deal. It has now proposed expanding its list of sensitive military bases to include Grand Forks.

But even skeptics of Chinese investment in the United States say Congress needs to be careful that its measures don't result in a backlash against Asian Americans.

Singelton of FDD said blanket bans "run the risk of feeding into broader anti-Asian sentiment and xenophobia."