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fDi Intelligence: Biden’s Cfius order risks spurring anti-China sentiment
President ‘advertising’ national security tip line could increase Sinophobia in investment
By Danielle Myles
In a first for US investment screening, a public tip has prompted President Joe Biden to force the divestiture of Chinese-owned land on national security grounds. The government is now expected to receive an uptick in referrals about Chinese transactions allegedly requiring investment screening, risking a further rise in Sinophobia in the country.
On May 13, Mr Biden issued an executive order requiring Chinese-owned MineOne Partners to sell land it acquired in Wyoming in 2022, because its crypto-mining operations used foreign-sourced technology capable of conducting surveillance on a nearby military site.
The order came one day before the US sharply raised tariffs on Chinese imports, and amid growing tensions between the two countries which has sparked a rise in Sinophobia affecting foreign investment and a crackdown on Chinese ownership of farmland.
“[The order] certainly fuels that fire,” says Christine Daya, a partner at DLA Piper in Washington DC. “The anti-China sentiment over the past five years or so might encourage public tips and a specific focus on China.”
The president is authorised by the country’s investment screening watchdog, the Committee on Foreign Investment in the United States (Cfius), to block or unwind deals deemed to present national security risks and which cannot be resolved by Cfius.
Last week’s order was only the eighth time a president has used their Cfius powers to stop a transaction. Seven of these have involved Chinese investments, in line with Cfius’s intense scrutiny of the increasing number of deals emanating from the country over the past decade.
MineOne is the first time a presidential block is known to have been instigated by a public tip, as Mr Biden states in his executive order. Anne Salladin, a partner at Hogan Lovells who worked for Cfius for almost two decades, “absolutely” expects more tips to follow given the public nature of the presidential order.
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Research by the Chicago Council on Global Affairs found that 81 bills banning Chinese ownership of US land were introduced across 33 states in 2023. That same year, the federal government expanded the list of military sites for which land acquisitions in close proximity require Cfius’s approval. This was driven in part by state and local concerns about Chinese land ownership, says Mr Curran, and followed an uptick in Chinese acquisition of real-estate near military facilities.
Foreign investment practitioners say this crackdown on the ownership of land, which to the public is more visible and tangible than business operations, compounds the risk of Chinese property deals being reported to Cfius.
“Anti-China sentiment, fed by the government's aggressive policies and rhetoric toward China, has created a climate of suspicion and racism,” concludes Jane Shim, a director at the Asian American Legal Defense and Education Fund, via email.
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Read the article here: https://www.fdiintelligence.com/content/news/bidens-cfius-order-risks-spurring-antichina-sentiment-83806