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How U.S.-China tensions could affect who buys the house next door

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  • GO NAKAMURA/THE NEW YORK TIMES
                                A rally against State Senate Bill 147, the bill that would ban Chinese citizens from buying real estate in Texas, outside City Hall in Houston, Jan. 23. Gov. Greg Abbott’s endorsement of the legislation brought swift opposition from Democrats in the state’s growing and diversifying cities and suburbs.

    GO NAKAMURA/THE NEW YORK TIMES

    A rally against State Senate Bill 147, the bill that would ban Chinese citizens from buying real estate in Texas, outside City Hall in Houston, Jan. 23. Gov. Greg Abbott’s endorsement of the legislation brought swift opposition from Democrats in the state’s growing and diversifying cities and suburbs.

HOUSTON >> After a Chinese billionaire with plans to create a wind farm bought up more than 130,000 acres of Texas land, some of it near a U.S. Air Force base, the state responded with a ban on such infrastructure projects by those with direct ties to China.

Now, a Republican state senator is proposing to broaden the ban, seeking to stop Chinese citizens and companies from buying land, homes or any other real estate in Texas. Gov. Greg Abbott announced his support last month: “I will sign it,” he wrote without equivocation on Twitter.

His endorsement underscored just how important foreign land ownership, particularly by Chinese buyers, has become as a political issue, not just in Texas but across the country.

Tensions have been rising between the United States and China over a range of issues, including international trade, recognition of Taiwan and the war in Ukraine. On Friday, Secretary of State Antony Blinken abruptly canceled a planned weekend trip to China — the first by a U.S. secretary of state since 2018 — after the discovery of what U.S. officials described as a Chinese surveillance balloon drifting over the American heartland. (On Saturday, a U.S. fighter jet shot down the balloon off the coast of South Carolina.)

The geopolitical strain has fueled calls for a more aggressive approach to Chinese investments in the United States with an eye on security.

“We don’t want to have holdings by hostile nations,” Gov. Ron DeSantis of Florida said in a news conference last month. Gov. Glenn Youngkin of Virginia made it part of his State of the Commonwealth speech soon after, urging lawmakers in his state to prevent “dangerous foreign entities” tied to the Chinese government from purchasing farmland.

Chinese owners have very slowly expanded their holdings in U.S. agricultural land in recent decades, but the increasingly hostile political climate has made the topic a rising concern, with at least 11 states considering some form of new legislation related to foreign ownership of farmland or real estate, according to the National Conference of State Legislatures.

Some of the new and proposed laws go beyond targeting Chinese nationals to broadly take aim at ownership by all foreign governments, businesses and new immigrants. Other laws, like the one under consideration in Texas, single out countries seen as particular security threats, including Russia, Iran and North Korea, in addition to China.

Nor are Republican lawmakers the only ones challenging foreign land ownership. In California, a bill to rein in foreign ownership of farmland passed both Democratically controlled houses last year. The bill’s sponsor, Sen. Melissa Hurtado, a Democrat, said it was an effort to stop the purchases while trying to better understand the motivation behind them.

“Something doesn’t smell right,” she said in an interview. Other Democrats, including in Congress, have proposed legislation to increase the oversight of foreign agricultural land purchases.

Lawmakers have expressed concern over the security of the nation’s food supply and worry that several land purchases were deliberately made near American military bases. Late last month, the U.S. Air Force weighed in on a Chinese company’s purchase of a corn mill in North Dakota, not far from a base, declaring it a “significant threat.”

Though the government did not specify the nature of the threat, beyond “near- and long-term risks of significant impacts to our operations in the area,” community leaders speculated that the mill could be used for spying on the Air Force, which the company denied.

State Sen. Lois W. Kolkhorst, the sponsor of the Texas bill, said in a statement that foreign land ownership had become an issue in her district, a mostly rural area stretching west and south of Houston.

“One of the top concerns for many Texans is national security and the growing ownership of Texas land by certain adversarial foreign entities,” Kolkhorst said, referring to the Chinese purchase of the land near an Air Force base near Del Rio, Texas, for a proposed wind farm.

But the legislative push, while in some cases bipartisan, has largely brought opposition from Democratic elected leaders. The California bill was vetoed by Gov. Gavin Newsom. In Texas, Democratic leaders said the broad measure now before the Legislature appeared to be prompted more by a rising anti-China political environment than by any legitimate concern over espionage or foreign ownership of the food supply.

The bill as written would make it impossible for the large number of Chinese immigrants who have come to work in the tech sector or study at Texas universities to do something as basic as buy a home. It would not affect those who already own such property.

“Through the years I have helped a lot of Chinese immigrants purchase their homes in Houston, and a lot of them had been working toward their citizenship for years,” Kevin Yu, a green card holder and a real estate agent in Houston, said at a protest. “These people can be engineers, medical doctors, accountants and teachers.” The proposed bill in Texas, he said, would “take American dreams away from these people, including my family.”

A 2021 census survey estimated that about 150,000 foreign-born Chinese are living in Texas, a larger population than any of the other nationalities targeted by the proposed ban.

Protesters have rallied against the bill in Houston and Dallas in recent weeks, saying that the legislative efforts could worsen the climate of anti-Asian violence and could be easily extended to include other immigrant groups.

State Rep. Gene Wu, D-Houston, said he supported laws targeting foreign corporations with ties to the government from buying certain property. “That’s fine,” said Wu, who was born in Guangzhou, China, and immigrated to Texas with his family as a child. “But the difference is this bill. This bill attacks individuals, private people with no connections with other governments other than being from that country.”

Lawyers with the American Civil Liberties Union of Texas who are watching the bill’s progress said that the measure was likely to run afoul of the federal government’s prerogative to manage relations with other nations, and that it was unconstitutional.

“The discriminatory bill would prohibit members of our communities from participating in the Texas economy, including dual citizens and legal permanent residents, such as green card holders,” said David Donatti, a lawyer with the ACLU of Texas.

Some legal scholars were also skeptical. “Such a bill would raise a host of constitutional issues,” said Stephen I. Vladeck, a constitutional law professor at the University of Texas. Because the measure does not distinguish between targeting people who are already here and those outside the United States, he said, it raises “serious due process and equal protection issues.”

In response to an inquiry from the New York Times, Kolkhorst said in a statement that she would amend her bill “to include a provision that will make crystal clear that the prohibitions do not apply to United States citizens and lawful permanent residents.”

That would mean, presumably, that Chinese green card holders would be entitled to buy property but more recent immigrants, or those on temporary work visas, would not.

The emerging battle over the bill in Texas comes amid rising attention, particularly from Republicans but also from Democrats, to the role of Chinese-owned companies in American life, including bans in several states on the use of the Chinese-owned social media platform TikTok on many college campuses and government devices.

But the issue presents complicated crosscurrents. For example, at the same time that Abbott is backing the sweeping ownership ban on real estate purchases, Texas has also celebrated the state’s “strong economic relationship with China,” including billions of dollars in direct investment by Chinese companies.

The share of United States farmland owned by Chinese people and companies is small and has not been growing substantially. Chinese owners held about 350,000 acres at the end of 2020, according to a U.S. Department of Agriculture report, and most of the farmland came from the Chinese acquisition of Smithfield Foods in 2013. Canadian owners, by contrast, held 12.4 million acres.

The figures do not include residential or commercial buildings, though that has largely not been the focus of most legislative efforts. Chinese investors are among the top foreign purchasers of residential real estate, along with Canadians, according to the National Association of Realtors.

Other states have had concerns over foreign ownership of land and have made efforts to regulate it. Some states, including Minnesota and Iowa, have enacted bans on foreign ownership of agricultural land, and a larger number place restrictions on such purchases. The Oklahoma Constitution limits land ownership to U.S. citizens. Those laws, unlike the proposal in Texas, do not single out citizens of particular countries.

In Canada, a sweeping ban on foreign ownership of residential property went into effect this year — a move that the country’s liberal leadership said was aimed at curbing soaring housing prices.

However, the proposed ban in Texas, endorsed by Abbott, appears to go further than the laws adopted in other U.S. states, both in applying to all “real property” — including urban buildings or condominium apartments — and in applying its provisions not only to the governments of certain countries but also to their citizens.

During its last session, in 2021, the Texas Legislature barred companies from the same list of countries targeted in the new proposed law from winning contracts that relate to “critical infrastructure” in the state, including the electricity grid, water treatment plants, and cybersecurity and communications systems.

That bill came in response to the plan by Chinese billionaire Sun Guangxin to construct a wind farm that would have connected to the Texas electricity grid. The bill passed with bipartisan support in the state Senate, and Abbott signed it.

A representative of Sun did not respond to a request for comment.

Last month, more than 100 people joined the rally against the latest proposal on the steps of Houston City Hall, a diverse coalition that included local officials and members of Congress.

“This is wrong,” Mayor Sylvester Turner said, standing at the rally with Wu, who grew up in a house his parents purchased after immigrating to Texas but before they became citizens.

“This could be my family’s home, this could be yours,” the mayor said, pointing to an image of the home, in an area of the city now represented by Wu.

This article originally appeared in The New York Times.

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