Foreign Asset Ownership in the United States

Zongyuan Zoe Liu, the Maurice R. Greenberg fellow for China studies at CFR, discusses China’s sovereign wealth funds, investments in the United States, and considerations for policy responses to foreign land ownership trends in the United States. Elizabeth Blosser, vice president of government affairs at the American Land Title Association, discusses recent state legislation on the purchase of U.S. property by foreign entities and individuals. A question-and-answer session follow their opening remarks.

TRANSCRIPT

FASKIANOS: Welcome to the Council on Foreign Relations State and Local Officials Webinar. I’m Irina Faskianos, vice president for the National Program and Outreach here at CFR.

CFR is an independent and nonpartisan membership organization, think tank, and publisher focused on U.S. foreign policy. CFR is also the publisher of Foreign Affairs magazine. As always, CFR takes no institutional positions on matters of policy.

Through our State and Local Officials Initiative, CFR serves as a resource on international issues affecting the priorities and agendas of state and local governments by providing analysis on a wide range of policy topics. We appreciate your taking the time to join us today. As a reminder, this webinar is on the record, and the video and transcript will be posted on our website after the fact, at CFR.org. And we are delighted to have over four hundred state and elected officials registered, representing over forty-seven states and U.S. territories.

We are pleased to have Elizabeth Blosser and Zongyuan Liu with us today. We’ve shared their bios with you, so I will just give you a few highlights.

Elizabeth Blosser is vice president of government affairs for the American Land Title Association, ALTA, which oversees the association’s state legislative efforts including annually monitoring state bills related to the real estate, mortgage, and title industries. She also serves on the board of directors for the Property Records Industry Association. Ms. Blosser has worked for legislators on the federal, state, and local levels, and has extensive experience managing political grassroots and public relations campaigns.

Zoe Liu is the Maurice R. Greenberg fellow for China studies at the Council on Foreign Relations. Her work focuses on international political economy, global financial markets, sovereign wealth funds, supply chains of critical minerals, development, finance, emerging markets, and more. Dr. Liu is the author of Can BRICS De-dollarize the Global Financial System?, published by Cambridge University Press, and Sovereign Funds: How the Communist Party of China Finances Its Global Ambitions, published by Harvard University Press.

So thank you both for being with us today for this conversation on foreign asset ownership in the United States. Elizabeth, I thought we could begin with you, if you could give us a little background on specific policies regarding foreign land ownership in the United States up to now, and how could recent changes at the state level shape U.S. foreign policy going forward?

BLOSSER: Yeah. Happy to talk about that. And want to say, we really appreciate the Council on Foreign Relations including us in this conversation. We especially appreciate it because we are not foreign policy experts. I have to admit I woke up this morning still a little bit surprised I was doing a webinar for CFR. But what we are experts on is the safe, certain, and legal transfer of real estate in this country, something that represents approximately 13 percent of GDP. So we think that’s very important.

So there’s been a lot of conversations about foreign ownership of U.S. real estate. What we’ve tried to do over the course of the past year is really offer ourselves to legislators, regulators, and others who are looking to develop policy around this issue as subject matter experts. Notably, we don’t take a position on any of the legislation being considered in the space—again, because we’re not foreign policy experts. But, you know, whether you think these bills are good or bad, or right or wrong, there’s a lot of conversations happening around this. They’re going to continue. And so from our perspective, it is really important that whatever policy is developed and whatever laws are enacted, they fit within the current system of real estate transfer so that you don’t run into unintended consequences and you’re not adding risk for American real estate and landowners.

If you think about it, besides a place to call home, real estate really represents one of the greatest generators of wealth in the country. So whenever you’re talking about shaping real estate policy, how you do that really matters. It matters to millions of everyday Americans. And so what we want to do is provide some subject matter expertise to make sure that there aren’t unintended consequences. And we think that can be accomplished by adding some procedures and protections within this legislation. And the good news is, there’s a lot of existing real estate law that can be leveraged for that purpose.

So I’ll talk a little bit about some of the legislation we’ve seen. And it’s been extensive. So about a year ago all of a sudden we started seeing a lot of legislation pop up on this issue of foreign ownership of U.S. real estate. And to date, fourteen states have enacted legislation. Some states have enacted several bills. And this is—this is just last legislative session, so last year. And then most recently in Missouri, there was an executive order issued on this subject. Two states have enacted legislation for study committees on the topic. And as of right now, there are almost 150 active pieces of legislation in over thirty states moving on this topic. So it is a lot to track. As Irina said, we track all the legislation related to really real estate, title, and mortgage. And when you think about different topics, this one is just sort of off the charts in terms of the number of bills that are out there.

Notably, there’s really no model legislation that has emerged in this space. But all the bills that have been introduced or enacted do two main things. One, they identify restricted parties. And, two, they identify impacted land or real estate. So in these bills, a restricted party could be a foreign government, it could be an entity, it could even be an individual. And the impacted properties could be anything from just agricultural land, to property that’s adjacent to or in a certain radius of critical infrastructure or military bases, or, in some cases, it could be all real estate within the state. So just to kind of give you an idea of the bills that passed last year, six dealt just with agricultural land, two with critical infrastructure, four with a combination of those two, and then eight touched on real property throughout the state, to some extent.

So with these two elements, there are some challenges that come in with definitions. When you’re talking about these restricted parties, there’s not necessarily lists available to know who exactly is a restricted party. Some states have addressed this by pointing to federal lists, such as the Department of Commerce’s foreign adversary list, or the Department of State has a countries of particular concern list. But, you know, that has been a challenge. And you would think sort of definitions around real estate would be kind of straightforward, but unfortunately, that’s not as straightforward as you might think. For example, property that is considered ag land or farmland today can literally be a strip mall tomorrow. And conversely, property that’s not farmed today can be farmed in the future. And, you know, today we also have a lot of urban farming on land that is, you know, definitely not considered traditional agricultural land.

Likewise, it’s really hard to figure out what properties are within a certain radius of critical infrastructure or military bases, even knowing where all of those places are. You kind of have to put together a map, and map that out, and survey. And, you know, there may be all sorts of reasons why you wouldn’t want to do that. So there’s definitely some definitional challenges as you look at this legislation to definitely be thinking about. Unfortunately, the more sort of focused and narrow the legislation is, the harder it is to sort of sort through some of these aspects.

I mentioned unintended consequences. And I want to talk a little bit about what that might look like. And I will preface this by saying the majority of unintended consequences we think about from our perspective have to do with legislation that simply voids transactions. So rather than a divestment process of some sort, there’s legislation that says, you know, whether a transaction with a, you know, restricted party happens in the future, and in some cases in the past, that transaction is just simply void.

Well, that creates some problems, because obviously, the local land records are going to show something different than that. So, you know, think about it from a consumer perspective. You have a seller who unknowingly sells property to a restricted party at some point. That transaction is considered void. Presumably, the property would revert back to the seller. So at that point, does the restricted party, you know, have reason to sue the seller for false enrichment, or others who were part of the transaction?

From a business standpoint, liens that are on properties owned by restricted individuals that are, you know, transactions later considered void are unlikely to get paid. They’re not going to get paid. And those liens could be anything from a mortgage, to a mechanics or construction lien of some sort, or a tax lien—for all of those the local officials listening in today. And so, you know, that becomes a challenge, and that those liens are unlikely to be covered at that point. You know, if a transaction is voided, basically what a lienholder has is a note, but there’s no property to secure that interest anymore.

From sort of an economic standpoint, transactions that are voided bring into question who owns the property. So, as I said, presumably the transaction’s voided, the property goes back to the seller, but the land records are going to show somebody else owns that property. And so there are serious questions about who has rights and responsibilities as it relates to that property. That kind of puts the property into limbo and creates clouds on title. That’s going to make that property unmarketable in some ways, really hard to transfer in the future. It certainly is going to impact the value of the property. So that’s obviously something to think about from a real estate standpoint and just an overall economic standpoint.

And then, of course, I would be remiss if I didn’t mention that, you know, we are concerned about the liabilities some of these bills might cause for real estate professionals, whether you’re talking about a realtor, a lender, a title professional, or arguably even a county recorder. So those are some of the concerns that we have with legislation. I’ll talk about, just high-level, a few things that that we think can help address these concerns. I will say though, at the outset, I think we can expect a lot of changes going forward, right, in terms of what this policy looks like. This is a very new issue. As I said, there’s no—there’s no model that’s emerged. I think there’s going to be a lot of lessons learned as states look to implement this legislation. I think there’s probably been some lessons learned already.

Notably, there has been litigation around some of this legislation. I assume there will be additional litigation that we will see. So that will impact things. Then you also have whatever’s going to happen at the congressional level. Certainly Congress is looking at this issue, and that might impact what states do in the future and what they’ve done in the past on this issue. So I think we can expect, you know, sort of changes and evolution in policy. And I think that that’s fine. I was talking to someone at the Uniform Law Commission recently about, you know, their process for updating model legislation or uniform legislation that’s been enacted in many states. And, you know, they do take a look after a set number of years at, you know, what’s happened, what new information has emerged. And they go back to legislators and ask them to make changes as necessary. And so we might see that happen.

So there’s three main pieces we think about in terms of strengthening the policy around domestic real estate aspects. First, we think there needs to be an established enforcement authority within the legislation. There needs to be somebody within state government who has responsibility for enforcing the legislation. In many cases, that’s the state attorney general’s office. Sometimes it’s another agency within the state, depending on the type of real estate that’s been impacted.

Second, we think there needs to be divestment processes built into the legislation versus just voiding transactions that have happened in the past, or may happen in the future. And that divestment process can really follow whatever is established in the state. It could be judicial foreclosure. It could be partition or receivership. Most state laws allow a restricted party a certain amount of time to divest themselves of the property. And if that doesn’t occur then there’s forced divestment after that period of time, hopefully using, again, established real estate transaction processes. And what that’s going to do is make sure that lienholders are paid, that the local land records are updated, and all that information is correct.

And then finally, we really think it’s important for some protections to be built in. They need to be built in for the seller or previous owners of the property. They also need to be built in for future owners, so that, you know, the fact that the property was at one point an impacted property owned by a restricted individual should not impact somebody’s property rights down the road, a future owner of that property. I think there needs to be protections for lienholders and then also protections for real estate professionals.

So that’s kind of a high-level overview. And I’m happy to take questions and dive into some of these issues in more detail.

FASKIANOS: Fantastic. And, Zoe, let’s go to you to talk about the trends in Chinese global investments, and how the purchase of land and other assets in the United States has changed over the years.

LIU: Yeah, sure. Thank you, Irina, for inviting me to do this. It’s truly a pleasure to, and I’m always happy to work with our state and the local legislators.

So, you know, what Elizabeth just to described from a high level, in particular a lot of these reasons—the legislative changes or updates with regard to land, including farmland and real estate investment, or property in general—a lot of these really happened, I would say, starting from the past year, in particular. There was this one particular transaction. If I remember correctly, it was this Chinese company called Fufeng Group. Its U.S. subsidiary made an investment—or, purchased about three hundred acres of land in North Dakota. And the piece of land that this Chinese company purchased happened to be about twelve miles from the Grand Forks Air Force Base. So basically, it’s about a ten minutes’ drive by car.

So I think it matters in the sense that first—from two perspectives. The first piece is, it’s important to understand who is the foreign investor which could become the asset owner of a particular piece of U.S. asset. And then, secondly, it also matters in terms of both national security perspective as well as in cases—in particular, in cases where CFIUS—which is the federal level panel of government agencies that review the national security implications of foreign investment in the United States—in cases where CFIUS do not necessarily have jurisdiction, then perhaps local legislators and state legislators can actually step in and fill the gap.

So I wanted to just sort of first talk about, you know, who—why the individuals matter. You know, in this particular case that I talked about, the Fufeng Group, it’s a private company. And it’s, you know, based in China. But the reason why this triggered a national security concern is not necessarily because of the state ownership, but because this investment is related to a piece of the Grand Forks Air Force Base, which is reportedly to be home to a U.S. top secret drone technology base. So from that perspective, is there is this inherent—despite that this is a private Chinese company, the nature of the investment, in the sense that it’s—the location is in the proximity to a top-secret military base, makes this—from a national security perspective, triggered concerns.

But in this particular case, CFIUS really did not have the jurisdiction in terms of rejecting the investment. Therefore, the investment could have moved forward. But what ended up happening, or obstructed the investment, was that actually local officials also reacted and took matters on their own hand. In particular, the city council sort of stepped in and say that, well, you know, despite that perhaps the city council may not necessarily directly have the authority to revoke the transactions, or so on so forth, there are other ways that the city council can actually do, such as the granting permit, or developing infrastructure, and so on, so forth. So there is this kind of disconnection—or, in other ways, it’s not necessarily, like, disconnection in the sense of what national security might—what national security concerns might mean for the local legislators, right?

So the Fufeng Group—the Fufeng investment was a private company. And then that does not necessarily mean that all Chinese investment in the United States or all Chinese asset owners in the United States are, you know, not state-owned. In fact, there have been a lot of state-led investment from China in the United States. And a particular group of investors would it be the state-owned institutional investors, such as China’s sovereign funds. The most influential one would it be this group called China Investment Corporation, which is now the world’s second-largest sovereign wealth fund. And the size, as of the end of last year, the total assets under management of this state-owned institutional investor, China Investment Corporation, or CIC, was more than $1.1 trillion. In other words, the size of the asset under management by the state-owned investor is bigger than the GDP of Saudi Arabia.

So from that perspective, you know, if you look at how these companies—how China’s state-owned institutional investors invest in U.S. assets, they will invest in not just in real estate. They also invest in startup companies in companies that have critical pieces of technologies that are to the interest of the Chinese government. So from that perspective, you know, not we—from local governments—from local legislators’ perspective, you need to know what—you need to know not just national security concern at that very high level, but you also need to know who is the investor or who are the potential asset owners.

And then from that perspective, the inherent debate, perhaps, many legislators, especially at the local level, you are facing, is the promised job delivered by foreign investment versus the national security concern, because, you know, obviously, coming with foreign direct investment, there will be job created, there will be infrastructure being upgraded, and so on, so forth. So if the investment were to be blocked for national security concerns, then that also perhaps means the jobs were not necessarily going to be generated. Therefore, it perhaps would work if there were the so-called white-knight leaders that could have potentially step up when there is undesired foreign investor try to secure a piece of strategic asset, viewed as strategic from either federal or local perspective, and as a counterbalance, try to sort of defend against undesired foreign direct investment—foreign investors.

And then finally, if I can just conclude by quickly saying that, you know, despite there is this whole panel of CFIUS review at the federal government level, again, I wanted to emphasize that CFIUS do not always have jurisdiction over every single piece of investment. And on top of that, could have foreigners, foreign investors, try to bypass the CFIUS review process? There are ways that foreigners could potentially do that. And one way to do that is to set up joint ventures by partnering with a U.S.-based company or U.S.-based institutional investor, so that the joint venture from a review—from a regulator’s perspective, this investment is made by a domestic entity rather than a foreign entity, despite the source of money comes from foreign investors.

So, this—again, this ultimately relies upon deeper scrutiny from actual—the recipient of the investor, whether it is a local company or it’s a local government—it’s a local land managed or owned by a local legislator. So know your investor, and know the source—ultimate a source of money actually matters a lot, too. I will just stop there. And happy to answer any questions.

FASKIANOS: Thank you both. Now, we’re going to go to all of you for your questions. And we also encourage you to share your experiences as well, because this is a forum for you to exchange your ideas. So with that, of course, we are on the record.

(Gives queuing instructions.)

So let’s go first—we have a raised hand from Mayor Mark Allen.

Q: Hello. This is Mark Allen. Can you hear me OK?

FASKIANOS: Yes.

Q: OK. Thank you very much for having me today, for your discussion.

Just wanted to chime in a little bit on foreign ownership within America. My state rep—she’s a state senator, Donna Campbell. I know she introduced some legislation during the most recent legislative session in Texas to prohibit foreign ownership of land in Texas. I’m not sure if her bill did ultimately get approved and voted on. But, you know, I do have a little bit of concern about that. We do have, you know, two projects going on in my city, which is a little bit east and northeast of San Antonio. And we have an existing factory that—it’s called Aisin AW. And they build transmissions for Toyota. And so they do have a Toyota factory that builds Toyota Tundra trucks down in San Antonio. And so what they do there is they build the transmissions there in our site, in Cibolo, and they, you know, put them in trucks and bring them on down there.

But we do have another prospect. And they’re from South Korea. And they’ll be making electrolytes for Tesla. And so we’re—we still haven’t finalized the deal, so I can’t name the company. But we are, you know, a little bit concerned if there is, you know, like, a restriction on ownership of the land. Because I know that Aisin AW, it’s a company based out of Japan. And they did buy land in our city, in Cibolo, and then annexed into our city. And I’m assuming that the—our South Korean partners would be interested in doing the same.

And so if this legislation does happen to go through in Texas, I just wanted to know if there’s any federal laws that would potentially trump that law that Donna Campbell, you know, put forth, or if there’s any compromise that could be made where the landowner, which could be an American, they could rent to the—to the foreign company. So that seems to me like a win-win, because the landowner would have a nice tenant there, with I’m sure they’ll make a pretty good amount of money on the rental situation even if it’s a long-term, you know, twenty, forty, maybe even sixty-year contract. So, just wanted to get your opinions on if there’s anything on the federal level that might trump what Donna Campbell is trying to do there in Texas.

FASKIANOS: Who wants to—Elizabeth, do you want to go?

BLOSSER: Yeah, I’ll jump in and just share that Texas is not on our list of states that enacted any legislation last year. So I know there’s been a lot of conversations at the state legislature there. I anticipate there will be additional conversations. You know, in terms of things happening at the federal level, whether it be legislatively or existing law, I think there are some good questions. There’s certainly a lot of questions that have been raised over fair housing. That would be less of sort of this business type of transaction, but more, you know, restricted parties being individuals and impact on residential real estate. I think a lot of these questions are going to be considered by courts and decided in the courts. And so I would—I would not even hazard to guess how that’s going to go. But there will be some impact there.

In terms of the leasing question, I would just—like, some of these bills do include language regarding leasing. So I would take a look at that. And again, you know, in terms of who’s a restricted entity and what’s impacted property, it’s been a really wide variety of, you know, restricted parties. So it could be just government—foreign governments, right? And then they could be specifically laid out. Or it could be just certain types of foreign entities. So there’s a wide variety of impacted both property and restricted parties. So, you know, it’s kind of hard to say, but, you know, certainly we’ve heard too about, you know, the pending projects and other things. And I think Zoe did a really good job laying out sort of that balance on that point.

LIU: If I can just quickly chime in here. I personally do not think that there would be any federal political willingness to—a political willingness to stop or obstruct this type of—at least from CFIUS perspective—this kind of investment, I mean, would not—would not be—would not be under the same type of national security review process, because neither Korea nor Japan are treated the same way as China, because they are U.S. allies. And then on top of that, one beneficiary—one beneficial factor would be the Inflation Reduction Act, which is very much in favor of localizing or near-shore and friend-shore and onshore a lot of the manufacturing product, and in terms of facilitating the renewable transitions. So from that perspective, I do not think there will be any federal obstruction in terms of making the—obstructing the investment.

But there is the FIRRMA, the Foreign Investment Risk Review Modernization Act of 2018. So, FIRRMA expanded the scope and the reach of CFIUS. It include—sort of, it has the authority over certain transactions, including undeveloped land in proximity to facilities that are considered as sensitive for national security concerns or connected to critical infrastructure, critical technology, and so on, so forth. So from that perspective, unless the specific investment made by Toyota or the Korean company has any kind of that problem, I do not think existing legislator or the new legislature would potentially trigger any kind of obstruction. But, you know, Elizabeth can correct me if my interpretation of the legislation is wrong there.

Q: Yeah, thank you very much for your answer there. We do have an Air Force base in the area, Randolph Air Force Base. And so it is within ten miles, for sure. So that could be a bit of a concern. But I think with them being friendly nations that we should be OK.

LIU: Right. But the CFIUS did, I think, last year, right after the Chinese company investment—Chinese food company investment case, CFIUS did add a couple more U.S. Air Force—just U.S. military bases on sensitive—on the sensitive list. So you might want to check if your military bases is on that list.

Q: Thank you very much.

BLOSSER: I’ll just also throw out there, because I don’t think it’s been shared yet, but generally the countries that are listed in the state legislation that’s been introduced or enacted are China, Russia, North Korea, Iran, Cuba, Venezuela, Syria. That’s kind of—pretty close to comprehensive list. So those are—those are the countries that usually are referenced in the legislation.

FASKIANOS: Thank you.

I’m going to go next question from Justin Bielinski, who is the director of communications in the office of Wisconsin Senator Chris Larson: What is the best source of data to find out what level of foreign asset ownership exists at the state and local levels, and to compare how your state, community stacks up against other U.S. jurisdictions? Elizabeth, do you have that—those sources?

BLOSSER: That is a great question. And I don’t think that there are necessarily great sources for that data. As I mentioned, Mississippi and South Dakota passed legislation to do a study on these types of things. It’ll be interesting to see what data comes out. I don’t—you know, I don’t think it will be possible to go into a state and try and look at all the land records and figure out things like beneficial ownership and the, you know, status of individuals who own various property. Maybe you can take a segment and study that and get that information.

So, you know, I have seen some studies come out. I know the National Association of Realtors puts out some information annually on this topic. And I’m not exactly sure how that information is gathered. From a title perspective, we certainly do not gather or retain that type of information. And then, of course, it’s strictly prohibited and illegal for us to ask about country of origin, or political affiliation, or things of that nature in a real estate transaction.

I don’t know, Zoe, if you have other data sources.

LIU: I was going to mention the National Association of Realtors, their annual report. They basically talk about, you know, to what the level of the transaction—what are the levels of transaction, whether they are—you know, what type of investment, whether they invest in—or, they purchase in existing homes or new homes, or to what extent the transaction is made by cash. And if all transactions are made by cash, then there are kind of further financial security, or safety, or legal implications. And then in terms of farmland investment, I think USDA—the Department of Agriculture, USDA, the Department of Agriculture does have this farm service agency. They put out an annual report on foreign ownership and foreign investment in U.S. agricultural land. So they would show, like, which countries are the largest share of—which country owns the largest share of U.S. agricultural land, and how much. So that would be another source.

In terms of—in terms of just the generic foreign investment at the federal level, and to what extent it triggers a CFIUS review, CFIUS does have annual report. I think they have done the 2023 press release. But I don’t think the 2023, like, statistics is out yet. But CFIUS do have annual report. But I would—in general, I would agree with Elizabeth that there is really a lack of comprehensive data sources that allows for just a direct oversee who owns what and in what types of asset. Then if you—if you broaden the definition of—which, if we just take a holistic view of foreign asset ownership in the United States, then this asset can include financial assets, that include U.S. Treasurys, corporate securities, or any other types of financial investment.

And for those type of data at the federal level, especially for U.S. Treasurys ownership, the Treasury Department published numbers on that, and then the Federal Reserve also have comprehensive data in terms of who—what types of foreign investors owns what type of U.S. financial assets.

FASKIANOS: Thank you.

I’m going to take the next question from Mayor William Lewis of Havelock, North Carolina, with a raised hand.

Q: All right. Can you hear me good? Can you—OK.

FASKIANOS: Yes.

Q: Cool. Yeah, Will Louis, down here in eastern North Carolina.

We have Marine Corps Air Station Cherry Point. And one thing you guys have not mentioned that we’ve seen a little bit of a trend on, particularly around our training ranges where there are some really, really large properties that are available, is this digitizing property rights. Where they’re selling—where we have one organization that is an American organization that is using foreign money to digitally purchase properties, and then sell NFTs based on those properties. And I don’t know—I haven’t—in all the things I’ve heard about CFIUS, and doing research on that, that’s a different level of scrutiny. And, you know, that can be changed so fast at any given time that you don’t even know who does own a property.

And being able to protect those pieces around the range. Have you guys heard anything about that, or have any insight on what levels of scrutiny that may require in the future? And just for reference, we have a project right now that in the next month may get sold that way, that is literally right next to our ranges. And if you present the company to CFIUS for review, they’re an American company that just sells the digitized pieces of the property. So a whole different level of concern.

BLOSSER: We could probably do a whole conversation on NFTs and real estate, and what that looks like. You know, this is an issue the Uniform Law Commission is looking at, and others. You know, my understanding of the process is basically you have an LLC that owns properties, and then really you’re transferring the LLC versus the property. And so that brings up lots of questions about local land records. And so it’s a big—it’s a big conversation.

I will say, as somebody who’s a board member for the Property Records Industry Association, you know, the way that we do land records in this country is very unique. And it is very local, where those records are kept at, generally, the county level, local government level. You know, to protect people’s property rights, they record on the local land records, and that provides constructive notice. And really, that’s been the backbone of property ownership in this country for hundreds of years. And, you know, is it a perfect process? No, absolutely not. Is it arguably the best process out there today? Yeah. So I think when you start talking about NFTs and that piece, there’s a lot of issues that get pulled into that. But that’s a really interesting perspective. And, frankly, something I’m going to do some more research on, and educate myself more on.

LIU: I really do not have too much to add here to the conversation, you know, besides what Elizabeth just mentioned. But one thing that struck me was a lot of the—a lot of the transactions could potentially be made by cryptocurrency, not just for—obviously, not just for NFTs, but also for the transaction of a particular

real house. Like, you know, they—in the transaction, the property owner would just say that she or he would be happy to take cryptocurrencies. And that—for me, that is something very interesting, because it has direct implications for tax payment and a lot of things like that. So far, I mean, I’ve never made a transaction using cryptocurrency and I really do not know what are the implications for taxation. So perhaps, you know, for Mayor Lewis’s office, you need to, you know, take the entrepreneurship and pioneer work to help us understand it better.

FASKIANOS: Thank you.

I’m going to take the next question from representative Aundré Bumgardner, who is Connecticut house assistant majority leader: Maine stands out among U.S. states for its high percentage of foreign-owned land. Why is this the case?

Elizabeth, you want to?

BLOSSER: I don’t know that I have a good answer to that one. I don’t know what the—what would necessarily be a driver of that.

LIU: If I can—if I can quickly chime in here, just very briefly. I mean, I did—I’ve done research in food security. And as far—if I understand this correctly—and please do correct me if I’m wrong—if I understand it correctly, that a lot of the foreign-owned land again in Maine, a lot of this is related to farmland, and a lot of this is related to concerns with regard to food security. And there are—it’s probably worth looking into who are the owners of land in Maine. My guess is that, given that China, just in the grand scheme of foreign-owned U.S. agricultural land, China’s ownership is less than 1 percent. So probably, China’s ownership and may be minimal, whereas countries like Canada looms large in the—in the totality of the picture, and the geographic proximity perhaps makes sense, both from food security perspective, as well as invest just for the resource such as timber.

FASKIANOS: Thank you. And he had a follow-up question: Why do we see more foreign ownership of U.S. agricultural lands than we do from Black, indigenous, or Latino farmers combined? How does U.S. policy through the farm bill shape this phenomenon?

And again, I don’t know if you study this, Elizabeth, or you’ve been following this.

BLOSSER: Yeah. You know, again, sort of data on some of this stuff is limited to get a big picture. A lot of times, state-by-state, people have a good view on this. I do think, going back to kind of discussions in Congress, there are a lot of conversations about this issue, specifically as it relates to agriculture. You know, I would not be surprised to see legislative language make itself—and, you know, its way into to the farm bill, especially given that the Government Accountability Office, the GAO, recently released a report just within the last couple of weeks kind of talking about concerns about communication breakdown between the USDA and CFIUS. So, you know, I could—I could see some policy on the federal level come down through the through the farm bill. You also might see something come through the National Defense Authorization Act, the NDAA.

LIU: Elizabeth, you just reminded me in terms of the legislation, restrictions in terms of foreign ownership of U.S. land. Like, not all state has legislative restrictions against foreign ownership, which is—which reminds me of the earlier question with regard to Maine. If I remember it correctly, I don’t think Maine has foreign—has restrictions against the foreign ownership. But it—although it did have procedures to say, if it’s a foreign investor, if a foreign owner, you have to report it. But there is no restrictions. But, you know, a lot of these legislative changes over the past year would mean that, you know, perhaps more state would enact additional foreign ownership restriction laws, or even become more restrictive. But just a thought.

FASKIANOS: Thank you.

In the Q&A there’s some resources. Evan Meyer has shared an article that you might want to take a look at.

And Zamora Gaston, legislative assistant for Representative Marcus Evans from Chicago, Illinois, is—responds to Justin’s question: In Illinois, certain foreign persons have to disclose their agricultural land holdings to the Illinois Department of Agriculture. And there is a bill that has been proposed during this session that will require the Illinois Commission on Government Forecasting and Accountability to provide to the legislature a report that details noncitizen purchases of real estate, and percentage of noncitizen-owned real estate, and offers recommendations to make it easier for citizens to purchase real estate. So that might be legislation that other states might want to look into raising, passing.

There is a written question from Joshua Ward—Councilman Joshua Ward from Pemberton Township in New Jersey: Being that we live right next to McGuire Air Force Base and we have farmland that is owned by foreign entities, it raises concern for my local citizens about this. Is there a way local municipalities can ask for assistance in investigating concerns?

BLOSSER: You know, I think those are conversations to have with your state elected officials in terms of, you know, what policy is coming down the road. But sort of the last conversation reminds me to say that, you know, sort of restrictions, especially as it relates to ag land, aren’t necessarily new. We saw a whole slew of bills get passed last year but, you know, there’s bills—or, legislation that’s been on the books, you know, back to the ’80s, and before, regarding reporting or review of certain transactions by, you know, a state’s department of agriculture, or others. So I would also check to see sort of what maybe some of the requirements in your state currently are.

FASKIANOS: So I’m going to ask a question. How do you balance legitimate national security concerns with legislation that might discriminate against individuals of certain national origins?

LIU: I guess it’s really hard, because it seems to me that a lot of these national security concerns, so it’s specifically directed against undesired investors, that are either U.S. rivals or U.S. competitors, or entities that are—entities or individuals that are under U.S. sanctions. So it’s very easy for the—for investors—for the investment process, meaning the law firms and the companies that are the recipient of the investment, to be—to self-select themselves outside of the investment process. So from that perspective, I do not—I really do not have a good answer, Irina.

FASKIANOS: OK.

Let’s go next to—oh, Zamora Gaston has a raised hand. So follow up.

Q: I was wondering—Zoe touched on this earlier—about investments from foreign nationalities and startup companies, or businesses in general. I was wondering if there was any congressional oversight or what state-led legislation that you would suggest we look into.

LIU: Thank you for the question, Zamora. Right now, there are there are—there are I don’t know how many bills in Congress that are specifically targeting China. But the direct, most relevant piece of a process would be the CFIUS national security concern review process. And in order for the review process to be triggered, the—it has to either satisfy national—it has to satisfy a certain percentage of investment, and in a particular company. And that particular company would also be of strategic relevance, or in an industry that are relevant for national security.

Now, in the current political scenario, everything can potentially be national security concerns. So, I would anticipate a lot of additional, more stringent CFIUS reviewing processes against Chinese investment, specifically state-led investment, coming up. In terms of how local legislators can respond to this, I mean, this is really—this is really a calculation that local legislators you need—you would have to have the conversation among yourself, and with your—with your own constituencies. Because, again, who are the investors matters, and to what extent these investors, whether they are Chinese, they are Russian, they are from the Middle East or elsewhere—to what extent they have state connections.

The point here—the reason I wanted to make this point is because not all investment—not all, you know, foreign investment in the United States from U.S. competing countries are state-owned entities. And there are private company that really just want to invest for business purposes, right? But the over-securitization of investment make things very difficult. Therefore, you would really have to have a serious conversation in terms of what are the—what are the priorities? Do you think the job being created, the tax revenue being generated, is—basically, the benefit, like, outweighs the potential risk? And if you do think—you do value the benefit, then what are the countermeasures that you can compartmentalize the national security risk?

In other words, you take the investment but how are you going to safeguard the national security concern that, you know, CFIUS or other people who are opposing the investment might raise? You know, part of this could be through, like, a contract. You can have specific, concrete terms by saying that, you know, there should not be forced technology transfer, and so on so forth. So this is really a conversation that you would have to have with your own constituencies and figure out is the national security concern a real concern, and then do you have the countermeasures that can balance out the potential national security threat.

Q: Thank you so much.

FASKIANOS: Thank you. Zoe, to build on that—let me see. Wait.

We might have—Vice Mayor Ted Bui from Fountain Valley, California has a question: Foreign entities that are here on an EB-5 visa, are they a concern as well? And, second, are we only concerned with entities that are here from China, or are there other countries as well, like Vietnam?

LUI: I can chime in on this, and Elizabeth can correct me and enrich the conversation. So on the EB-5 visas, this is interesting, because with EB-5 visas you really apply to business and business individuals and in the context of China in particular these are usually rich individuals who are—who want to eventually migrate to the United States. So from that perspective, as long as—you know, as long as you have a clean understanding of this person’s source of money, and the connection, and the company’s capital structure—meaning to what extent—again, it’s know your investor and know the business person. As long as you have a clear understanding of the ultimate source of money, there is a high chance—there is a high chance that a lot of these projects coming from a private individual may be from somebody who wanted to, you know, eventually migrate to the United States. Therefore, the national security concern would be not as severe as a state-owned enterprise investment.

And then, I would say that not just China. Right now the reason why China becomes a national—Chinese investment become a national security concern was because a lot of the—a lot of the demonstrated patterns by—at least, viewing from Western investor—Western policymakers and Western companies perspective—China tend to have strategic motivation, or their investment is not necessarily just for pure financial returns. And the Chinese—the strategic nature of Chinese investment also not only apply to U.S. companies, but also to their investment in other companies—in companies in other countries as well. One good example, would be 2015 Chinese company’s investment in a German robotic company called KUKA. And this Chinese company, again, it’s private. It’s called Midea. It’s basically a Chinese appliance maker. It has—it does not make anything advanced, like, you know, weapons or anything. No, it just, like, make refrigerators, or toasters, or coffee machines.

But this company is very interested in making itself a pioneer in smart home appliances, like smart appliances. Now, whenever—now, when everything touched upon the issue about “smart” or “chips,” now it started to touch upon a series of other things. Like, you know, do you want your coffee machines to start spying on you? Things like that. But I’m not saying that, you know, the Chinese appliance makers are doing that. But those are the kind of concerns in countries like the United States and—or Western companies. And when you—when a Chinese company, even a private company investing in a robotic—in a piece of company that are strategically—yes, it is very much of the German industry’s strategic concern.

The reason why the process could go forward, could go through, was primarily for two reasons. First, in Germany there was no other competing bidders willing to offer a counter bid. And then, secondly, at that time, Germany did not really have a robust investment screening process. But from the U.S. perspective, we really did. We have a robust review process. And oftentimes, we can mobilize our private investors to sort of offer a counterargument. Now, not just to China. There are other countries like Russia, as Elizabeth mentioned earlier, from other countries that are considered as U.S. rivals. But I’m not exactly sure about Vietnam, because Vietnam is very much a beneficiary from a lot of this supply chain diversification.

BLOSSER: Yeah, I’ll chime in. Again, you know, we don’t really comment on the foreign policy, you know, who should and shouldn’t be included in these bills, what—and, you know, impacted property should or shouldn’t be included in in the bills. But this kind of goes back to what I said earlier about definitions matter in this legislation. Like, how do you draft definitions that are somewhat evergreen, right? You’re putting this into law. That really gets to what you’re trying to accomplish on a foreign policy front, whether that be around the restrictive parties or the impacted properties. And that is difficult. I don’t think there are great answers to that. Like I said, you know, some states have, you know, referenced the federal lists, which sort of narrows it down and allows you to deal with sort of changes over time. In terms of Vietnam, I don’t recall off the top of my head them being listed in any of the bills that I’ve seen.

FASKIANOS: Wonderful. Well, we are at the end of our time. Thank you very much to both of you for doing this—Elizabeth Blosser and Zoe Liu. We appreciate it. And to all of you, for your questions and comments.

We will send out the link to the webinar recording and transcript, as well as other resources. You can follow Elizabeth on X at @EABlosser, or you can also follow the American Land Title Association at @ALTAonline and Zoe at @ZongyuanZoeLiu. Zoe is also a contributor to CFR blog Asia Unbound. So you can sign up for that if you wish to receive notifications for that at CFR.org. And, as always, we encourage you to visit CFR.org, ForeignAffairs.com, and ThinkGlobalHealth.org for the latest developments and analysis on international trends and how they’re affecting the United States. And we also encourage you to share your suggestions for future webinars by emailing us to [email protected].

So, again, thank you all for joining us today. We appreciate it.

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