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However bizarre you think President Biden’s handling of the Chinese spy balloon was, another recent episode in U.S.-China relations could well top it for weirdness. Indeed, it raises the question of whether the administration will fall into a puzzling pattern of commendably tough and smart trade and tech transfer policies toward the People’s Republic while overlooking grave espionage threats.

Not that the spy balloon thing wasn’t plenty strange enough. I mean, the U.S. government found out that this Chinese surveillance craft entered U.S. airspace in Alaska nearly a week ago. (The New York Times has put together this handy-dandy timeline.) It let it float southward over the Canadian border and pass over numerous American strategic sites for days. It first explained its failure even to try shooting it down by citing fears about the debris harming civilians on the ground – when the target was drifting over virtually unpopulated regions. And it finally acted only after the balloon clearly had ample time both to snap pictures of key locations and send them back to China.

But in late 2021, an arguably stranger tale began. That’s when a Chinese agricultural entity (remember – no organization in China deserves the label “business” or “company” because in China’s state-dominated economy, all such groupings are either directly or indirectly controlled by the Chinese regime) announced plans to build a corn milling facility just outside Grand Forks, North Dakota.

Most state and local leaders welcomed the plan as a big jobs and growth boon. But there was this problem: The facility would be located 12 miles from a major U.S Air Force base.

Now you’d think that since the Biden administration deems China as America’s most dangerous strategic adversary, this prospective Chinese investment – from something called Fufeng Group Ltd. – would be vetoed immediately. And this expectation logically would be even stronger because in August, 2018, Washington’s authority to reject potentially threatening foreign projects was broadened to include purchases of real estate. In February, 2020, regulations issued by the Trump Treasury Department came into force that listed facilities, including military installations, near which such transactions could (but not must) be prohibited.

Yet the Grand Forks base never made the list. And it stayed off the list even after September, 2022, when a Biden Executive Orderreflecting the evolving national security threat landscape and underscoring the critical role of the Committee on Foreign Investment in the United States in responding to new and emerging threats and vulnerabilities in the context of foreign investment,” elaborated and expanded “on the existing list of factors that CFIUS considers, as appropriate, when reviewing transactions for national security risks, and describes potential national security implications in key areas.” 

As a result, when critics started protesting about the national security implications of these Chinese plans, CFIUS decided (after three months) that it lacked jurisdiction in the Grand Forks matter.

And there the controversy presumably would have ended. Except that on January 27, in response to concerns expressed by North Dakota’s two Republican Senators, Assistant Secretary of the Air Force Andrew Hunter stated that

Grand Forks Air Force Base is the center of military activities related to both air and space operations. While CFIUS [the Treasury-chaired inter-agency task force charged with scrutinizing proposed foreign investments with national security implications] concluded that it did not have jurisdiction, the [Air Force] Department’s view is unambiguous: the proposed project presents a significant threat to nationa security with both near- and long-term risks of significant impacts to our operations in the area.”

And the base’s website makes it easy to see why. It explains that Grand Forks is headquarters of

The 319th Reconnaissance Wing [which] provides a decisional advantage to our warfighters and national leaders through support of our Nation’s Global Hawk High Altitude ISR [Intelligence, Suveilllance and Reconnaissance] mission. Ensures strategic command and control through the operation of the Nation’s High Frequency Global Communication System.  Affords Combatant Commanders mission-ready Airmen anytime, anywhere. Provides airmen and families of the Grand Forks AFB team, to include geographically separated units, with responsive, tailored, and mission-focused support.”

In addition,

Communication professionals with the 319th Communication Squadron maintain one of two high-frequency global communications systems in the Air Force, offering 24/7 global continuity for command and control in support of the Department of Defense, Executive Branch of the U.S. Government and Department of Homeland Security.”

But China’s intentions of building…anything…anywhere close to Grand Forks? Nothing to see here, according to Treasury and its task force.

To be fair, Treasury’s “What, Me Worry?” attitude toward national security ever since the task force – the Committee on Foreign Investment in the United States – and the screening process it’s supposed to operate was created in 1975.

At the same time, back then, and in the following decades, the main controversy surrounding CFIUS was whether it should be warier of proposed investments by American allies like Japan or Persian Gulf oil producers because critics (like me) argued that they could threaten the economic and technological foundations of U.S. national security.

Today, the China challenge obviously combines these economic and technological considerations with out-and-out military threats.

Fortunately, in the North Dakota case, Grand Forks’ mayor has reversed his stance and declared he will ask the City Council to deny the Chinese building permits. But clearly, these decisions can’t be left up to state and local officials. If President Biden is really determined to counter China with the comprehensive approach that’s needed, he’ll revamp CFIUS by removing Treasury from the driver’s seat, expand the list of strategic facilities near which Chinese and other foreign investments can be banned. And respond promptly the next time a spy craft from China, or anywhere else, violates American air space.

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