Geo-political experts and United States policymakers are concerned about China's growing ownership of US debt, a staggering $859 billion, as well as its acquisition of over 384,000 acres of American farmland. Beyond economic considerations, China's holdings raise trepidations about national security, strategic influence, and economic autonomy.
Economic Vulnerability: Because China owns a large portion of US debt, second only to Japan, the US is vulnerable to economic instability. China wields considerable influence over the American economy as a major creditor. This power can be wielded by manipulating interest rates or selling off US debt holdings, causing financial turmoil and affecting the value of the US dollar.
National Security Concerns: China's control over a significant portion of American farmland raises national security concerns. The 384,000 acres of farmland are more than Bill Gates (The US’ largest private farmland owner and 18 other foreign countries combined). The ability to manipulate food prices or limit supply has the potential to destabilize the US food system and jeopardize food security. Dependence on foreign entities for such a critical resource exposes the country to external pressure or food crises.
Strategic Influence: China's ownership of US debt and farmland provides it with significant strategic leverage over the US. China can shape policy decisions, influence political dynamics, and potentially undermine American sovereignty by leveraging economic power. The potential influence on key decision-making processes poses challenges for maintaining an autonomous and balanced economic relationship, from trade negotiations to diplomatic relations and domestic policy formulation.
So, what should be done?
To ensure economic security in the face of China's ownership of US debt and farmland, a comprehensive approach that addresses both short-term concerns and long-term strategies is required. Here are some potential measures to consider:
Reducing Diversification of Debt Holders: It is critical to reducing reliance on a single country for debt financing but even more critical to reduce our debt to foreign powers in total. Even to our allies.
Strengthening the Domestic Agricultural Sector: Prioritizing the development and resilience of the domestic agricultural sector is critical for ensuring national security and food sovereignty. This can be accomplished through targeted investments, R&D, and assistance to local farmers. Encouragement of sustainable farming practices, technological advancements, and agricultural innovation would increase self-sufficiency and decrease reliance on foreign-owned farmland. More importantly, the US must find a way to start buying back that farmland.
Transparency and Monitoring: It is critical to improve transparency and monitoring of foreign ownership of US assets. Setting up comprehensive reporting mechanisms and regulatory frameworks to accurately track foreign investments will give policymakers a better understanding of the scope and implications of such ownership. This will allow for informed decision-making and prompt action to address potential risks. The problem with this course of action is: how do you prevent it from becoming another Patriot Act that violates the rights of Americans?
Strengthening Alliances: To address the challenges posed by China's economic influence, the United States should work closely with like-minded nations. Building strong alliances and partnerships based on shared values and economic interests will provide collective bargaining power in negotiating economic terms and ensuring economic security. Collaboration with allies can also aid in the diversification of trade and investment opportunities, reducing reliance on a single country. I personally believe the US needs to take a really hard look at the defunct Monroe Doctrine and find a way bring it back into a more modern version of itself.
Implementing rigorous national security review mechanisms for foreign investment, particularly in critical sectors such as agriculture, infrastructure, and technology, is critical. These mechanisms should assess potential threats to national security and allow for intervention to protect vital interests when necessary. And ensure that review includes our policymakers who are undoubtedly making money off foreign investments for the sake of national security.
The fact that China owns $859 billion in US debt, as well as significant farmland holdings, raises concerns about America’s economic vulnerability, national security risks, and strategic influence. To mitigate these risks, a careful assessment of the implications is required, along with proactive measures to ensure economic security. Policymakers must balance protecting national interests and long-term economic resilience and ensuring a mutually beneficial economic relationship with China. One of the best ways to deny the PRC access to America’s interests is to greatly reduce America’s dependence on the PRC itself.
Foundation, PGP. 2023. "The Federal Government Has Borrowed Trillions, But Who Owns All That Debt?" Peter G. Peterson Foundation. May 11. Accessed May 21, 2023. https://www.pgpf.org/blog/2023/05/the-federal-government-has-borrowed-trillions-but-who-owns-all-that-debt.
Washburn, Emily. 2023. "How Much U.S. Farmland Does China Really Own? More Than Bill Gates—And Less Than 17 Other Countries." Forbes. March 1. Accessed May 21, 2023. https://www.forbes.com/sites/emilywashburn/2023/03/01/how-much-us-farmland-does-china-really-own-more-than-bill-gates-and-less-than-17-other-countries/?sh=5ef9cd19421f.
Comments