If you owned a company, would you let your competitor monitor all your incoming and outgoing orders?
In the 1970s, would the United States have allowed the Soviet Union to operate our ports? Would the Soviets have allowed the U.S. to run its docks?
Of course not.
But such an outrageous scenario is about to play out.
China has openly declared it intends to replace the U.S. as the world’s sole superpower. Yet, if all goes as planned, China will soon take control of the Port of Long Beach, California.
Cosco Shipping Holdings Company, a Chinese state-owned enterprise, is buying a competitor that has the long-term concession to operate the Long Beach port.
If the deal goes through, a company controlled by the Communist Party of China will be running America’s largest port.
Of course, Beijing would never allow a foreign entity, let alone one owned by the U.S. government, to control critical infrastructure in China.
While the U.S. has been widely open to Chinese investments, Beijing requires foreign investors to cede control to a Chinese partner.
And that partner is essentially the Chinese government, since there is no private sector in China. “Though many companies defined themselves as ‘private,’ practically all of them are directly or indirectly controlled by the centralized government, which is ruled by the Communist Party. All Chinese businessmen, investors and companies play along the party lines and its prevailing spirit,” says Dr. Harel Menashri, head of the cyber department at the Holon Institute of Technology and a former official in Shin Bet, the Israeli domestic security agency.
China’s takeover of Long Beach must first be approved by the Committee on Foreign Investment in the U.S., CFIUS. This multi-agency federal panel reviews foreign purchases of American assets for potential national security threats.
But CFIUS is notoriously outdated, overworked and underfunded. It doesn’t have its own budget and relies on staff and referrals from others for its investigations.
CFIUS investigations into foreign acquisitions nearly tripled from 2009 to 2015. “Chinese investors were the most active in acquisitions, takeovers, or mergers during the 2013-2015 period, accounting for 19 percent of the total number of transactions,” the Congressional Research Service reports.
China is pulling out all the stops to acquire cutting-edge technologies and dominate strategic industries.
Direct purchase of U.S. companies is the obvious but not the only way China can get what it wants. (There’s also cyber espionage, but that’s another story.) Chinese front companies are buying partial stakes in existing companies, start-ups and even scavenging bankruptcy courts to gain access to the technology Beijing covets. Many of these purchases fly beneath the radar and evade review.
CFIUS is also susceptible to political pressure. During the Obama administration, this “watchdog” approved the Uranium One deal, giving the Russian government control of one-fifth of America’s uranium reserves while Secretary of State Hillary Clinton’s husband was receiving fat paychecks from Kremlin interests.
Sen. John Cornyn, R-Texas, and Rep. Robert Pittenger, R-N.C., are sponsoring legislation to strengthen CFIUS.
But we can’t wait for their bill to make its way through Capitol Hill.
The China port deal is slated to go forward in June, and Congress must make its voice heard now.
Click here and send a message to Congress: The Committee on Foreign Investment in the U.S. must stop China’s takeover of the Port of Long Beach.
Washington should bar Cosco or any other Chinese government-controlled or funded entity from operating the Long Beach port.
Keep American ports under American control.