Foreign investment in Alabama is not a bad thing. In fact, it should be encouraged under the right circumstances. However, as state leaders consider solicitations from foreign countries to bring business to Alabama, particularly from China, they should be vigilant and consider the long-term impacts it could have on America’s national security and Alabama businesses.
The good news is that business has been booming in Alabama, and business leaders expect that to continue. The influx of investment, much of it coming from companies based overseas, has strengthened and diversified Alabama’s economy and provided thousands of good-paying jobs in the state. Pro-business policies championed in the state have been a large catalyst to the growth, as have federal policies rewarding companies for keeping their operations within the United States rather than abroad.
This growth has led many state leaders to develop closer relationships with foreign countries, particularly with the communist People’s Republic of China. This has taken the form of seemingly harmless trips to China for state officials, sister state and sister city programs further linking Chinese officials to their counterparts in the United States, and lucrative investments in American states.
However, before getting into bed with China, state leaders should consider the warnings from the federal government about China’s influence operations in the United States. As the saying goes: if something seems too good to be true, it probably is.
Former Trump administration Secretary of State Mike Pompeo, prior to leaving office, warned state leaders that lucrative Chinese investment in the United States often falls under China’s long-term efforts to influence state policies and politicians to the Communist Party’s benefit. Saying that Chinese overtures are “not in the spirit of true cooperation or friendship” Pompeo urged state leaders to investigate who is truly behind the investments and China’s grooming of state officials.
Further, Trump-appointed and current Federal Bureau of Investigation Director Christopher Wray has also warned that Chinese investment in the United States is often linked to Chinese intelligence and influence operations. These efforts leverage connections within the United States to achieve China’s own foreign policy goals to the detriment of American and allied international efforts to promote democracy over authoritarianism and communism.
So, what is the real danger?
Among the immediate consequences of this cooperation that could be particularly dangerous to Alabamians is China’s well documented theft of intellectual property from American companies. The 2017 National Security Strategy estimated that China makes off with hundreds of billions of dollars worth of American technology each year. To do business with China, American companies are often required to provide sensitive data on critical technologies. China then uses that information to build a competitive edge for Chinese companies in an effort to eventually supplant American companies in the global market. So, accepting investment from China now could prove detrimental to companies down the road.
An issue in addressing this threat is that most of the information about such nefarious Chinese activities lives in the federal government and larger companies and does not always trickle down to officials at the state and local levels. To address this, Alabama’s congressional delegation, along with all members of Congress, should work with federal agencies that govern foreign investment in the United States, as well as with the Office of the Director of National Intelligence and the FBI, to facilitate more information flow to the state level. Such information will help illuminate the threat of Chinese intellectual property theft and the long-term impact it can have on businesses in Alabama.
Another danger of investment from China is, as previously alluded to, their efforts to influence American state and local politicians and policies. FBI Director Wray said in a July 2020 speech that China uses its connections in state and local governments, enabled by their economic investment in those states, to influence business policies at the state and federal level. Sometimes, this is done through overt methods, but Wray said it can also be achieved through clandestine methods to coerce American politicians through blackmail and influence operations in which the hand of the Chinese government is hidden. Chinese intelligence activity, including these influence operations, is at an all-time high in the United States, with the FBI opening a new China-related counterintelligence operation every 10 hours, according to Wray. That should terrify all Alabamians, especially its political leaders, and spur them to demand action.
Much of the threat of coercion likely originates from the relationships and benefits Chinese officials offer to state officials to gain their favor. One of the key tools China uses to do this is providing free trips to China for key leaders. To hedge against this practice, the state of Alabama should consider legislation to strengthen the transparency surrounding officials’ travel to foreign countries, particularly those paid for by governments considered adversaries of the United States. It should also be easier for citizens of Alabama to access those disclosures, so the legislation should include requirements for a website and smartphone application where journalists and Alabama citizens can query the travel activities of their elected officials. This type of accountability exists for federal elected representatives in Congress and their staff. It should also exist for state leaders who are clearly a target of these Chinese activities.
A third, and far from the final threat Chinese investment poses to the American security, is the link between many Chinese companies and their military. Chinese investment in the United States often targets sectors that seem harmless at face value, such as precious metals or computer technology, but have dual-use applications in the military sphere. China can use the knowledge it learns and accesses through investing in unique American manufacturing and technology industries and transfer that knowledge to its military and security services. Providing China’s military with superior American technology could have devastating consequences for free and fair trade around the world, particularly as the United States and its allies compete with China to establish global security and economic norms.
In a positive trend on this issue, Congress in 2018 strengthened the ability of the Committee on Foreign Investment in the United States, known as CFIUS, to filter nefarious investment and procurement of American companies by China. This was done through the Foreign Investment Risk Review Modernization Act of 2018 to update CFIUS’s authority and ability to block Chinese efforts to purchase sensitive technologies. While it is a welcome step forward, it does not remove all risk, and state and federal leaders should continue to strengthen protections against China’s efforts.
So, while not every foreign or Chinese investment in Alabama and other states is malign, state leaders should be prudent to not take Chinese overtures at face value. There are plenty of American partnered and allied nations that have and will continue to contribute to Alabama’s economy in more mutually beneficial arrangements than what is offered by China’s communist government. With the ongoing upgrades at the Port of Mobile, this will only become more of an issue as access to Alabama will prove more and more profitable for international actors. As business in Alabama continues to grow and diversify business interests in the state, our leaders should keep that in mind.
Jake Proctor is a former intelligence officer at the Defense Intelligence Agency and previously held staff and defense policy positions for U.S. Senators Jeff Sessions (R-AL), Luther Strange (R-AL), and Joni Ernst (R-IA). He currently works in business development at Palantir Technologies in Washington, D.C., focusing on the company’s intelligence community and defense work. He is a Birmingham native and graduate of the University of Alabama and the U.S. Air Command and Staff College.
The views expressed in this article are those of the author and do not reflect the official policy or position of Palantir Technologies, the Department of Defense, or the U.S. Government.
