Kasasa Island is a small island in the Inland Sea where Chinese developers have been buying property. (©Yamaguchi Prefecture)
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The Trump administration has announced plans to ban the sale of United States farmland to Chinese companies and individuals. The move came after it was learned that Chinese nationals had been purchasing land around US military bases, a trend that was judged to pose a threat to national security. Further legal developments concerning this issue are expected in the days to come.
In Japan, also, mainland Chinese individuals and capital have been seeking to acquire land, buildings, and even remote islands near Self-Defense Force bases. In fact, this became a topic of public discussion during the recent House of Councillors election. Japan should adopt regulations to prohibit certain property acquisitions by foreign capital and foreigners.
In July, the Trump administration unveiled its National Farm Security Action Plan. The catalyst for the plan was the sale in 2022 of farmland near a US Air Force base in the Midwest state of North Dakota. Its buyer, a US subsidiary of a major Chinese food company, stated it intended to build a factory there.
Officials at the base expressed concern that the new plant could become a locus for monitoring activities. The city council subsequently withdrew its approval of the purchase. However, it was unable to block the sale. Later, it was learned that Chinese capital was also used to purchase farmland near US military bases in other states.
Japan's Problems
The US government's Committee on Foreign Investment in the United States, known as CFIUS, has a system for reviewing foreign land acquisitions. It can make recommendations to the president if it deems a proposed land acquisition a security threat.
Nevertheless, there is no nationwide legal system in the United States to prevent such purchases. That led the Trump administration to announce the new plan, citing "the repeated purchase and misuse of farmland by the Chinese Communist Party."
As things stand in Japan today, foreign individuals and capital are allowed to acquire land unchecked. That remains true, even in cases where there are security concerns.
One issue derives from the World Trade Organization's (WTO) General Agreement on Trade in Services. It upholds the principle of non-discrimination in commercial transactions. When an agreement is signed, the Japanese government, unlike other countries, does not attach a reservations clause restricting transactions by foreigners. That is the excuse given for why the government has been powerless to block such acquisitions.
Why Not Revive 1925 Law?
Japan's government can monitor only the acquisition of land and buildings around important national security facilities, only. That is thanks to the Act on the Review and Regulation of the Use of Real Estate Surrounding Important Facilities and on Remote Territorial Islands, which took effect in 2022. Nonetheless, the effectiveness of this law is limited. It is simply a mandatory prior notification system, and does not prevent buying and selling of real estate as such.
Actually, the Act on Foreign Nationals' Rights in Relation to Land, enacted in 1925, still remains on the books. There is a provision in this law that prohibits or restricts foreigners from acquiring land deemed vital to national defense. However, the law is no longer in effect because the enforcement ordinance was abolished after World War II.
If the WTO agreement issues are resolved quickly and a new enforcement ordinance is enacted, the 1925 law can be revived. It is up to Japanese politicians to create a system that prevents land sales that run counter to the national interest.
RELATED:
- Strengthen Regulations on Land Transactions Around Security Facilities
- Fix the Loophole That Allowed Okinawa Land Purchase by a Chinese Citizen
- Survey Finds 80 China Related Land Deals Near Defense Sites
Author: Editorial Board, The Sankei Shimbun
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