Capital controls, not tariffs, will finally lead to China and US economic divorce – Arthur Hayes

Capital restrictions, not tariffs, will be the reason China and the United States’ relationship ends, according to Arthur Hayes, co-founder of crypto derivatives platform BitMEX. 

The entrepreneur shared a snapshot of a news update on X on Monday, showing a bill passed by the Texas House last week that bars citizens from China, Iran, North Korea, and Russia from purchasing real estate in the state.

According to state records, the SB 17 bill prohibits foreigners from buying homes, farmland, and commercial property. It was passed along party lines of an anti-China sentiment led by President Donald Trump, who is also using tariffs to “nerf” the influence of China and its allies in global trade.

Capital controls not tariffs will be the driving force behind the eventual Chi-American divorce. pic.twitter.com/bJpSr7IcI4

— Arthur Hayes (@CryptoHayes) May 12, 2025

Several commenters on Hayes’ post argued that such land bans are common worldwide and represent basic national security, not capital control.

“Americans cannot buy land there. This is not capital control, it’s basic security,” one user wrote in response.

Another claimed the law was fair because all non-Western countries ban foreigners from owning land and homes. “Go to any Asian country and their government protects citizens from having foreigners come in and buy up all the desirable properties,” they argued.

According to federal data, as of the end of 2024, Chinese nationals owned around 383,935 acres of US land. Roughly 195,000 of those acres were purchased directly by Chinese investors, valued at an estimated $2 billion. The remainder is held through 62 US-based companies with Chinese shareholders.

Texas bill targets “hostile nations”

The SB 17 bill would reportedly prevent citizens, companies, and governments from four countries, deemed “hostile” in US federal threat assessments, from purchasing any “real property” in Texas.

The bill grants Texas Governor Greg Abbott the power to expand the list to additional countries unilaterally, while enforcement would fall to the state attorney general. Violations could carry civil penalties of $250,000 or more. The legislation applies to future purchases and does not retroactively affect land already owned by foreign nationals.

State Representative Cole Hefner, one of the bill’s main sponsors, said the law is about “securing Texas land and natural resources from adversarial nations and oppressive regimes that wish to do us harm.”

However, in a House debate held on the day of the vote, Representative Gene Wu, a Democrat from Houston and critic of the measure, asserted that without clearer language, the bill could affect thousands of foreign nationals working and studying legally in Texas on H-1B and student visas.

Democrats bash GOP lawmakers for passing “racist” law

Hundreds of protesters took to the streets in Austin over the weekend, denouncing the bill as racist and xenophobic. “Stop the hate” and “housing is a human right” were among the slogans seen on placards. 

Alice Yi, co-founder of Asian Texans for Justice, called the bill a direct attack on immigrants based on national origin. “This is a racist bill,” she propounded.

State Rep. Wes Virdell, a GOP lawmaker from west of San Antonio, voted “present” and lambasted the legislation for failing to achieve its original goal. “The intent was to prevent hostile countries from buying up large plats of land,” he said, but cautioned the law “entangles everyday people” and hands excessive power to the executive branch.

Meanwhile, State Rep. Ray Lopez, a Democrat from San Antonio, withdrew his co-sponsorship of the bill after his requests for scaling back on certain provisions and an appeals process were denied. 

“I get what the bill authors are trying to do,” Lopez surmised, “but if you took out ‘Chinese Americans’ and you were talking about ‘Mexican Americans,’ that would make me feel terrible. It’s discriminatory, man.”

Your crypto news deserves attention - KEY Difference Wire puts you on 250+ top sites