Washington may lead on foreign policy, but the vulnerabilities China exploits often sit at the state level. That gap demands state-level enforcement—precisely what Foreign Adversary Fraud Offices (FAFO) are designed to provide.

Arizona’s SB 1308 would establish an FAFO within the existing Arizona Attorney General’s office and authorize it to bring legal claims against entities suspected of violating consumer fraud laws when marketing, distributing, or selling technology produced by a foreign adversary.

But such an office does not need to break the bank. SB 1308 appropriates $500,000 for the office’s fraud fund in fiscal year 2026–2027 for a general use fund for staffing and litigation costs. Any money won in litigation above $10 million at years’ end is transferred into a foreign adversary technology “rip and replace” fund.

This secondary fund would pay for replacing foreign adversary technology from critical infrastructure, including oil and gas systems, water systems, electrical power delivery, telecommunications networks, transportation systems, emergency services, and personal data storage systems.

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While procurement bans are important, they are symbolic without effective enforcement measures and proper financing vehicles. The linking of investigations, litigation, and prudent solution financing solves these issues elegantly from a policy perspective.

The case for such an office is not theoretical. The Department of Commerce’s foreign adversary list includes China, Hong Kong, and Macau, along with Cuba, Iran, North Korea, and Russia.

Meanwhile, Cybersecurity Infrastructure Security Agency (CISA) and partner agencies warned in 2024 that PRC state-sponsored actors known as Volt Typhoon had compromised IT environments across multiple U.S. critical infrastructure sectors. Volt Typhoon’s efforts were the latest in a long-running campaign of cyber-attacks from the PRC. These espionage targets included telecommunications, energy, transportation, water, and waste management systems.

Arizona’s proposal also fits a broader national trend. In a recent Heritage Foundation paper, our scholars catalogued recent state laws on China across 11 policy categories, including land ownership, procurement, app restrictions, divestment, genomic data, education, foreign gift reporting, lobbying, sister-city relationships, organ harvesting, and transnational repression.

We found that these laws seem to be passed along partisan lines, with chiefly states that voted for Donald Trump in the 2024 election having passed such laws. While dozens of states passed foreign land ownership and procurement restrictions on Chinese goods, far fewer states had acted on lobbying, foreign gift reporting, transnational repression, or sister-city relationships.

That gap matters because China’s strategy is far from one-dimensional. Beijing does not fixate on a single method of leverage or infiltrate only one control system. The fear is that adversaries could leverage these ties, allowing its affiliated agent to have enough footholds in enough sensitive systems to create a crisis point. A compromised router, a tainted procurement chain, a vulnerable water utility, or a data system tied to foreign adversary technology can become a strategic liability.

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More states should emulate Arizona’s model legislation, but they should also strengthen it. A durable FAFO framework should include a dedicated unit within state Attorney’s General offices, a required inventory of foreign adversary technology in critical infrastructure, authority to pursue civil enforcement under state consumer fraud law, a dedicated rip-and-replace fund, and annual public reporting that protects sensitive security information while prudently informing lawmakers and the public where risks remain.

This approach avoids two common errors. It does not pretend that every Chinese-made product is automatically a crisis. But it also refuses to pretend that economic cost savings are real savings when they import surveillance, sabotage, or coercion risk into public infrastructure.

Washington has a role to play, but states control the systems that matter most—procurement, infrastructure, universities, and public data. Strategic competition with China won’t be won in theory or diplomacy alone; it will be won—or lost—through those systems. Arizona’s FAFO proposal recognizes that reality, and other states should follow.