President Barack Obama has blocked a Chinese company from owning four wind farm projects in northern Oregon near a Navy base where the US military flies unmanned drones and electronic-warfare planes on training missions.
It was the first time in 22 years that a US president has blocked such a foreign business deal.
Mr Obama's decision is likely to be another irritant in the increasingly tense economic relationship between the US and China.
It also comes against an election-year backdrop of intense criticism from Republican presidential challenger Mitt Romney, who accuses Mr Obama of not being tough enough with China.
In his decision, Mr Obama ordered Ralls Corp, a company owned by Chinese nationals, to divest its interest in the wind farms it purchased earlier this year near the Naval Weapons Systems Training Facility in Boardman, Oregon.
The case reached the President's desk after the Committee on Foreign Investments in the United States, known as CFIUS, determined there was no way to address the national security risks posed by the Chinese company's purchases. Only the president has final authority to prohibit a transaction.
The administration would not say what risks the wind farm purchases presented. The Treasury Department said CFIUS made its recommendation after receiving an analysis of the potential threats from the Office of the director of national intelligence.
The military has acknowledged that it used the Oregon Naval facility to test unmanned drones and the EA-18G "Growler". The electronic warfare aircraft accompanies US fighter bombers on missions and protectively jams enemy radar, destroying them with missiles along the way. At the Oregon site, the planes fly as low as 200 feet and nearly 300mph.
The last time a president used the law to block a transaction was 1990, when President George Bush voided the sale of Mamco Manufacturing to a Chinese agency.
In 2006, President George Bush approved a CFIUS case involving the merger of Alcatel and Lucent Technologies.