> This has to do with companies making their own rules about what is right or wrong without any checks, balances, or voter feedback.
As far as I understand, companies are generally free to make their own hiring decisions, so long as they do not amount to discrimination against a protected class. That limitation, by the way, stems from federal legislation--so companies are very much not extra-legal entities operating without any judicial accountability. If a state or federal Congress decide to further regulate companies' hiring decisions, they are free to do so.
I don't understand what exactly you would like companies to do: Simply ignore potential security risks? Do you have a specific process you advocate should be used to evaluate risks? What different kind of restrictions on companies' personnel decisions would you like to see? Do you just have a problem with a focus on risk from family members in PRC as opposed to a broader vetting process where that is only one risk factor?
> Security clearances are actually defined by law
I am not sure that an exact formula for grant/deny decisions exists in statute. These decisions strike me as inherently subjective, although certain facts are obviously pertinent to the decision. I would be very interested to read the relevant laws and regulations, though, if you'd be so kind as to point me to them.