China, for all of its commitment to US treasuries, continues to seek US investment alternatives. On our recent visit, manufacturers, business people, and family offices affirmed that the US, Latin America, and Africa are popular investment destinations. Why is this? The devaluing dollar is already responsible for a 20% loss, so it may stand to reason that by investing in assets that are denominated by the
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dollar — but not actually tied to it, like treasuries — is just sensible.
The US offers additional benefits through programs like EB-5 that ease immigration hurdles by offering
processing in exchange for investment in US businesses qualified by the US Citizenship and Immigration Services (USCIS) for as little as $500,000. Critics of the program liken it to ‘visas on sale’ that somehow compete with what would otherwise be jobs for American citizens. Closer examination of the program reveals that EB-5 stimulates US job creation and encourages immigration of those able to contribute monetarily.
Popular investment forums include real estate and natural resources. Of particular concern to promoters and investors under the EB-5 program, is the delay associated with USCIS approval. We spoke with one promoter of an oil and gas development project in Oklahoma with $25,000,000 raised now locked up awaiting approval of USCIS. According to the promoter, the investment is
in danger of being returned to its eager investors for no other reason than unexplained delay.
Enter Hong Kong. Since
its independence from Britain in 1997, Hong Kong has grown at breakneck pace, while maintaining its own brand of independence from China.
China’s commitment to economic expansion, initiated in the 1990s was the
catalyst behind such projects as the high-speed bullet train. On our 57 minute ride from Shanghai to Hangzhou at speeds of 299 kph, it became apparent how Shanghai could experience 37% growth in population over the last 10 years. The rural are going urban, and Hong Kong-based capital sources are there to take advantage.
Whether from mainland China or Hong Kong, investment in US based business enterprises is prolific and growing. As capital organizes into private equity firms and other accessible platforms, the Chinese are ever more able to take maximum advantage.