11 December 2018

Wealthy Chinese vote with their feet

The ranks of affluent mainland Chinese heading for the United States under Washington’s Immigrant Investor Program (also known as “EB-5″) have been swelling at a scorching pace in recent years, columnist Liu Yi {劉怡} wrote in the Hong Kong Economic Journal. EB-5 applications lodged to the US Citizenship and Immigration Services (USCIS) — the government agency that oversees lawful immigration to the country — surged to a new high overall in 2013. Not surprisingly, Chinese investors — 6,895 in total — took the bulk of the approved EB-5 applications, Liu noted. South Korea was in the second spot with 364 successful applicants.

The EB-5 program was created by the US Congress in 1990 to boost the nation’s economy through capital investment by foreigners; most of the funds are redirected into the country’s less developed states for job creation there, Liu wrote. USCIS statistics show that the program has attracted total capital inflow of US$8.6 billion since 1990, offering at least 57,300 jobs for Americans.

The capital investment threshold has been set at US$500,000, with authorities requiring sufficient proof that the funds are from legitimate sources. Also, investment must be made in “targeted employment areas” like places outside major metropolitan areas, townships or rural areas with a population of less than 20,000 or where local unemployment rate is 1.5 times the national level.

The program has become a hit with the Chinese as they can reap the advantage of lower labor costs in the less-developed areas and easily create or help preserve 10 jobs – one of the prerequisites to apply for the green card, the US permanent residency, Liu noted.

A survey conducted by the Centre for China and Globalization (CCG), a think-tank set up by Chinese graduates of overseas universities, has revealed that the number of Chinese capital immigrants has soared in the past three years with US-bound flow leading the charge. The number of successful Chinese applicants for the EB-5 conditional green card stood at 772 in 2010, but the figure surged multifold to 2,408 in 2011 and further to 6,124 in 2012, almost 8 times the level just two years before.

The CCG report also noted that the assets owned by China’s opulent economic elite — individuals and families with investable assets worth at least 6 million yuan (US$991,638) — ballooned to 33 trillion yuan in total value in 2011. Of that, about 2.8 trillion had been transferred abroad, representing 3 percent of China’s gross domestic product in that year.

Among the various destinations, Hong Kong, United States and Canada have been the most preferred options. About 22 percent of the mainland investors shifted their assets to Hong Kong while the share for the US is 21 percent and Canada 16 percent. The rest include Switzerland (9 percent), Singapore (6 percent) and Australia (5 percent).

– Contact the writer at [email protected]


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