Date
15 December 2017
Michigan governor Rick Snyder sees Chinese investments as crucial to Detroit's resurrection. Photo: Bloomberg
Michigan governor Rick Snyder sees Chinese investments as crucial to Detroit's resurrection. Photo: Bloomberg

Can the Chinese help save Detroit?

A real-estate agent in Detroit picked up the telephone and heard an unusual request from a customer in China. “I want to buy 100-200 homes. I have no time to see them. You see them on my behalf and buy them. That would be fine.”

Nervous about where the funds were coming from and what the customer wanted to do with the units, the agent did not carry out his request. But the case was not unusual.

Last year, Shanghai Dongdu International Group spent US$13.6 million to acquire two landmarks in the center of Detroit — the Detroit Free Press Building and the David Stott Building. The firm did not visit the properties in advance: for a company with assets of five billion yuan, the purchase was not a major decision. The Chinese are buying fire-sale assets.

On July 18, 2013, Detroit filed the largest municipal bankruptcy case in case in US history. It was declared bankrupt by US judge Stephen Rhodes on December 3, who cited the city’s US$18.5 billion debt and declared that negotiations with thousands of creditors were unfeasible.

The population has more than halved from 1.8 million in the 1950s – when it was the third largest city in the nation — to 700,000. Last year the Congressional Quarterly named it as the most dangerous city in the US, overtaking St Louis.

But, where others see crime, insecurity and financial ruin, Chinese see opportunity. And Michigan governor Rick Snyder, a Republican, sees them as key to the resurrection of the city.

In January, he announced a EB-2 immigration plan to bring in 50,000 immigrants to Detroit over five years; the target is people with advanced degrees or exceptional ability in science, business or the arts.

“Is that not how we made our country great, through immigrants? Think about the power and size of this program and what it could do to bring back Detroit, even faster and better.

“I hope very strongly that Detroit will be a centre of Chinese investment in the US,” Snyder said. “In the 1990s, I co-operated with many Chinese firms and know many Chinese business people. Since I became governor, I have been to China many times.”

Under the EB-2, the Federal government is permitted to grant a maximum of 40,040 visas nationwide each year. It is rare for a state to ask for the visas to be allocated to a specific city. Immigrants who were selected would be required to live and work in Detroit.

Snyder’s top ally in the Chinese community is a Beijing businessman named Xu Jing; he was on the platform when the governor made the announcement. He has been doing business in Detroit for more than 20 years and has known Snyder for a long time. Since becoming governor, Snyder has invited him to his private dinners every year.

A month later, Xu held a Spring Festival banquet in Detroit, at US$400 a ticket, for Chinese businessmen and officials; the venue was the same centre where Rev Martin Luther King made his famous speech 50 years ago, in which he said: “I have a dream.” Snyder attended the event and his daughter, 17, gave the introductions in Mandarin.

Snyder argues that Chinese have the money to buy the empty properties of Detroit and the skills and enterprise to set up companies, create jobs and establish a more stable tax base. “This immigration plan can bring great benefits to Detroit. Most importantly, we do not have to spend more money.

“Demand already exists for experts in fields like engineering, technology and health care. The colleges and universities of Michigan are home to tens of thousands of international students, many of whom ought not to depart after graduation,” he said.

According to the Michigan Economic Development Corporation, total Chinese investment in the state is US$1 billion, 95 percent of it automotive-related. Michigan ranks ninth among US states in Chinese investment and third in number of deals. More than 100 Chinese auto-related firms have operations in the state.

“Michigan can partner with China on every step of its automotive industry evolution and growth, from R&D and prototyping to clean-tech and connected vehicles,” said Nigel Francis, the state’s automotive advisor.

Snyder’s is an ambitious plan. It depends first on his being able to persuade Washington that Detroit is a special case and should be allocated immigrant visas specific to a single city.

Second, it depends on there being enough Chinese who are brave and entrepreneurial to live in a city which others are trying to leave. Detroit has a majority black population, with 38 percent of people living below the poverty line and a shortage of essential services because of the bankruptcy.

A century and a half ago, Chinese left home in the hope of finding gold in California. Will their descendants dare to do the same in Detroit?

RC

Hong Kong-based journalist and author. He had worked as a correspondent for the South China Morning Post in Beijing and Shanghai.

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