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China’s Wealthiest Invest in Better Lives in the United States

January 4, 2013 / usifredo

While China’s rapid development has improved the lives of many Chinese, and made a substantial amount of individuals rich, many of the wealthiest citizens are heading overseas. This rush to put money into Western nations rather than China is leaving economists and social experts suspect of the effects it will have on the economy.

The Chinese International Migration Annual Report 2012 found that the wealthiest Chinese have either begun looking or have already invested in opportunities in overseas capital markets. According to China’s Globalization Research Center for Social Sciences, 27 percent of Chinese billionaires have already moved overseas, while an additional 47 percent are considering action.

Those who are interested in “investment immigration,” are private business owners and senior corporate staff, generally between the ages of 30 and 45. These individuals are members of China’s economic and intellectual elite.

The China Daily reported that 50 percent of investment immigration projects worth at least half a million dollars in the US are being pitched by Chinese. These types of investment opportunities are often in the form of EB-5 Immigrant Investor opportunities, a US endeavor that trades residency for investments. In these situations, the Chinese individual partners with a Regional Center, such as U.S. Immigration Fund, and leverages either a $500,000 or $1 million investment in exchange for the legal residency of the investor and his or her family. This program has gained in popularity over the past decade, and in 2012, reached its acceptance limit.

According to Wan Huiyao, director of the Center for the Study of Globalization, Chinese money usually ends up in real estate and foreign currency. The main reason people have moved their money abroad, according to Huiyao, is to invest in a regulated environment and enjoy a higher quality of life. Furthermore, a country with a legal system that protects private property is a popular reason for the move.

China will undoubtedly experience detrimental effects in relation to this. According to Huiyao, “The private economy contributes more than 60 percent of China’s GDP and it absorbs a majority of employees. So if private business owners emigrate with their capital, it would mean less investment in the domestic market, so fewer jobs would be created.”

The negative effects of investment immigration will be felt more profoundly in poorer, less developed areas that rely heavily on the private sector to boost their local economies.

Only time will tell the lasting effects upon China’s economy. But in the meantime, Chinese immigrants continue to invest in the United States in exchange for residency, higher quality of life and education for their children.

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