Any worries that China’s obsession with the West be it the USA or Western Europe was diminishing would seem to be without basis, at least for now. China invested a record $23 billion in Europe last year (2015) and also pumped $15 billion into the US hardly the actions of a nation looking to either cut their ties or worse still enter into conflict with their main economic rivals. So while the sabre rattling between the US and China in the South China Sea continues, it’s clear by these figures that it is nothing more than military posturing.
The growth-rate of China’s colossal domestic economy, which has been rising at an acute angle for two decades, is finally slowing down, and this could be a major reason for this level of foreign investment, which is both state-funded and from private business investments. In order for China’s economy to continue to grow, and eventually supplant the US as the world’s biggest economy, it needs to continue to invest massively abroad.
Naysayers will point out that the level of Chinese investment is actually on the wane. While investment in Europe was up 28% on the $18 billion that was spent in 2014, it is a far smaller percentage increase than the dramatic doubling of expenditure which occurred from 2013 to 2014. Investment in the US was also up by 17% compared to 2014’s $12.8 billion.
Impressive as those figures are, they could be blown out of the water in 2016. During the first two months alone there were reputedly $70 billion in potential deals lined up with Chinese investors in the USA and Europe, although that figure was highly provisional and many of those so-called deals would not come to fruition. Nevertheless, the 2015 combined record of $38 billion looks a certainty to tumble.
Where Did Those Billions Go?
In Europe it was Italy and France that were the main beneficiaries of Chinese spending. The largest individual deal saw an Italian tire manufacturer involved in a $7.8 billion merger with the China National Chemical Corp., commonly known simply as ChemChina.
In the US, New York, California and Texas were the main beneficiaries of Chinese investment. Interestingly, much of the $5.4 billion that was invested in New York went on property deals. Could that have been more Chinese billionaires buying themselves and their children pieces of prime Manhattan real estate?
According to Forbes, China has the world’s top-two real estate barons, Wang Jianlin (personal fortune $28.7 billion) and Lee Shau Kee, who is worth a cool $21.5 billion. Both men are heavily involved in construction in China, but both have recently purchased luxury Western bolt-holes. Lee Shau Kee bought a 3-bedroom New York apartment that cost a mere $25.4 million, while Wang Jianlin owns an £80 million house in London (pictured above).
The Quiet Invasion?
More than 100,000 wealthy Chinese have moved to the West since 2000, and that figure grows larger each year. The Chinese are the largest purchases of Citizenship by Investment, which is the legal practice of investing in a country and in return receiving its citizenship and passport. The EU passport is the most desirable, and in Europe countries like Austria, Belgium, Portugal, Cyprus and Malta all operate CBI programs, and all report the Chinese market as their largest.
Many of China’s so-called Golden Generation of young, affluent, highly educated individuals (some of which are pictured above) are living the high life in the USA, Europe and Canada, and are unlikely to ever return permanently to China. Many have been educated in the finest schools in Europe and the US, and feel far more at ease with life in the West than they would if they were to return home.
But is China really worried about this seeming brain-drain of wealth and talent? China now has more billionaires than the US, and Beijing in particular has replaced New York as the city where billionaires are most plentiful. On the whole, these fabulously wealthy individuals many who own large chunks of real estate in the West are in no rush to leave China. Could it be that the Chinese government realizes that those high net-worth individuals who have begun new lives in Western Europe, particularly Britain, France, Germany and Spain, are in reality still doing their bit to sell China globally?
If you are a Chinese citizen interested in acquiring an EU passport, or if you are curious to learn more about Citizenship by Investment, 2ndPassports.com are here to help. You can find details of the very best CBI programs available in the world, including those programs provided by nations that you may not have realized had investment programs, like Germany, the UK and the USA.
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