By John Boudreau, San Jose Mercury News –
SAN JOSE, Calif. — Even as China emerges as a super power, many of those who have benefited most from the country’s economic rise are heading for the exits.
“The rich people are trying to get green cards,” said Ta-lin Hsu, founder and chairman of Palo Alto, Calif.-based venture capital firm H&Q Asia Pacific, who spends a lot of time in Asia. He is frequently asked by business associates about how to immigrate to the United States.
“The main reason is, they still worry about the future stability of China,” Hsu said. “The U.S. is a democracy; there is freedom, and it’s a safer place.”
The exit door for many of these wealthy Chinese is opened by the fast-track visas America offers for well-heeled immigrants. Known as the EB-5, the visa requires applicants to invest $500,000 in projects in economically struggling regions or $1 million in a commercial venture in other locations. The investments must create or preserve 10 jobs for two years. If successful, the applicants and their families — spouses and children younger than 21 — are awarded permanent residency.
The foreign money is a welcome source of funding for many projects. Oakland, Calif., city officials, for example, have eyed the program to help pay for a project that includes hotels, a convention center, shops and new facilities for the Raiders football team and Warriors basketball team and possibly a new A’s ballpark.
In recent years, as the number of China’s millionaires has grown, interest in the program from across the Pacific has soared.
Between 1992 and 2011, the number of applications for investor visas jumped 700 percent, from 474 to 3,805, according to the U.S. Citizenship and Immigration Services. In the past two years alone, the number of applicants has nearly quadrupled. More applications by far come from China than any other country. Last year, 77 percent of all of those who applied for these visas were Chinese.
“They are standing in line,” said Scott Bachman, CEO of San Mateo, Calif.-based eBee5. His company helps pair large development projects with wealthy Chinese looking to invest in the United States.
“When I go to China, I get a Chinese cellphone and I am constantly bombarded with EB-5 (advertising) text messages,” said Kevin Wright, a consultant with offices in the United States and China.
A survey of 980 Chinese millionaires published last fall by the Bank of China and the Hurun Report, which tracks the country’s wealthy, revealed that 46 percent of them were thinking about leaving China, while an additional 14 percent were filling out immigration paperwork or had already left the country.
“The Chinese government is definitely worried,” said one successful EB-5 applicant, who relocated his family from Beijing to Los Altos Hills, Calif., after initially moving to Texas, where he invested in a metal processing factory. The man, who asked that he only be identified as Mr. Zhang, did not want to reveal his full identity because he still does business in China and does not want to upset powerful government officials.
Indeed, most Chinese who come to the United States on these visas strive to remain under-the-radar, particularly those doing business in China, whose laws forbid transferring more than $50,000 a year out of the country.
Many Americans, bruised by the long recession and its painful aftermath, worry about the United States being eclipsed by China. But many successful Chinese complain about China’s pervasive corruption, polluted air, contaminated food and educational system that stresses memorization over creative thinking.
“The United States looks like a pretty good option to them,” said San Francisco immigration attorney Robert Gaffney, a specialist in EB-5 visas who is fluent in Mandarin. “It’s a quality-of-life decision for them. They are voting with their pocketbook: They’d rather be here than in their own country.”
The investor visa, which began in 1992, will expire in September unless Congress reauthorizes it, but experts expect that to happen.
“It has enjoyed bipartisan support,” said Peter Joseph, executive director for the Association to Invest In the USA, a trade group that lobbies Congress. “It’s about creating jobs without spending anything from the public purse.”
Indeed, the risks are borne by the immigrant investors, San Jose, Calif., immigration attorney Acton Yang said.
“The EB-5 requires a risky investment,” he said. “It can’t be investing in a security. You can’t just buy a house. It has to be a risky investment that will generate employment in the United States.”
And if investors put money in something that fails — say, a shopping center in a troubled neighborhood — they stand to lose more than their cash, noted consultant Bachman. “If the business is dead, they not only lose their money, they lose their visas,” he said.
