Mon, Sep 26, 2016 - Page 14 News List

Chinese firms California dreaming


Construction workers walk past the US$1 billion UD condominium-hotel project being built by Beijing-based Oceanwide Holdings in Los Angeles, California, on Friday.

Photo: AFP

From real estate to high-tech firms to entertainment giants, Chinese investments in the US, notably California, are moving at a dizzying pace and are on course to smash records again this year.

Chinese companies shelled out a record US$15 billion last year in the US and that figure could more than double this year, according to research firm Rhodium Group and the National Committee on US-China Relations.

California, especially the San Francisco Bay Area and Los Angeles, has been at the forefront of China’s appetite to invest overseas, with billions of dollars going into the technology, renewable energy and entertainment sectors, and increasingly into real estate.

China has pumped US$8 billion into California businesses since 2000, more than in any other state, a recent Rhodium Group study said.

It added that there were 452 Chinese-owned businesses that employed more than 9,500 people in the Golden State as of the end of last year, among them the online giant Alibaba Group Holding Ltd (阿里巴巴) and the Internet company Tencent Holdings Ltd (騰訊).

Cash is also flowing into Hollywood, with the Beijing-based Wanda Group (萬達集團) paying $3.5 billion earlier this year to acquire the film studio Legendary Pictures LLC, the largest-ever cultural takeover by China.

The buying spree is showing no signs of abating for the foreseeable future, experts say, despite tumult in China’s economy and mounting rhetoric during the US presidential campaign.

“Chinese investment in the US — and California in particular — will almost certainly multiply in the coming years,” said Matt Sheehan, who consults and writes about Chinese investment in the Golden State and whose forthcoming book is entitled Chinafornia.

While the political climate is not helping, cities across the US are welcoming Chinese investments with open arms, drowning out the campaign rhetoric and anti-China sentiment in Congress.

“If the domestic Chinese economy continues to boom, firms will have the loose cash to make strategic investments and vanity purchases abroad,” Sheehan said. “If the Chinese economy and RMB [renminbi] currency go into a nosedive, you’ll likely see a large capital flight disguised as overseas investment.”

One sector increasingly on the Chinese shopping list in the US is real estate, with buyers snapping up expensive homes and high-end commercial properties at a record pace. Chinese investors pumped nearly US$11 billion into US real estate in the first five months of this year, outpacing last year’s total of US$4.37 billion, according to a report by real estate firm Cushman & Wakefield.

The west coast has proven a major draw. Of the four mega development projects currently underway in Los Angeles, three are by Chinese firms, including a US$1 billion condominium and hotel development by Beijing-based Oceanwide Holdings Group Co (中泛控股) and a similar project — Metropolis — by Shanghai-based Greenland Holding Group (綠地控股集團).

Once completed in 2018, Metropolis will be the largest mixed-use complex on the west coast.

In San Francisco, Oceanwide has acquired land that will house the city’s second-tallest tower and several other Chinese-backed developments are on the books.

Residential property is also part of the buying frenzy, with sales more than doubling in the past three years.

“In 2016, we had US$27.3 billion in volume of sales to Chinese buyers compared to US$7 to US$13 billion up until 2013,” said Danielle Hale, an analyst with the National Association of Realtors.

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