Chinese Investments Double
31 May 2016

Chinese To Double US Investment in 2016

Chinese, Top Investors in US Property, Set to Double Investment

Chinese buyers have spent over $93 billion in purchases of residential property from 2010 until 2015; Chinese buyers, however, only make up 10% of all foreign investment in the US.

The injected investments provided much needed demand in many US housing markets where property values had dropped during the recession. With annual increases of 20%, the Chinese investments had a significant impact on the US economy. Seeking safe investments, the US property market was seen be a good risk for those looking to bring their Chinese yuan into western markets. Chinese buyers also spent nearly $208 billion in mortgage backed securities and invested about $17 billion in commercial real estate buying both office buildings and hotels. The Asia Society report that released these figures recently is the first independent study made of Chinese investments in the US, and was created in a partnership with real estate specialty firm Rosen Consulting Group.

Despite its position as the world’s second-biggest economy, China has so far invested little in the U.S. compared with the American investments coming from firms based in the U.K., Japan and other advanced economies.

Of the $120 billion that the Chinese invested abroad in 2015, only an eighth of the investments went to the U.S. Europe and Asia remain the central targets of Chinese seeking to invest abroad. The amount being invested in the U.S., as well as Europe and Australia, is growing rapidly as China turns its focus from investing in emerging markets to high-income markets in the west.

California Dreaming

California was the most popular state for Chinese investors in 2015, seeing 35% of the Chinese property purchases. West coast’s Washington state had 8% of sales, while New York saw just 7%. It’s considered that these purchasing trends are influenced by the availably of direct flights from China as well as the established populations of Chinese Americans. In San Francisco and Los Angeles where there are large Chines enclaves, new construction projects saw the benefit of some of the $15 billion invested in mixed use commercial and residential projects.

Chinese Investments Will Double in 2016

China’s domestic economy’s slow growth hasn’t affected the volume of investment in U.S. real estate and projections made by the study suggest that Chinese investors are looking to double their investments in 2015 to around $218 billion.

The average amount being spent by foreign investors on U.S. property is nearly $500,000, but Chinese buyers are buying property abroad and spending averages of $832,000. Many are living in the homes and emigrating to the U.S. on the EB-5 immigrant investor programme. In the programme’s 25-year history, Chinese immigrants account for 70% of the total investment from global citizens with $11 billion in immigrant investments. In other cases, the properties are being purchased to lease or resale.

China’s Renminbi and Yuan

Those unfamiliar with Chinese currency wonder whether to refer to Chinese money as yuan (¥) or renminbi. To make matters more confusing, currency calculators today put the rate at 1 USD=6.56 CNY.  Despite the abbreviation CNY, China’s currency is officially called the renminbi. Renminbi means “the people’s currency” in Mandarin and renminbi was first issued in 1948 when the People’s Bank of China was established. Though the official abbreviation is CNY, the abbreviation RMB is also used. The yuan, pronounced “kuài” in spoken Chinese, is used much the same way as the term ‘a pound’ is used as a unit of Sterling.

Yuan is the unit of account, as the currency is denominated in 1 yuan, 2 yuan, 5 yuan, 10 yuan, 20 yuan, 50 yuan, or 100 yuan. The paper money also breaks down into smaller denominations like fen and jiao. One yuan equals 10 jiao, which equals 100 fen.