Chinese citizens wait to submit their visa applications at the U.S. Embassy in Beijing.
Some immigration lawyers have seen a new increase in the number of Chinese seeking foreign citizenship, a trend they suggest is tied to worries about political turmoil and economic slowdown in China, especially among businesspeople and politicians seeking to protect their families and wealth.
"There's definitely a surge in China for what I call 'let-me-out-now' product," said Jean-Francois Harvey, an immigration lawyer based in Hong Kong who deals with clients throughout Asia.The recent interest builds on a trend of growth in applications from Chinese seeking to emigrate to places like the U.S., Canada and the U.K. in recent years, including to programs that promise citizenship in exchange for investments: In the U.S., 75% of investor-immigrant applicants were from China in fiscal 2011.
The rush to apply to the U.S. investor immigration program, known as the EB5 visa, is also partly prompted by Washington politics: The plan has to be reauthorized by Congress in September for it to continue, but applications filed before that date will still be considered. Last time the program was up for review, in 2009, there was a big spike in applications.
Under the program, applicants and their immediate families receive permanent U.S. residency if an investment of at least $1 million in the U.S. leads to 10 full-time jobs within two years. The requirement is only $500,000 if the U.S. jobs created are in a rural or high-unemployment area.
There is little information on the identities and actual numbers of Chinese seeking to leave, but participants in the industry that has grown up around such requests say they have seen increased activity in the weeks since the Communist Party's ouster of senior party official Bo Xilai, which adds to a general feeling of uncertainty ahead of a once-a-decade leadership transition in the fall.
Mr. Harvey and other lawyers say clients rarely give a reason for wanting to leave, which makes it difficult to say whether the latest headlines are helping to drive the push, though they say anecdotal evidence suggests they are a factor.
"The political situation heightens anxiety, and the wealthy people head for the visas," said Richard Kurland, an immigration lawyer based in Vancouver, who said he has seen a rise in inquiries in recent weeks.
Mr. Harvey said that as recently as this week he received queries from Chinese consultants about programs under which Chinese clients could secure passports in a short time.
Canada was a favorite destination, but its investor immigration program, which required applicants to essentially post an 800,000 Canadian dollar (US$799,500) five-year, interest-free loan for governments in the country's provinces, is no longer accepting new applicants, until at least July, to deal with a backlog that has caused process times of more than threeyears for Chinese.
That has led wealthy Chinese to look to the U.S. and elsewhere. A State Department official said recently that the U.S. immigration agency has been receiving a wave of applications, leading to a backlog of cases in the Chinese city of Guangzhou.
However, with wait times for permanent U.S. EB5 visas averaging around two years, the industry that helps Chinese get money out is widening the search for places to go. Hong Kong lawyer Mr. Harvey says the most skittish are asking for ways to get to lesser-known destinations such as the small Caribbean island nation of St. Kitts and Nevis, as well as to Bulgaria.
Mr. Harvey said he filed 16 applications to St. Kitts from Chinese citizens in the past two weeks. In the past, he has typically filed only one to two a month. "We now have people looking for short-term products," he said.
To obtain St. Kitts citizenship through its investment program requires either a minimum $250,000 donation to the Sugar Industry Diversification Foundation, the government's main development fund, or a real-estate purchase of at least $450,000, a St. Kitts government official said.
Getting a passport can take six months to a year, the official said. St. Kitts doesn't require investor immigrants to live in the country and will send a passport in the mail upon acceptance. The St. Kitts official said to date, fewer than 20 Chinese have been accepted for citizenship and many "don't migrate here to live." So far, he added, "we haven't seen a tremendous increase" in applications from Chinese nationals.
"Definitely, the St. Kitts benefit to the Chinese is immediate citizenship," said Armand Arton, a Dubai-based businessman who helps put up financing for 500 prospective investor immigrant families a year, about half of which come from China.
Eugene Chow, an immigration lawyer based in Hong Kong, says St. Kitts is being pitched as an easy-to-obtain passport, though he says that applicants may be surprised by the vigorous checks. "It's not a passport of convenience. They are very stringent," he said.
Mr. Harvey says St. Kitts officials are likely to notice an increased interest soon. "The surge has just happened in the last month, so it hasn't registered with them yet," he said.
Bulgaria's investor program requires immigrant applicants to place 1 million Bulgarian levs (US$676,000) into a government bond portfolio for five years. That qualifies for a permanent residency immediately and for a passport in five years. Similar to St. Kitts, there is no residency requirement and applicants can be admitted in six months, according to immigration lawyers and consultants.
The same industry participants say the flow of China's rich to the U.S. will likely also increase dramatically this year. Already, the U.S. took in 2,969 applications (each of which can cover several family members) from China for investor immigration in the fiscal year ending in September, compared with just 787 two years earlier, according to the U.S. immigration agency.
After Canada imposed an annual cap of 700 new investor applications for the 12-month period starting July 1, 2011, the quota was filled within a week, with 697 of those applications coming from China.
By John Boudreau [email protected]
Posted: 04/05/2012 03:01:47 PM PDT
Updated: 04/06/2012 10:44:13 AM PDT
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. And many are relocating to the Bay Area, whose large Asian population, good schools and comfortable lifestyle are powerful draws for Chinese multimillionaires concerned about the future of their homeland and seeking the own American dream.
"The rich people are trying to get green cards," said Ta-lin Hsu, founder and chairman of Palo Alto-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 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 and Warriors 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 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-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 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 money of these deep-pocket immigrants is highly valued in this country at a time investment funds can still be tough to acquire for some development projects.
"Local financing is just not available, or it's very hard to come by, especially for construction," said Katie Yao with Sand Hill Property, a Redwood City developer that is planning to build a hotel across the street from the yet-to-be-built new Apple campus in Cupertino.
So far, the company has found one Chinese investor interested in backing the project with a $1 million stake, with the hope of getting an EB-5 visa.
"We are only trying to raise $20 million -- that means 20 (Chinese) families," she said. "We offer 6 percent returns and profit-sharing."
By China's boom-time standards -- which often reward investors with returns of 100 percent or more -- the Cupertino hotel project hardly seems worth their interest, she admitted. However, Yao added, "People want to find a shelter for their money, someplace safe."
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 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.
Still, many wealthy Chinese are willing to place such bets if they trust those they are doing business with, said Zhang, whose wife and two children live in their gated Los Altos Hills home while he splits his time between China and Silicon Valley.
The number of people in China who can make a $1 million investment "is huge," he said. "I am the captain of my golf team, 40 people. More than half of them can make a $1 million investment just like that.
"The Chinese have full confidence in the United States," he added. "It will come back. That's why, from an investment perspective, there are a lot of opportunities here. At least a dozen people around me want to come here. They have the economic power. They have the means."
actually it is, thats the reason they are moving out. fear of caught, know the situation in china etc. even businesman who earn honest $$$ decide to move to canada or US. 3 of my uncle live in china are moving to canada and US. alot rich chinese want to move to US not only because political, but also living condition, and internally china has alot issues.