12 December 2016
I was recently interviewed by GlobeSt.com to discuss Chinese investment in the United States, including why the US is an attractive market for Chinese dollars, how it helps the US economy, and what it means for the Chinese market. Some selected excerpts from our conversation are below.
The driving factors behind Chinese foreign investment in the United States:
Chinese investors will deploy a record $212.7 billion in investments outside China. This trend is driven by a number of factors: Chinese real estate and stock market bubbles are bursting; The Chinese economy is slowing down so foreign investment (as in the US) are more attractive; The yuan has been depreciating against the dollar, making US dollar-denominated investments more attractive. Many Chinese investors, ranging from very wealthy individuals to insurance companies, find themselves with significant amounts of cash that need to be deployed into large, high-yielding investments. US commercial real estate is one of the few markets and asset types that can meet these requirements (large, high-yielding).
Chinese foreign investment has been encouraged by the Chinese government for building “soft power,” which is building the image of China and expanding its influence. Finally, many Chinese investors see synergies for using their foreign investment to take advantage of the Chinese market. Chinese travelers are expected to spend more than $72 billion at home and abroad in 2016. So everything related to travel, tourism, lodging, and entertainment plays into this growing market.