By Anayat Durrani
Since China reopened post-pandemic, advisers to the wealthy report an uptick in demand for backup residency and citizenship options abroad. Three years of harsh COVID restrictions, unpredictability with geopolitical tensions, and dimmer economic prospects have left the rich uneasy. There’s also the dwindling number of global options for fast-track visas and passports.
In this scenario, one program that remains highly desirable for high-net-worth individuals (HNWI) from China is the EB-5 Immigrant Investor program.
“HNWIs from China continue to look for opportunities to emigrate to other countries,” says Ignacio Donoso, managing attorney at Donoso & Partners. “The United States remains the top country for Chinese emigrants because of its dynamic economy, top education choices, and tremendous opportunities to build a prosperous life.”
According to the Henley Private Health Migration Report 2023, some 13,500 Chinese HNWIs are expected to leave the country with investable wealth surpassing $1 million in 2023. That’s compared to 10,800 high-net-worth individuals that migrated out of China in 2022.
“The main reason high-net-worth individuals emigrate out of China is the political uncertainty in the country. They are afraid their assets could be frozen and confiscated by the authorities,” says Marko Issever, chief executive officer for America EB5 Visa, LLC. “The currency transfer restrictions are a leading indicator of many potential future problems. Others, who do not want to emigrate themselves per se, want their children to have a life in the Western world. The United States is always the priority destination for Chinese nationals.”
RIA 2022 spurs interest of Chinese HNWI EB-5 investors
In 2022, Congress reauthorized the EB-5 visa program for an additional five years. With the changes came new priority project categories for rural, infrastructure, and TEA projects to attract investments from investors from China and India, which has helped spur increased interest in the program.
“EB-5 is a top choice for Chinese HNWI investors. Improvements to the EB-5 program first introduced in 2022 are now delivering concrete results for new EB-5 investors: timely approvals and access to conditional permanent residency,” says Donoso.
The attorney says the concurrent filing of the EB-5 visa petition, which includes the pre-2022 Form I-526 and post-2022 Form I-526E, with I-485 Adjustment of Status, “is one of the major benefits of the 2022 improvements to the EB-5 program, and it has become a very popular choice for HNWI investors from China.”
Donoso adds this trend has become particularly enticing because of waiting lists for EB-1 and EB-2 for Chinese applicants.
“Investors who are not living in the U.S. on valid visa status – and who therefore do not qualify for I-485 Adjustment of Status – received great news this past summer 2023 because USCIS began issuing approvals for new EB-5 petitions filed after March 2022,” says Donoso. “Faster processing of new I-526E petitions is going to continue through 2024 and is going to drive the continued popularity of the EB-5 program.”
Reasons why wealthy Chinese apply for an EB-5 visa
A fast-tracked green card appears to have revived interest from Chinese investors motivated by their entrepreneurial objectives and desire to provide better opportunities for their families.
“One new trend is that HNWI families are seeking EB-5 visas for their children because Chinese students are having greater difficulty obtaining academic student visas to the U.S.,” says Donoso.
Many wealthy Chinese are attracted to the renewed program since their kids are already studying at U.S. universities and could get a faster pathway to green cards.
“The most popular trend in EB-5 is from Chinese students studying in the United States,” says Issever. “Many of these students are children of HNWIs. Since they already have a non-immigrant visa, F-1, they are eligible for concurrent filing. They invest in projects eligible for visa set-asides, such as rural, TEA, or infrastructure projects. This way, they can file for adjustment of status, work permit and travel permit visa.”
In the 2010 to 2019 period, millionaires from China obtained more than 70% of the total of 81,125 investor visas issued by the U.S., per research by Prof. Dr. Yossi Harpaz. China held its top spot among EB-5 investors with 6,125 EB-5 visas issued of 10,885 total in 2022, per data from the State Department.
“Global tax liability, processing times, retrogression concerns, the source of funds scrutiny, increased minimum investment requirement, and residency requirement are among the reasons why they also choose other destinations, such as Canada, Australia, and the United Kingdom, to name a few,” says Issever.
But the U.S. remains a popular destination. According to Henley Private Wealth Migration Report 2023, the U.S. is forecast to have the fourth highest net inflow of millionaires globally in 2023. Mehdi Kadiri, managing partner and head of North America at Henley & Partners, remarks that the findings “highlight the attractiveness of North America as a sought-after destination for HNWIs seeking investment migration opportunities.” Further he adds, “The ‘American Dream’ is very much alive for many foreign investors who want to access the USA, be it through the EB-5 or E-2 routes.”
Meanwhile, Andrew Amoils, head of research at New World Wealth, states that the U.S. is expected to attract a net inflow of approximately 2,100 new high-net-worth individuals in 2023, mainly from Asia. He notes that the most affluent people who relocate to the U.S. are traditionally involved in the entertainment, financial services, and tech sectors. He adds, “In particular, successful tech start-up entrepreneurs often move to the U.S.A. (Silicon Valley especially) to take their companies to the next level.”
Chinese investors’ interest in EB-5 set to continue picking up
Issever notes that though in the last few years China-born investors were out of the EB-5 market, “they are now back in full force, taking advantage of the various provisions of the RIA of 2022, such as concurrent filing and visa set-asides.”
The RIA brought with it special set-asides that include 20% or 2,000 visas per year for rural projects and 10% or 1,000 visas for TEA projects.
“We are seeing hundreds of our Chinese clients receiving notices from the U.S. Department of State to proceed with their visas for U.S. Consulate interview in Guangzhou,” says Donoso.
He notes that in the year between October 2022 and September 2023, the U.S. Department of State issued 4,639 EB-5 visas to Chinese EB-5 investors and their families, which accounted for 65% of the overall EB-5 visa issuances that year.
“We expect that this trend will continue given that the large majority of EB-5 investors waiting for visas are from China,” says Donoso.
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