By: Henry T. Chou, Esq.

Even in the aftermath of the worst recession in American history and today’s uncertain economic climate, the U.S. remains a very desirable destination for immigrants.  Today, there is a new breed of immigrants who do not arrive penniless like the generations before them, but come flush with cash and a mission of invigorating the American economy.

The Chinese, in particular, have taken on this mission more than any other immigrant group.  According to the U.S. Citizenship and Immigration Service (USCIS), thousands of wealthy nationals of the People’s Republic of China (PRC) have applied for the EB-5 visa, which comes with a green card and a path towards citizenship.

Under the EB-5 visa program, foreign investors must finance commercial projects in the U.S. by investing at least $1 million (or $500,00 in a targeted employment area) and create at least 10 full-time jobs. EB-5 investors must undergo a background check, identify the source of their wealth and create and sustain 10 full-time jobs. If all of the requirements are satisfied and sustained after five years, the investors and their families are eligible for citizenship.

While the EB-5 visa program attracts a diverse range of applicants, Chinese nationals comprised a dominant majority – three quarters – of the applicants in 2011.  According to USCIS, 2,969 Chinese nationals applied for the program and 934 of those applicants were approved in 2011.  These figures represent a huge increase from previous years.  For example, in 2007, only 270 Chinese nationals applied and only 161 were approved, accounting for only about a third of the totals.

The explosion of Chinese applicants is attributable to the rapid economic development of China, which has created an abundance of millionaires and billionaires.  Surveys indicate that a majority of these newly rich are either considering emigrating or have already implemented plans to do so.  Those surveyed cite education, advanced medical treatment, environmental issues and due process rights as their reasons for emigrating.

New Jersey, which is a highly populated state located strategically between the metropolitan areas of New York City and Philadelphia, is one of the top destinations of EB-5 investors.  USCIS has established a regional center in New Jersey, which presently facilitates investment in Bergen, Essex, Hudson, Mercer, Middlesex, Passaic and Union Counties.  Permitted investment options currently include hotels, restaurants, retail stores, office buildings, light industrial warehouses, civic buildings, apartments, condominiums and various types of mixed use development.

As one of the largest full-service firms in central New Jersey, Hill Wallack LLP is well-positioned to assist Chinese EB-5 investors with their immigration applications and business transactions and operations in New Jersey.  The firm has attorneys on staff who are both fluent in Chinese and experienced in the areas discussed above.

By: Henry T. Chou, Esq.

The China Investment Corporation (CIC), a sovereign wealth fund responsible for managing the foreign exchange reserves of the People’s Republic of China (PRC), recently declared that it will seek to diversify its holdings by investing directly in infrastructure projects in the United States.

The PRC has invested two-thirds of its reserves in U.S. dollars, mostly U.S. treasury bonds and agency bonds, totaling U.S. $2.5 trillion. In response to the devaluation of the dollar, the PRC sought a better return by creating the CIC in 2007 to invest in enterprises across the world. Over the past four years, the CIC has limited its investments mostly to smaller equities in publicly traded companies, but its recent announcement signals a dramatic shift in investment strategy.

According to its Chairman and CEO, Lou Jiwei, “China is keen to get involved” in improving U.S. infrastructure, which “badly needs more investment.” He cited energy, water, transportation, digital communications and waste disposal as potential investment opportunities.  This strategy comports with the PRC’s goal of encouraging Chinese companies to invest aboard to diversify an economy that has traditionally relied heavily on exports and investment.

Economists surmise that the CIC’s interest in infrastructure probably reflects its own commercial views, rather than those of the PRC government. In particular, investments in infrastructure could help CIC earn a more stable profit and reduce China’s exposure to U.S. and European government bonds amid their sovereign debt crises.

It remains to be seen how the CIC will actually implement its plan in the United States. While many areas of infrastructure, such as energy and digital communications, are in the private sector, other major areas, such as transportation and water, are publicly-owned and operated.

Whether the CIC or other Chinese enteprises seek to invest in private or public projects, they will undoubtedly face regulatory hurdles that require the assistance of local counsel familiar with municipal, county, state and federal regulations in the United States. Hill Wallack LLP has represented Chinese investors in renewable energy projects and has experience in conducting extensive due diligence associated with the development of a large natural gas power plant in New Jersey. We stand ready to assist foreign entities seeking to invest directly in U.S. infrastructure projects.

By: Kun Zhao, Esq.

Foreign investment is constrained by U.S. laws that bar foreign ownership and limit activities in industrial sectors as maritime, aircraft, mining, energy, communications, banking, transportation, and government contracting. However, there is no sector within which foreign investors are excluded by federal law from any type of investing. The sector-specific federal laws that apply to foreign investors vary in the types and levels of restrictions and provisions they contain.

The government review and approval process applies to foreign investment in existing U.S. companies or businesses engaged in interstate commerce through mergers, acquisition or takeover. Those reviews include: (1) review by the Department of Defense under the National Industrial Security Program (NISP); (2) review by Committee on Foreign Investment in the United States; and (3) review by Director of National Intelligence (“DNI”). Generally, those reviews operate independently, although at times they may overlap.

Disclosure requirements under certain federal statutes are not restrictions on foreign investment per se but additional compliance obligations. There are two principal federal laws which impose disclosure obligations on foreign investments: (1) the International Investment and Trade in Services Survey Act of 1976 (“IITSSA”); and (2) the Agricultural Foreign Investment Disclosure Act of 1978 (“AFIDA”).

Even though there are sector-specific and various levels of restrictions on foreign investment, the United States is still largely open to foreign direct investment. No federal laws completely exclude foreign investment from an industry sector. As long as it is not related to above identified sectors and critical industries and technologies essential to national security, there are generally no federal restrictions limiting ownership and activities of foreign investment in the United States.

New Jersey uniquely sits in center of the tri-state region that has 100 million consumers with a collective purchasing power of $2 trillion, connecting New York City and Philadelphia. It also gains the competitive edge by its complete infrastructure and fully-developed network of transportation.

From 2003 to 2010, with its consistent policies and continued dedication to grow international trade and foreign direct investment (“FDI”), New Jersey has received $227 million in direct investment from China. The Christie Administration has shown a new, unprecedented commitment to growing exports and FDI. Since Governor Christie took office, there have been14 new FDI projects, representing $1.4 billion of new capital investment in New Jersey. China has become one of the primary contributors.

A great number of major corporations from China are headquartered or actively operating in New Jersey, including Huawei Technologies (USA) in Bridgewater, Huahai US, Inc. in Cranbury, China Construction America, Inc. in Jersey City, Hisun USA, Inc. in Princeton, and Minmetals Corporation in Weehawken.

With its unique geographic location, efficient market reach and firm government commitment, New Jersey will undoubtedly continue to be an important trading partner with China and be one of the most favorable destinations of FDI from China.