New rules would tighten Chinese firms\u2019 overseas capital use, according to Xu Chen, chairman of the US chapter of the China General Chamber of Commerce<\/b>
\nChina\u2019s foreign exchange regulator will make it more difficult for property developers operating in the US to rely on a controversial investor visa programme to fund their projects, a Chinese industry association said. Restrictions aimed at controlling how Chinese companies and individuals deploy capital overseas will make it difficult for them to invest in businesses not aligned with domestic consumer demand, such as pharmaceuticals, and prioritise industries for the government including advanced manufacturing, Xu Chen, Chairman of the US chapter of the China General Chamber of Commerce (CGCC) , told reporters. \u201cFrom July, [China\u2019s State Administration of Foreign Exchange, or SAFE] will continue to further tighten capital outflow from China and this is very important to the EB-5 program, \u201d Xu said. \u201cIt\u2019s reasonable for China to tighten restrictions on the capital outflow into [the real estate] market\u201d because Chinese investment in this sector had surged too quickly. \u201cIn the meantime, China\u2019s central government, central bank and also the foreign exchange control authorities are encouraging the capital outflow in the market closely related to the consumption demand in China\u2019s market.\u201d Sometimes referred to as the \u201cgolden visa programme\u201d, the HB-5 programme allows foreigners investing as little as US$500,000 in a qualifying real estate project to apply for permanent residency. Qualification for projects approved for the $500,000 minimum investment level is limited to those in areas of high unemployment. Cases of fraud in EB-5 projects and questions over how some projects in high-rent areas received their qualifications prompted US senators, including California\u2019s Dianne Feinstein and Iowa\u2019s Chuck Grassley, to call for the elimination of the programme. News that a property developer owned by the family of US President Donald Trump\u2019s son-in-law, Jared Kushner, has raised funds for a high-rise project near Manhattan through the EB-5 programme increased public scrutiny. That attention peaked when Kushner\u2019s sister touted her family\u2019s ties to Trump to attract more investors during presentations in China last month. Investors from mainland China have accounted for more than three quarters of the EB-5 visas issued in recent years, particularly since the financial crisis of 2008, when more traditional forms of credit for real estate projects dried up. CGCC\u2019s Xu said banks in Hong Kong and Macau will step up supervision of funds remitted to the US to ensure they don\u2019 t violate SAFE\u2019s policies. Moreover, he said, the Trump administration\u2019s focus on restricting immigration may further restrict the ability of banks and other intermediaries involved in pooling EB-5 investments for property developers. Xu\u2019s comments about China\u2019s control over investment outflows highlighted insights from a CGCC survey of its US membership, particularly the degree to which this is affecting their investment plans. \u201cThe recent tightening of outbound investment oversight by the Chinese government has affected 54 per cent of the surveyed companies\u2019 investment plans, \u201d according to the CGCC\u2019s just-published report of survey results. \u201cAmong these affected companies, 80 per cent say the change has increased the time for getting approvals, and 78 per cent say it has made it more difficult to obtain approvals.\u201d China\u2019s capital outflow controls appear to be a more pressing issue for the CGCC\u2019s US chapter members than restrictions they face in the US. Sixty-five per cent of the survey\u2019s respondents \u201cconsider the implementation of US policies and rules to be unbiased\u201d, the survey report said.<\/p>\n

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