Chinese Immigrant Investors Pull Back While America Is Shut Down
USD vs RMB. Chinese investors sought EB5 visas but have been stymied by the backlog in processing such cases.
The U.S. Citizenship and Immigration Services (USCIS) allots 10,000 EB-5 visas every year for eligible foreign investors. Once regarded as “the most popular residency program in the world,” in 2014 and 2015 the USCIS stopped accepting EB-5 applications after they reached the quota set by Congress. Research shows that approximately 85 percent of those granted EB-5 green cards have been Chinese nationals. However, as of late, there appears to be a stark change in the desirability of the program for Chinese investors. In the third fiscal quarter of 2018, only 617 new EB-5 petitions were filed with USCIS, the lowest quarterly figure for applications in 5 years. The program, which has operated in pilot-mode since 1990 (in need of regular re-authorization) offers green cards to foreign investors who make a minimum investment of $500,000 in targeted employment areas and in the process create at least ten new U.S. jobs. As it stands, for investments outside of targeted employment areas the minimum qualifying investment for EB-5 applicants is $1 million dollars.
Desirable locations for large-scale investments from foreign nationals include the thriving metropolis projects of New York City, Seattle, San Francisco and Southern California. Up until 2014, Chinese investors applied at record numbers for the program which served as a way to secure American residency for an entire family. It could offer their children a U.S. education, avoid the dire effects of pollution in China’s mega cities and shore up family assets overseas. It was effective in creating American jobs. A 2017 report from the U.S. Department of Commerce underlined this fact when it recorded that 11,000 immigrant investors between the years of 2013 and 2015 provided $5.8 billion in capital for 562 projects which produced a combined total of 174,000 American jobs. Part of the requirements is that for foreign investors to be eligible for the EB-5 visa, the U.S. government requires that their investments remain “at risk” in an active project until a visa is granted. In recent years, however, wait times for EB-5 green cards have skyrocketed for Chinese investors. They are now forced to wait more than 10 to 15 years while their capital and immigration status is in limbo. In many cases this backlog has jeopardized the outcomes of permanent residency Chinese investors sought for their children before they turned to age 21 (the USCIS age cap). Previously, the green card wait time for Chinese applicants after submitting appropriate I-526 paperwork was only 2 years.
An increase in the investment amount for EB5 applicants was proposed in the past, but so far, no such increase has been implemented. It is expected to happen in a future review of the program.GETTY
A week before Trump’s inauguration, the Department of Homeland Security proposed an increase to the minimum investment required for the EB-5 program—from $500,000 to $1.35 million in targeted employment areas—mucking the already muddied landscape for future capital investment from Chinese nationals. Whether an increase in capital requirements will result in fewer foreign investors applying for the EB-5 visa and less of a backlog for Chinese applicant green cards, is up for debate, particularly because there is a more expedient option for many Chinese business professionals looking to obtain timely U.S. citizenship (the EB-1C inter-corporate green card).
A number of Chinese investors currently enrolled in the EB-5 program have filed suit in hopes of opting out of the program entirely and recovering their investment. An extension of the program was renewed by Congress just recently, where the deadline after this year’s Congressional elections on December 7 was extended later to December 21 due to the untimely death of Former President George H.W. Bush. Legal experts claim that such short re-authorization periods for the program hint that Congress plans to eventually reform the program. December 21st has come and gone and no renewal of the EB5 program has occurred. So all investors at the moment, Chinese or otherwise, are awaiting word on what happens next. In the meantime applications are still being accepted on EB5 cases even though the U.S. government has shut down. Stay tuned for more news on this front when Congress sits down with the President to work out the budget crisis and as part of it, what happens next to the EB5 program.
- New York
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