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February 2017

Chinese Investments in the US Hit Record-Breaking Amount in 2016

 

Chinese investments in the United States hit an all-time high in the year 2016, recording 75 deals worth a total of $53.9 billion. That is triple the amount recorded in 2015.

Among the biggest deals were Dalian Wanda’s acquisition of Legendary Entertainment for $3.5 billion, Haier’s acquisition of GE Appliances for $ 3.3 billion, Tianjin Tianhai’s acquisition of Ingram Micro for $6.07 billion, the HNA Group’s acquisition of a 25 percent stake in Hilton for $6.49 billion, and Anbang Insurance’s acquisition of Strategic Hotels and Resorts for $6.5 billion. The owners of the said Chinese companies are among the richest in China. These investments will help them become more powerful players in their respective fields.

Despite being under Chinese ownership, most of the acquired companies will still operate under their current CEOs. The parties involved in these deals say that adjusting to the new policies they have to follow will not be easy, but will not affect the quality of the services or products that they deliver.

Unfortunately, this growth is expected to slow down in the next year due to some political factors affecting both countries.

Political Factors Affecting Chinese Investments

Several lawmakers in the US were alarmed by the explosion of Chinese investments in their country, which led them to think that it may affect national security. Because of this, incoming Chinese investments will have to go through intense scrutiny and monitoring.

Following the win of Donald Trump for the presidency, the US government might also start imposing steep taxes on foreign investors – specifically those coming from China – as this was what the President promised during his campaign. While it is not yet clear how the government would go about with this, it might cause Chinese investors to create other plans to increase their revenue without involving the US.

The Chinese State Council is also planning to implement stricter capital controls in their country in the hopes of strengthening their own economy. This idea was spurred by the observation that too much of the county’s money has been going out of the country, and most of them illegally.  No plans have been finalized yet, but it is said that offshore investments will have to follow limitations and restrictions. Deals over $10 billion will most likely be banned.

Despite these challenges, several Chinese investors are still planning to continue acquiring assets in the US as they predict that there is something more that they can gain from it. Many say that it would help them solidify their standing as a leader in their respective industries. One of these Chinese investors is Wang Jianlin, the richest man in China, who is eyeing to buy one of the big six Hollywood movie studios – a group that includes Paramount, Universal Studios, 20th Century Fox, Columbia, Warner Brothers, and Walt Disney. Jianlin also hopes that security concerns can be addressed as netizens throughout the country opt to use VPN China for optimal security.

Jianlin says he is confident and believes that his company has potential to grow in the US. He will not be shaken by any plans that the US or his own country might have to curb Chinese offshore investments.