The American VISA program that has funneled billions of dollars to the US seems to be losing its luster to Chinese citizens.
The EB-5 program grants US green cards to foreigners who are willing to invest at least $500,000 to the American economy. These investments are then used to create jobs that Americans and migrants, alike, can take advantage of.
Chinese people snapped up 80% of the visas issued under the EB-5 program in the past two years, according to a CNNMoney analysis of government data. But those applying now may have to wait at least 10 years to get the green card because of the huge backlog, according to the U.S. Department of Homeland Security.
“China is a victim of the popularity of the EB-5 program,” said Ronald Klasko, an immigration lawyer based in Philadelphia.
The surge of interest in recent years has resulted in a massive backlog. This means that applicants would now have to wait years to get a green card. On top of that, Beijing is actively working to limit money flowing out of China. As a result, the enthusiasm for the program has died down.
The increased wariness comes amid uncertainty over the future of the EB-5 visa. It was set up in 1990 to boost the U.S. economy but has been criticized for lacking transparency and channeling money into wealthy urban areas.
KUSHNER CONTROVERSY
Following a financial crisis that made banks reluctant to lend money for construction projects, the EB-5 program became an indispensable source of cheap funding for US real estate developers.
In May this year, the program was under fire when a sister of Jared Kushner, President Trump’s son-in-law and adviser, appeared in Beijing to try to drum up millions of dollars in Chinese investment for a skyscraper project being developed by the family business.
A LONG WAIT
Getting American residency for children is a major motivation for many Chinese EB-5 applicants but the long waiting time could mean children will be too old to qualify automatically for a green card.
“With the 10-year wait, if the child is 14 years old today and they do an EB-5 case today, it may already be too late,” Klasko said. “The child would be over 21 and therefore ineligible to get a green card with the parents.”
Investors in the program, which issues a maximum of 10,000 green cards a year, don’t get their money back until they obtain permanent residency. If the investment goes sour, they can lose their money altogether.
A number of reform proposals have been floated in Congress for years, which has kept the program running beyond a series of previous expiration dates. It’s currently set to end on December 8.
GIVE UP
Beyond the long wait, potential Chinese investors face other hurdles, including the Chinese government’s tightened restrictions on moving money out of the country and uncertainty over Trump’s immigration policies.
Gary Pan, a New York-based immigration lawyer whose clients are mainly from China, estimated that he’ll handle at least 30% fewer EB-5 cases this year.
Some real estate developers are also noticing a shift.
Zhang Xun’s Chicago-based company has built seven residential buildings in Oklahoma using Chinese EB-5 funding.
He said he spent 80% of his time on EB-5 projects in 2015. But he hasn’t taken on any this year because of uncertainty about the program.
The problems don’t mean Chinese interest has evaporated entirely.
“The EB-5 program continues to attract high net-worth foreigners on a worldwide basis, and disproportionately from China,” the Office of the Citizenship and Immigration Services Ombudsman said in its latest report.
The overall number of applications is up this year, but experts say that’s because other countries are more than compensating for the decline from China.