Investor Visas: A Worrisome Trend

​Image: Moerschy | CC0 1.0

By Peter Podkopaev

The Associated Press has unearthed $24 billion in investments by 100,000 Chinese nationals under “golden visa” programs that offer residency in return for cash. The U.S. alone received $7.7 billion and issued 40,000 visas in the last decade.

As Belinda Li has pointed out, the EB-5 visa investment visa program is fraught with issues—such as inadequate background checks to establish the identity of applicants—and is in need of urgent reform. Despite lacking sufficient protocols and checks to spot and deter abusers, the program was recently renewed.

Chinese nationals can only legally purchase $50,000 worth of foreign currency per year, under increasingly restrictive regulations put in place to stem capital outflows. But under EB-5 visa requirements, the minimum investment amount is $1 million (or $500,000 if the qualifying investment is within a targeted employment area). Of course, there are any number of legitimate ways for Chinese nationals to possess or raise this money, but given the EB-5 regime’s lack of oversight it is also conceivable that some of it could derive from the tens of billions of dollars in illicit funds leaving China each year.

Though Chinese banks appear to be clamping down on foreign currency outflows, the continued scale of private investment and sheer volume of visas issued tells a different story, one that arguably even reflects Beijing’s broader ambitions.

China has moved on from Deng Xiaoping’s policy of maintaining a “low profile” abroad by dramatically expanding its regional and global ambitions. For the time being, Beijing seeks cordial diplomatic and economic relations with the U.S. because it greatly benefits from globalism and capitalism. But as recent escalations in the South China Sea have demonstrated, Beijing is becoming more comfortable in asserting its regional primacy and challenging U.S. hegemony.

If the U.S. is going to provide residency to Chinese nationals who may have moved their wealth here illicitly–and who may either have political ties to Xi Jinping’s regime, be on the run from it, or both–then there must be stronger safeguards and oversight to avoid playing into Beijing’s wider geo-political strategy. By being lured by short-term investments, the U.S. may be losing track of larger and more worrisome trend.

Peter Podkopaev is a Researcher, Russia & Eurasia at Hudson Institute’s Kleptocracy Initiative.