New York’s Ticket to Heaven

By Andrej Mrevlje |
Illustration: Dale Robbins

A short wire in early October 2014 made me shoot out of my comfortable chair. For no particular reason, I felt that the news of a Chinese insurer buying Waldorf Astoria, the world’s most prestigious hotel, was important. For me, it was as big as when the Chinese bought into the famous London taxi – or later, when they took over Volvo, the famous luxury car producer. Or when – perhaps some day in the future – the Chinese decide to buy the Empire State Building, something almost equal to an American purchasing the Great Wall. Of course, my reaction was instinctive, almost on the edge of irrationality. I retweeted the news and added a short comment, saying that I would have sent a tax inspector to Park Avenue in order to have a good look at the books of that deal.

Why? Because the dispatch said that the new owners would let Hilton’s management continue to run the show… for the next hundred years.

One hundred years was the period of time that the Brits got control over Hong Kong in lease. But that was at the end of the Opium War – a colonial war that Western powers imposed on the weak and corrupt Imperial China.

No, the Waldorf Astoria was no Hong Kong. But the Rockefellers were. So what was going on?As the news of the Waldorf Astoria spread around the globe, the reports felt very repetitive. No news organization seemed to care much about the matter I was curious about: how was it possible that a Chinese insurer spent $2 billion for the hotel, and then let the old  management handle it for the next 100 years? Isn’t this called money parking? God bless the Russians this time, because the RT finally gave us a piece of useful news:

Chinese insurers have more than $14 billion available to spend on real estate abroad according to a study by global commercial property and real estate adviser CBRE.

In Manhattan alone in recent years, Chinese investors have bought some of the city’s most famous buildings. Zhang Xin, co-founder of China Ltd bought a stake in Manhattan’s GM building last year, and another Chinese company, Fosun International Ltd, picked up shares in the Chase Manhattan Plaza. …

The Chinese realty boom in the US is that Beijing no longer permits individuals to own more than two properties in China.

As if the Chinese government would tell its newly wealthy billionaires to go out of the country, to spread their wealth and conquer! “But in China, we command!” seems to be saying the authoritarian leaders of Beijing. Only a day later, the New York Times came out with a story that was wrapped in a nice headline like a gift in paper: “Chinese Return to the Waldorf, With $2 Billion.” The piece, written by David Barboza, had a photo of Deng Xiaoping and Henry Kissinger sitting comfortably on a sofa in the Waldorf. The picture was from 1974, when China’s old patriarch – then deputy prime minister – led the Chinese delegation to the U.N. General Assembly. I thought that it was one of the New York Times’ better headlines, albeit not a completely accurate one. But such a nicely wrapped piece had hidden poison in it, explaining why Anbang Insurance bought the Waldorf:

Analysts say that Anbang has grown rapidly by offering investment-style insurance products with higher interest rates than regular bank deposits, and by plowing much of its capital into expanding its businesses. After insurance regulators loosened investment rules for companies, Anbang started scooping up huge plots of land in Beijing and other big cities and taking stakes in some of the country’s largest banks, including China Merchants Bank and Minsheng Bank.

Chinese regulators have also allowed insurers to invest more of their money overseas, which has led to a flurry of deals from big Chinese insurers like China Life and Ping An. But several analysts said they were surprised to find that Anbang — which was once ranked No. 28 in life insurance premiums and was recently ranked No. 8 in the nation — can afford to buy the Waldorf-Astoria for $1.95 billion.

This is just the kind of hard-hitting journalism that Barboza is known for. Only a year before this, Barboza won a Pulitzer Prizefor his striking exposure of corruption at high levels of the Chinese government, including billions in secret wealth owned by relatives of the prime minister, well documented work published in the face of heavy pressure from the Chinese officials.”

In “Chinese Return to the Waldorf,” Barboza went on to reveal the links between important Chinese families and Anbang Insurance, hinting at their muddy business around Waldorf. But – when it comes to greed for money, at least – China and America are made for each other.

Early in 2014, AllGov published some statistics about Chinese immigration to the U.S.:

Many of China’s wealthy are fleeing their home country and settling in the United States, where better schools and other opportunities await.

The 2012 Annual Report of Chinese International Migration shows immigration from China is growing, with most heading to the U.S. Nearly 90,000 Chinese became permanent U.S. residents in 2011.

The migration includes a significant number of rich Chinese. At least 25% of those worth more than $16 million have fled the country, and nearly half of this group (47%) is thinking of leaving, according to the report.

The United Nations reported last year that the number of foreign-born Chinese Americans in the U.S. doubled between 2000 and 2010. There are about 3.8 million Chinese in the country, of which 2.2 million were born in China.

The Chinese expats cite various reasons for leaving their Asian homeland, including “political reform, infrastructure improvements, pollution, and education,” according to the study. However, the single biggest motivator, by far, is their dissatisfaction with China’s education system.

Well, this massive emigration from China is not just for kids’ education. As I explained in June, Chinese students have a substantial presence even in American colleges, but Chinese immigrants also have other reasons for giving money to American colleges. The Global Post, for example, attributes the increased influx of wealthy Chinese immigrants to the U.S. to the battle against corruption back in mainland China. This, of course, does not speak well of the latest Chinese immigrants landing on American soil.

But as said, China and America are walking hand in hand together, and the U.S. government facilitates the arrival of the migrants with fresh capital. For some years now, a business visa for the U.S. requires a one million dollar investment in the country, but is otherwise easy to obtain. And with the most recent change in legislation, it became even easier to invest in American real estate, as Forbes reports:

The real motivation behind the change in the Act back in December is a tax exemption that makes it easier (and cheaper) for foreign stock funds and REITs to buy American real estate. This also opens the door for institutional investors, particularly those in Europe, who are dealing with zero yield and negative interest rates and don’t have attractive options for capital preservation long term. Now they have a tax-friendly haven for moving money offshore in a tangible asset, like a high rise mixed-use dwelling in Manhattan, instead of putting it in low yielding debt, domestic equity or foreign currency bonds. With the outlook looking relatively dismal for stocks this year, foreign pension funds and investment firms managing real estate investment trust portfolios, will find a friendly market right here.

While America opens the door to foreign investors, China seems to be in a hurry to enter it:

Since China opened up part of its capital account, companies and rich Chinese have been heading West, namely London, New York, Toronto, Los Angeles and Vancouver.

Rich Chinese, either inside the government or with their ear to ground, have been wary that China might surprise with a policy of capital controls. In a sense, it did just that last month when it banned certain foreign banks from trading in its currency and, quietly, put a lid on “some Chinese nationals” aching to move money into American housing. HSBC, China’s biggest foreign owned bank, followed Beijing’s orders and put a stop in place on some mortgages.

It is unclear whether or not rich Chinese saw this coming and ran for the door, or if their fear that it was coming made them run for door and forced Beijing’s hands.”

However, as the TruthOut narrates it in quite dramatic story there is “The unspoken, long-term plan for most Chinese elites is to accumulate as much money as they can and then escape the country.”
So it’s not to Syrian refugees, but to rich, thriving Chinese businessmen that the U.S. is offering asylum. A situation that, no doubt, will lead to many conspiracy theories, all impossible to prove. But the framework I laid out seems to be working, and some evidence can be found in the recent changes to the New York skyline, which seems to be developing in a direction that one of the richest Americans predicted: Michael Bloomberg, three-time mayor of New York once said that he would love to have all the world’s billionaires settle down in New York. But according to Bloomberg, the future of the “city that never sleeps” will become its opposite. And it does not look appealing. New York is already growing into a half-empty and unaffordable city. About the near future of Manhattan,  I strongly recommend  you watch Moyers’ video, which discusses it all in much more depth. The video also includes staggering footage from within these new residential towers created for the super rich so that they can feel like they are already touching heaven. Hurry up and have a look – this is may be your only chance to see how the heaven looks like!    

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