New Leadership in China and EB-5 Practice
Yi Song, Esq
The seven-member Politburo Standing Committee in China greeted the world in the Great Hall of the People on November 15, 2012 in Beijing. What does the new leadership in China mean to EB-5 practice? Most believe it is too early to tell. However, a few welcoming changes have already taken place.
Appreciation of the Chinese Currency
The Chinese currency RMB has been revalued rapidly since the convening of the 18th National Congress. As of November 17, 2012 the exchange rate of the Chinese Yuan to US dollars is 1USD/6.29RMB, the highest level in the past eighteen years. That means the Chinese Yuan values more against the US dollar. This in turn means that more investors from China can afford to invest in the EB-5 program.
Ban Lifted in Foreign Currency Exchange
Another welcome change is in the foreign currency exchange restriction. To date, the wiring of the $500,000 capital investment, by investors out of the country, has been a complicated and time consuming process. Now the restriction on currency exchange has been gradually lifted.
The Bank of China launched a pilot program in its Guangzhou Branch to allow large amounts of foreign currency exchange and remittance. That means EB-5 investors no longer need to go through the hassle of utilizing ten currency exchange facilitators, instead the investors can wire the $500,000 at once. Though the regulation of Individual Foreign Currency Exchange Administrative Measures is not yet officially amended. The law states the maximum foreign currency remittance amount is $50,000 per year for Chinese nationals. The pilot program simplifies the currency exchange process and certainly is an incentive for Chinese nationals to invest.
The new Bank of China program provides adequate flexibility to the investors. The EB-5 investor does not need to travel to Guangzhou to open the account; the investor's representative can do so with the executed Power of Attorney, though the investor herself must travel to Guangzhou to wire the funds. This new change has proven feasible. Several Investor clients of Mona Shah & Associates have already opened the account with Bank of China Guangzhou Branch.
Exit Entry Office's Message to Investors
The Exit Entry Administration Office under the Ministry of Public Security is the Chinese governmental agency that directly governs and regulates EB-5 investment. The author believes that it is unlikely that the new leadership will make radical policy adjustment regarding EB-5 investment. The Exit-Entry Administrative Office's official website posted the warning to the investors about the investment safety. It is said that the investors shall conduct due diligence research before making any critical investment decision, including inspecting whether the project is US government sponsored or privately owned, whether the project business plan is credible and feasible, whether the project is capable of returning the investment at the end of the investment terms, whether the sufficient number of jobs will be created.
This article represents the author's personal opinion. No legal advice is provided in this article. Please consult the counsel for advice applicable to your particular circumstances.
Yi Song, Esq. is an associate attorney at Mona Shah & Associates in New York City. She is also licensed to practice law in People's Republic of China. She has practiced tax law in Beijing, China with a leading tax firm. She clerked in Beijing, the nation's capital at the Supreme Court of People's Republic of China. At Mona Shah & Associates, Yi practices EB-5 law and securities law and works on many successful EB-5 capital raising projects. She obtained her LL.B. degree from Beijing Foreign Studies University and she is a graduate from Georgetown University Law Center in Washington, DC. Yi is a native speaker of mandarin Chinese. She speaks fluent English and basic French.