What does China own in the U.S.? | CNBC Explains - YouTube

New York's iconic Waldorf Astoria was purchased by a Chinese company in 2014 for nearly $2 billion.

After the acquisition, President Obama stopped staying here due to security concerns,

breaking with the decades-long tradition of U.S. presidents staying here during their trips to New York.

The move was highly symbolic of Chinese money flowing into the U.S.

Billions of dollars flow into the U.S. from China in the form of investments every year.

And in some parts of New York City, it’s widespread.

Chinese investments include 28 Liberty Street, Baccarat Hotel and a stake in the General Motors building.

Bank of China agreed to pay nearly $600 million to buy this midtown skyscraper in 2014.

A big name gaining attention for her investments is real estate mogul Zhang Xin.

She’s a Chinese billionaire whose family acquired a 49 percent

stake in this building, Park Avenue Plaza back in 2011.

And she came together with investors to buy 40 percent of General Motors building in 2013.

And then there’s a company called HNA Group.

It poured billions of dollars into properties in New York, Chicago, San Francisco, Minneapolis and more.

But it’s not just real estate.

In 2012, Chinese conglomerate, Dalian Wanda Group acquired AMC.

The $2.6 billion dollar deal would make it the world's largest cinema chain.

Chinese investors also bought a $3.5 billion stake in Legendary Entertainment,

the company behind Matt Damon’s “Great Wall” movie.

In 2016, Chinese investment into the U.S. hit a high.

The next year though it declined significantly, reversing the trend.

Just take a look at the China Investment Monitor which tracks Chinese direct investment into the United States.

The figures have generally been on an upward trend since the tracker was launched in 2000,

peaking at nearly $46 billion in 2016.

Then investments dropped off.

So why the sudden decline?

Well to understand that, we have to go to back to the original surge.

You see, Chinese people and businesses were growing wealthier,

but they were worried about China’s explosive growth slowing.

After all, their holdings are priced in the yuan,

and a drop in the yuan against other currencies would mean the value of their assets goes down.

So mainland companies started buying up assets in other countries like the U.S.

It was their way of diversifying their portfolios, hedging their bets against a downturn at home.

But all of that money moving from Chinese bank accounts

into foreign real estate and companies made Beijing anxious.

The government was worried all of that capital abroad would do what Chinese businesses were

concerned about in the first place - drain value from the domestic economy and depress the local currency.

So, through various means, the Chinese government clamped down on money leaving the country, that's

what’s called capital controls, and encouraged their firms to bring back some of the money they sent away.

Beijing was particularly focused on China’s four biggest private conglomerates:

Earlier, I mentioned the purchase of the Waldorf Astoria in New York.

That was made by Anbang, which had spent tens of billions of dollars

around the world buying up high-profile properties.

But in early 2018, China’s government seized the company and even detained its chairman.

That means China’s government sort of owns the iconic New York staple.

Then there’s the Hainan Airlines, or HNA Group. The company began as a tiny airline in 1993.

But today it’s a global conglomerate, owning real estate, hotels and tourism companies.

In 2017, it was named the 170th biggest company in the world with annual revenue of more than $50 billion.

As part of its investment spree, HNA bought Radisson Hotels Group,

a $6.5 billion stake in Hilton hotels and a stake in Deutsche Bank.

This building, 245 Park Avenue was purchased by China’s HNA Group for $2.2 billion dollars in 2017,

making it one of the priciest office building purchases in New York history.

But a year later, HNA Group was said to be looking for a buyer.

Proof that China’s effort to reign in these companies is working.

Just look at these assets in the U.S. either for sale or being sold by some of China’s biggest companies.

Meanwhile, the U.S. is making it more difficult for foreign buyers to invest,

adding more roadblocks and in some cases even citing national security concerns.

The U.S. blocked a deal by Alibaba-backed Ant Financial to try and buy MoneyGram.

Meanwhile, HNA Group dropped its bid to acquire hedge fund SkyBridge Capital.

Chinese investment in the U.S. has leveled out to where it was before it surged earlier this decade.

But whether it will fall further or make a comeback remains to be seen.

Hey guys, it’s Uptin, thanks for watching!

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