Chinese investors going after more than the big stuff

The latest example of Chinese investment activity in the United States is this week's purchase of the L.A. airplane leasing company International Lease Finance for $4.2 billion (here's the LAT story). Deals of that size get plenty of attention - AMC Entertainment was sold to a Chinese conglomerate earlier this year for more than a billion dollars - and they raise obvious questions about the extent to which the Chinese government is involved. But far more interesting are the thousands of smaller-scale U.S. investments by Chinese businesspeople, many of them in Southern California. After a spectacular decade of growth, China has about one million millionaires, along with 100 or so billionaires - and many of them are looking for places to put that money. But the Chinese are not only investing in America; they're becoming part of America, as I report in the December issue of Los Angeles magazine. For as little as $500,000, a Chinese investor can get to the front of the line for a green card.

"The people and the companies that have been very successful in China are starting to diversify their holdings," says Alan Chu, China Business Services Leader in the Los Angeles office of PricewaterhouseCoopers. California has seen $1.3 billion in Chinese investment deals between 2000 and 2011, according to one study, including $560 million last year alone. The purchases say a lot about the depth and diversity of the state and regional economies: from a small solar panel company in the City of Industry to the special effects powerhouse Digital Domain in Venice to offices and retail centers and warehouses throughout L.A.

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In some ways the wealthy Chinese are simply hedging their bets. (The expression "Don't put all your eggs in one basket" is believed to have originated as a Chinese proverb.) China's quasi-capitalistic system remains highly dependent on the country's Communist party (state-run enterprises control half the nation's economy), so you can be wealthy and still have concerns that one day government officials will change the rules. Backroom political skirmishes in recent months have intensified those concerns, as have China's slowing economic growth, falling real estate market, contentious relations with U.S. officials over alleged espionage (China denies that any spying has taken place), and simmering labor unrest (workers at Foxconn, the factory that makes iPhones, have walked off their jobs on at least two occasions recently).

You can also add quality of life to the mix. Not to be churlish, but China isn't exactly a garden spot, what with its filthy air, questionable food safety, inexplicable regulations, high taxes, a rigidly controlled education system, and extremely dense communities. In a Gallup Wellbeing survey of consumer sentiment in nations around the world, 73 percent of Chinese respondents described themselves as "struggling," while 11 percent said they were "suffering." Only 16 percent thought of themselves as "thriving." To be fair, these are generalizations; not everyone is as miserable as the numbers would suggest. In fact, a growing number of graduate students who come to the United States for their advanced degrees are returning to China because of better job prospects. But what's undeniable is the lure to live here, particularly in Southern California, where Chinese Americans make up a huge part of the population.

Photo: Beijing Capital International Airport