“The Chinese will save Detroit.”

“Toledo is booming, thanks to Chinese investors.”

“Half of LA/Orange County/fill in the SoCal City will be Chinese within ten years.”

I have heard all the above recently and I don’t buy a word of it.  I thought about these comments today when reading a Slate Magazine article, entitled, “How China Could Save Detroit.

Here’s the deal.

1.  China isn’t going to save Detroit.  Detroit is (as of 2010) about one percent Asian.  That’s 7,500 Asians and I doubt that even half of this number is Chinese.  This is down 2,000 (more than 20 percent) since 2000.  Where are the Chinese who are going to save Detroit?  Why would the Chinese want to save Detroit by buying houses and living there when there are so few already there — yes, I am assuming that most Chinese would prefer to live in US cities where there are already other Chinese.  Detroit used to have nearly 2 million people.  It is now down to about 700,000.  What would “saving” it even look like?

2.  Toledo isn’t exactly booming. Its unemployment rate is nearly 9.0%, which is higher than Ohio as a whole, which in turn, is higher than the United States.

3.  Yes, I understand that some very wealthy Chinese have purchased homes in Southern California, but what evidence is there that this is going to continue, much less accelerate?

4.  The Slate Article mentioned how “Chinese Interest in the EB-5 immigrant investor program has grown threefold since 2008, with the Chinese now making up 80 percent of applicants.  But all that means is around 2,500 Chinese Eb-5 investors a year.  Even if Detroit were to receive 10 percent of them (and why would it), that’s only 250 people.  And if were to sell one shirt to 10 percent of the people in China….

And here’s the kicker.  I am “just not seeing it,” with the “it” being some massive influx of Chinese investment into the United States, such that it becomes a game-changer. And when I talk to my friends and colleagues who should be seeing it, they aren’t either.  Now I am sure that there are some realtors in places like Orange County that are doing a bang up business helping Chinese buy homes, and I also know that there are tens of thousands (maybe even hundreds of thousands) of people in the United States employed in Chinese owned factories, but I just do not see Chinese citizens coming here in large enough numbers to significantly tip any mainline economic numbers.  Yes, Chinese investment in the United States is important and growing, but let’s keep it in perspective.

According to the Rhodium Group, Chinese greenfield investment in 2013 in the United States totaled about $14 billion.  That’s about USD $44 per capita. Forty-four dollars.  And I have to think that at least some of that $44 per person would have entered the United States from some other country had China not been the one doing the buying.

Chinese investment in the United States may help at the edges, but it isn’t going to save Toledo or Detroit, much less have a major impact on the country as a whole.  I am from Michigan (about halfway between Detroit and Toledo) and I can remeber the “Japanese are coming racism” from an earlier era and I worry that there is a bit of that with “the Chinese are coming” trope.

Perspective people.

What do you think?  Is Chinese investment going to change America, and if so where and how? Am I missing something here?

  • lacompacida

    Chinese investment here probably release or create local money we can use to invest here or buying up somewhere else. May even be China.Whst’s more, most stuff Chinese bought here can’t be shipped back to China, and are stuff we have plenty of: land. These resources stay here to continue to generate wealth here. Worse comes to worse, these are wastwd investment from China if they don’t know how to generate wealth with them.

  • Vigarano

    Excellent post, Dan. Points up the innumeracy of so many journalists (and people).

    While Chinese greenfield investment in the United States in 2013 was $44 billion, trade between China and Africa in 2012 was $200 billion. And where do you think that investment is going? For the most part, into resource extraction. As is sort of the case with China’s buyout of Smithfield Foods.

    Secure resources, bring them back to China, that’s China’s entire overseas investment strategy.

  • Paul Maidment

    Of course, the Chinese aren’t buying Detroit/Toledo/insert benighted dustbowl city here. They are too busy buying up London.


  • Ward Chartier

    Once upon a time there was a small but busy Chinatown in Detroit. It was about a block and a half long. Last time I was there was 1980. Recent photos viewable on some webpages show deserted shops, boarded up windows, and no sign of business or cultural life.

    For the past few decades, Detroit was long on hopes and dreams, and woefully short on concrete action, results, and ethical conduct within the government. There will be no rapid return to a healthy economic and social state, though. No white knights will come to rescue the city. There will be no miracles.

    The largest question in my mind is whether the remaining tatters of city government and the Detroit residents are ready to make the hard decisions and do the hard work needed to restore safety to the streets, adequacy in the public schools, and repair the creaking infrastructure. I’m not hopeful. As the past 40 years has shown, throwing state and federal money at the situation is absolutely no solution.

  • Lucas Blaustein


    We are in agreeance, sort of.

    I am from Houston, Texas. When I was a child growing up you had to look hard to find Chinese people. Chinatown was a place near the downtown area that died during the oil bust of the 1980’s.

    Now, Chinese people are everywhere. In 1990 there were 10,817 Chinese in the greater Houston area, by 2013 there are now 72,320 Chinese living in Houston. That is an increase of around 60,000 people over a roughly 20 year period. A CAGR increase by 8.61%. Houston is now the 3rd fastest growing Chinese community in the United States behind San Francisco and New York. In percentage terms, Asians are now the fastest growing demographic in the United States, surpassing Latinos and Hispanics.

    In terms of just students the Chinese population at many universities has grown by 200% or more in many cases.

    This is a dramatic change for the people of my region. Texas and the southwestern United States has a long history of immigration from Spanish speaking nations, with many people residing in Texas who fought along side Northern European immigrants for Texas independence.

    With the end of the Chinese exclusion act in the late 1960’s, that formally re-allowed immigration from China (which had been suspended for over 100 years), many populations of Chinese veritably exploded.

    So, while there has not been a record breaking influx of Chinese capital into the United States, there is a record breaking flow in the amount of people coming from China to many parts of the U.S. I think that most people conflate the two, and this is where the problem arises. More Chinese coming from China does not necessarily translate into more money coming from China.

    While it is certain that the EB-5 program in real terms does not amount to many extra bodies in the United States, what is so shocking is the growth rate in applications from China.

    I for one agree that this hysteria will slow down with time. While many young Chinese, and a good chunk of wealthy Chinese are coming to the U.S. in droves – the heart of the Chinese economy, its middle class, is not going anywhere.

    To make a personal observation, as an American from a community not accustomed to dealing with large numbers of Chinese immigrants – part of the reason China is on everyone’s mind is no one is equipped to handle the influx.

    The language, the culture, the food – all alien. And while we can complain about Latino / Hispanic immigration, they were here first in many cases. We have worked together since the birth of this country.

    Not so to a people who for 100 plus years were ethnically banned from immigrating.

    If my studies at university are a microcosm of the feelings of Americans nationwide, I am greatly concerned. Gary Locke’s one accomplishment as ambassador was increasing the speed by which Chinese are granted visas…

    A lot of Americans are growing increasingly irritated with China as there is a commensurate increase in the number of Chinese people immigrating to the U.S. Especially people in communities like mine, that have no history and thus familiarity of dealing with the Chinese. We are less well equipped.

    The tide isn’t slowing down yet. And while I love my nation, and I adore the Chinese people (I have Chinese family!), if this amazing article from an Oped at the New York Times is indicative, as well as my own life experience, most Chinese have no idea why they want to come to the United States. Huge, no enormous misconceptions color the thinkings of both the average Chinese person concerning the United States, and Americans concerning China. I see immigration naturally slowing as China develops, and as Chinese immigrants realize the grass isn’t greener, it just smells different.

    Prior to the increase in immigration there was already an enormous cultural divide between the existing U.S. population of Chinese and the rest of America, (congressional representation, Fortune 500 CEOs, even just actors). What was a tiny crack is quickly transforming into an enormous gulf – the societal foundation is breaking under the increasing weight of new immigration. This scares people. And it fuels the kind of Yellow Terror writing that pervades investment circles. And nearly all other journalism.

    There is so much talk of war in the Pacific, and for the sake of my own family, I am horrified that by not addressing these serious issues the tide of new immigration is going to turn into a storm, as not only American allies, but also Americans feel increasingly threatened here at home.

    I think we need to have a day dedicated to hugging our Chinese brethren, and getting to know them better. Because from the outside, a summit between leaders in California clearly didn’t work.

    The two Op Eds:



    • cynthia curran

      Houston still has low Asian population the city is only 8 percent even Ahaheim and San Diego have a higher population of Asians at 15 percent.. Both Anaheim and San Diego have just Hispanics while Houston has more Afro-Americans. Houston Afro-American population has a 25 percent poverty rate while in Anaheim about 16 percent and San Diego 20 percent. Houston has two minorities Hispanics and Afro-Americans that are behind Whites and Asians in income and education while there are success ones Texas according to Steve Murdock predicts problems as Texas like California becomes more Hispanic. Hispanics have less formal education than whites and Asians.

  • It’ll be interesting to see what happens to Chinese Eb-5 projects now that EB-5 visas have run out for Chinese developers.