[FoRK] Chinese Investment in Oakland, CA

Joseph S. Barrera III joe.barrera.iii at gmail.com
Fri Apr 12 00:30:30 PDT 2013


Lending has shot up in China (again). Data released earlier today show 
that banks issued 1.06 trillion yuan ($171 billion) in loans in March 
(paywall), up from 620 billion yuan in February. Aside from the risks of 
more loans going bad, this is fueling a huge and ongoing problem with 
overcapacity: China is building more factories (and infrastructure 
projects) when it already has too many. As Michael Pettis, a 
Beijing-based economist, explains, the country “is producing far more of 
everything than it can absorb or export, but the only way to keep growth 
high has been to invest even more, at least part of which creates even 
greater production capacity.”

That’s why it’s a relief to see Chinese companies looking to places 
outside China -- like, say, the 12th-largest economy in the world, the 
state of California. Beijing-based firm Zarsion Holdings is ponying up 
an undisclosed chunk of a $1.5 billion makeover of Oakland’s waterfront. 
Since it’s a real-estate and investment firm, Zarsion will be involved 
in the property development, as well.

Mayor Jean Quan said the project will generate an estimated 10,000 jobs 
over the course of 8-15 years, and indicated that the investment was 
part of a larger trend. “We’re starting to see more aggressive 
investments in the U.S. by the Chinese and we’re hoping we’ll have more 
Chinese investments in Oakland in the future,” she said.

In fact, California already sees a much higher volume of Chinese 
investment projects than other states, according to the Rhodium Group, 
an economic consultancy. The state saw 166 deals from 2000-2012; the 
runner up was Texas, with 55. This is a screenshot from Rhodium’s cool 
interactive chart [Screen Shot 2013-04-11 at 3.56.32 PM]

Even so, Californians should be hoping for more of that. Last year, the 
American Society of Civil Engineers found that the Golden State needed 
$65 billion in infrastructure upgrades (pdf). And such investments would 
also potentially benefit Chinese companies in search of better returns, 
as well as the Chinese government, which now has more foreign exchange 
reserves than any country in the history of the world, ever.

Interestingly, Rhodium notes that areas of high investment tend also to 
be areas with high populations of ethnic Chinese (pdf, p.30, 
While the Los Angeles-Long Beach-Santa Ana area has the biggest number 
of people of Chinese heritage, the San Francisco-Oakland-Fremont region 
has the highest proportion.

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