The main reason behind Chinese banks’ record-breaking injections into US projects is a combination of the search for higher returns, risk diversification, and China’s geopolitical and economic strategy.
Historically, Chinese banks, some of which are state-backed, have accumulated colossal foreign exchange reserves, primarily in US dollars, thanks to China’s massive trade surpluses.
These banks and financial institutions are constantly seeking ways to grow these assets and diversify their investment portfolios beyond the Chinese domestic market, which has experienced periods of economic slowdown and weakness in the real estate sector.
American financial and real estate markets are perceived as havens of relative security, offering a legal and institutional stability not always found elsewhere, despite bilateral political tensions.
Infrastructure projects, commercial real estate, and private equity partnerships in the United States offer attractive returns compared to low-yielding government bonds or saturated domestic investments.
Foreign direct investment (FDI) also allows China to strategically position itself in key sectors and acquire Western technological and management expertise.
Furthermore, some of this influx may be linked to the desire of large Chinese companies and wealthy families to transfer assets out of China for reasons of capital security and tax optimization, often through these banks or their subsidiaries.
Although the total volume of investment may have been volatile due to increased regulatory scrutiny by the Committee on Foreign Investment in the United States (CFIUS), bank lending and asset financing continue to grow, representing a deep and interdependent financial relationship between the world’s two largest economies.