In the late 1980s, Japan seemed unstoppable. The Nikkei stock index was trading in the upper-30,000s – three times above where it trades today – Japanese exports were booming, and Japan was widely expected to one day surpass the U.S. as the world’s largest economy.
With plenty of cash and inflated prices at home, Japanese companies began buying assets around the world. In the US, they snapped up tire maker Firestone, Columbia Pictures, and landmark real estate in New York, Los Angeles and Chicago. But the climax of this wave of purchases was surely the $846 million sale of a 51 percent stake in The Rockefeller Group – owner of Rockefeller Center, Radio City Music Hall and New York’s dancing Rockettes – to the Mitsubishi Estate Company of Tokyo in October 1989.
The sale of such an iconic property – what The New York Times (a little pompously) called “the Hope diamond of world real estate” – sparked a wave of fear about Japan buying up the US. Oil tycoon John D. Rockefeller, who built the Center during the Great Depression, was a titan of US capitalism, and nothing seemed more American than the skating rink, giant Christmas tree and can-canning Rockettes that call Rockefeller Center home. Critics said the Japanese were “buying a part of America’s soul,” and decried the sale as a death knell for American exceptionalism.
Today a similar story is once again playing out, as a Chinese company navigates the purchase of the Waldorf Astoria, a luxury hotel on New York’s Fifth Avenue. Anbang Insurance Group, a little-known Chinese insurer, announced its intention to buy the hotel in a deal that is expected to close by the end of December. At $1.95 billion, the sale sets records as both the priciest New York hotel purchase in history and the largest amount ever paid by a Chinese investor for a New York building.
Park Avenue (west) elevation of the Waldorf Astoria Hotel, New York City. (Photo credit: Wikipedia)
This deal has raised some objections because of the hotel’s historic standing and high-profile clientele. The U.S. Department of State has said it is reviewing the Waldorf sale, presumably due to concerns that the hotel’s new owners will eavesdrop on the high-profile diplomats and politicians who stay there. US presidents since Herbert Hoover have stayed at the Waldorf when in New York, and the State Department has maintained a residence for the US ambassador to the UN at the hotel for the past 50 years. During the annual UN General Assembly, the State Department rents two floors of the Waldorf to house the president and hundreds of US diplomats. Of course, the hotel has also hosted every Chinese leader since Deng Xiaoping, as well as Alibaba’s IPO roadshow in September.
Joel Backaler, the author of “China Goes West” and an associate vice president at Frontier Strategy Group, says the State Department’s worries about surveillance are not unreasonable, but that they are also insufficient reason to block an investment in the private sector. “While it’s a historic property, and while there are people that tend to historically stay there, there are other hotels they could stay at,” he says.
Little opposition
Beyond these concerns, however, the reaction in the U.S. to the Waldorf Astoria purchase has been fairly subdued. Why has the sale of such an iconic American building failed to raise hackles, like the Rockefeller Center purchase did 25 years ago?
One reason could be post-financial crisis pragmatism, especially on the part of New York City. Neither Bill de Blasio nor any other New York politician has raised objections to the sale, perhaps because of the huge windfall the city expects to receive as the property changes hands -- almost $60 million in a 3 percent transfer tax. Across the U.S., Chinese property purchases have helped to buoy sagging real estate markets, revitalize empty neighborhoods and generate funds for cash-strapped local governments.
Another reason may be that, despite the headline-grabbing nature of some acquisitions, the overall volume of deals led by Chinese companies remains small. The volume is increasing quickly: Chinese investors spent more than $3 billion on commercial property in the US over the past 12 months, substantially more than the previous year, according to tracking by the Rhodium Group. And a handful of high-profile Chinese real estate purchases have grabbed headlines, including big New York purchases by Xinyuan Real Estate, Greenland Holdings, Fosun International and Zhang Xin, the CEO of SOHO China. Yet in 2012, China still accounted for less than 1 percent of total FDI in the United States, exceptionally small holdings for such a large economy.
This number will undoubtedly grow in years to come, however. “Chinese investment in the US and EU and other markets is only set to increase dramatically over the course of our lifetime,” says Backaler. “The initial push for globalization didn’t really happen until the late ‘90s and early 2000s where you saw a lot of state-led resource investment. The next chapter, which is the one that we really want to watch, is the private companies that are going overseas for very real business motivations.”
Indeed, Anbang may be the first of a coming wave of investment from Chinese insurance companies, which manage massive portfolios and are struggling to find sufficient investment opportunities at home. According to Rhodium Group, declining opportunities in China and growing political freedom to invest overseas are encouraging both large financial conglomerates like Fosun International and institutional investors like Anbang Insurance to diversify their portfolios with overseas purchases. China’s insurance regulator recently lifted restrictions on investing abroad, creating the potential for an additional $150 billion to flow into overseas capital markets.
As these deals ramp up, opposition to Chinese investment could increase in the US. Recently introduced bills in the Senate to expand government screening for Chinese investments, though unlikely to pass, hint at an undercurrent of opposition in Washington. At the same time, however, the benefits of Chinese investment to local communities will also become more obvious in the years to come, including added jobs, tax revenues and infrastructure.
Headed for a bubble burst?
Economists hotly debate how similar Japan’s bubble economy of the 1980s is to China today. Both Japan and China experienced stunning growth and skyrocketing property prices that sent cash-rich companies abroad in search of investment opportunities. The idea that China’s property market conceals an asset bubble that could one day pop as Japan’s did is appealing to some, but highly controversial.
The story of Japan’s Rockefeller Center purchase did not have a happy ending. After overseeing years of exploding inflation, growing asset bubbles and an overheated economy, the Japanese central bank began raising rates in 1990 to trigger a long-overdue correction. The Nikkei fell from a historic peak of 38,916 points in December 1989 to below 20,000 in March 1992, before sinking below 10,000 by 2001. Japan entered its lost decade, and its companies retreated from trophy properties en masse. In 1995, Mitsubishi Estate Company of Japan suddenly decided to exit the investment, transferring ownership of the Rockefeller Center back to Rockefeller Center Properties, Inc, the trust that held the mortgage.
Perhaps this experience, too, tempered American expectations. The US’ strong position in the world didn’t end when Mitsubishi bought the Rockefeller Center, and it’s unlikely to end with the purchase of the Waldorf Astoria.
FAQs
The Waldorf Astoria Hotel's Backstory Illuminates China's Ambitions In 2014, a Chinese company bought the New York hotel for nearly $2 billion.
Does China own Rockefeller Center? ›
China Investment Corporation (CIC) has forked out $1.03 billion to purchase a 45 percent stake in a building in New York’s iconic Rockefeller Center, a deal which makes the Chinese sovereign wealth fund one of the biggest buyers of Manhattan real estate in 2016.
What does China own in NY? ›
According to the U.S. Department of Agriculture's (USDA) latest report on foreign ownership of American land, from 2021, 146 Chinese investors held 383,935 acres—nearly double the 193,700 acres that comprise New York City.
Who is the Chinese owner of the Waldorf Astoria? ›
The Anbang Insurance Group of China purchased the Waldorf Astoria New York for US$1.95 billion in 2014, making it the most expensive hotel ever sold. The Waldorf was closed in 2017 for renovations; the upper stories were converted into 375 condominiums, while the lowest 18 floors will retain 375 hotel rooms.
Who owns Waldorf Astoria China? ›
The Waldorf is a rare gem that a Chinese buyer has kept. Anbang agreed to pay $2 billion for the Waldorf in 2014. Wu dreamed of transforming the Art Deco hotel into the Manhattan retreat for China's elite, according to people familiar with his thinking then. He envisioned condominiums spanning entire floors.
What American company does China own? ›
AMC. Popular cinema company AMC, short for American Multi-Cinema, has been around for over a century and is headquartered in Leawood, KS. In 2012, Beijing-based Dalian Wanda Group became the majority stakeholder, giving them the power to make decisions at the executive level.
Who owns the most money to China? ›
Which Country Owes the Most Money to China? Venezuela is the country with the greatest sovereign debt exposure to China, in terms of direct lending (excluding portfolio holdings), according to AidData's 2021 study, totaling $74.7 billion.
Does China own the Empire State Building? ›
China does not own the Empire State Building. The Empire State Building is owned by the Empire State Realty Trust (ESRT). The ERST is a public company which trades its shares on the New York Stock Exchange.
How much does the U.S. owe China? ›
Top Foreign Holders of U.S. Debt
| Rank | Country | U.S. Treasury Holdings |
|---|
| 1 | 🇯🇵 Japan | $1,076B |
| 2 | 🇨🇳 China | $867B |
| 3 | 🇬🇧 United Kingdom | $655B |
| 4 | 🇧🇪 Belgium | $354B |
6 more rowsMar 24, 2023
Chinese investors are among the top foreign purchasers of residential real estate, along with Canadians, according to the National Association of Realtors. Other states have had concerns over foreign ownership of land and have made efforts to regulate it.
Blackstone Group sold the Waldorf to Anbang back in 2014 for close to $2 billion, ushering in the era of major Chinese investment in U.S. real estate assets. After Anbang acquired the hotel, President Barack Obama declined to stay there due to security concerns, opting instead to use the nearby Lotte Palace hotel.
What is happening to the Waldorf Astoria? ›
The re-launched Waldorf hotel is to have 375 guest rooms, down from the original 1,400 — although new rooms and suites will be twice as large as the original ones. The 352 planned condos will take up the larger share of the building.
What hotel chains does China own? ›
Shangri-La, Aman, Banyan Tree and Mandarin Oriental are all Asian brands that have successfully established themselves internationally.
Why was Waldorf Astoria demolished? ›
The Waldorf-Astoria originated as two hotels, built side by side by feuding relatives, on Fifth Avenue in New York, New York, United States. Built in 1893 and expanded in 1897, the hotels were razed in 1929 to make way for construction of the Empire State Building.
Where do presidents stay in NYC? ›
The Roosevelt Hotel (Manhattan)
| The Roosevelt Hotel |
|---|
| Location | Manhattan, New York City |
| Address | 45 East 45th Street |
| Coordinates | 40°45′17″N 73°58′39″W |
| Opening | 1924 |
12 more rowsThe $200 million building is 12 stories high with 170 rooms designed by Pierre-Yves Rochon. Although Hilton elite members do not get upgrades to suites when staying at Waldorf Astoria hotels, it's worth mentioning that 51 of those rooms are suites.
Does China own Walmart? ›
No, Walmart is not owned by China, nor has it been sold to a Chinese investment group. According to USA TODAY fact check, a claim that Walmart had been sold to a Chinese firm was proven false. On Jan. 2 2021, a Facebook post claimed a Chinese business group bought out America's largest retailer.
How much of the US stock market is owned by China? ›
As an estimate, Chinese securities account for less than 2% of the total portfolio of U.S. investors.
What companies are tied to China? ›
American businesses rely heavily on China
Boeing (BA), Caterpillar (CAT), General Motors (GM), Starbucks (SBUX), Nike (NKE), and Ford (F) are some other US companies with a strong presence in the country.
Who owes the US money? ›
Many people believe that much of the U.S. national debt is owed to foreign countries like China and Japan, but the truth is that most of it is owed to Social Security and pension funds right here in the U.S. This means that U.S. citizens own most of the national debt.
As per projections by IMF for 2021, United States is leading by $6,033 bn or 1.36 times on an exchange rate basis. The economy of China is Int. $3,982 billion or 1.18x of the US on purchasing power parity basis.
Who is richer between USA and China? ›
The U.S. makes up 23.93% of the total global economy, says Investopedia. The World Bank Group lists China as the second richest country in the world as of 2021, possessing a GDP of $17.734 trillion along with a GDP per capita of $12,556.3. China makes up 18.45% of the total global economy.
Where does China claim to own? ›
The PRC claims the de jure administration of Taiwan Province, as well as mainland-nearby islands of Kinmen and Matsu Islands, currently controlled by the Republic of China (ROC).
Does the Chinese government own all property in China? ›
There is no private “freehold” land ownership in China. All urban land in China is owned by the Chinese government and is commonly referred to as “state-owned land.” All rural and suburban land is owned by rural collectives (ie, local groups of farmers) and is commonly referred to as “collective land.”
What family owns the Empire State building? ›
ESRT owns the iconic Empire State Building – “the World's Most Famous Building” – and the newly reimagined Empire State Building Observatory that was named #1 attraction in the US, and #3 in the world, in Tripadvisor's 2022 Travelers' Choice Awards: Best of the Best.
How much of Disney world does China own? ›
Do shareholders know that The Walt Disney Company is engaged in a joint venture with the Chinese Communist Party that allows for the operation of the Shanghai Disney Resort? And it's not an equal split, by the way. Instead, the CCP has 57% ownership while Disney holds only 43% ownership.
Who owns the Grand Canyon? ›
Despite these strategically located private in-holdings, the vast majority of the Grand Canyon is owned by the federal government, held in trust for the American people and managed by a varied collection of federal agencies. Indian reservations, state land, and private land surround these federal lands.
Does China own Yosemite national park? ›
“Yosemite National Park belongs to the American people. This action will not affect the historic status of the facilities, as they are still important cultural icons to the National Park Service and the public.”
Why does the US owe so much money to China? ›
U.S. debt to China comes in the form of U.S. Treasuries, largely due to their safety and stability. Although there are worries about China selling off U.S. debt, which would hamper economic growth, doing so in large amounts poses risks for China as well, making it unlikely to happen.
What country has the most debt? ›
According to data published by London-based investment fintech Invezz, Japan, Greece, Italy, Portugal, and the US are the top five nations with the highest level of government debt.
Flashpoints that greatly contributed to the debt over the past 50 years include the wars in Iraq and Afghanistan, the 2008 financial crisis and the 2020 COVID-19 pandemic -- the latter two prompting sweeping stimulus measures from Congress that cost trillions of dollars.
Who owns the most US real estate? ›
Who Is the Largest Landowner in the U.S.? The largest landowners in the United States are the Emmerson family, with 2,330,000 acres of land.
Are US citizens allowed to own property in China? ›
The answer is yes, foreigners are allowed to purchase property in China! The essential requirement is that you have studied or worked in China for at least one year on a residence permit. Foreigners are allowed to only own one residential property for dwelling purposes.
Which country owns the most real estate in the US? ›
Canadian investors lead this pack, by a long shot, with nearly 9.4 million acres of U.S. land — more acreage than 44 of the top 50 foreign landowners combined, according to the report. (These people own the most land in America.)
Was the Waldorf Astoria owned by the Astor family? ›
He became a British subject in 1899, and in 1917 he became 1st Viscount Astor of Hever Castle. He used much of his wealth—aside from that spent building the Waldorf section of what eventually became the Waldorf-Astoria Hotel—restoring Hever Castle and funding conservative political causes in England.
When did Mandarin Oriental become Waldorf Astoria? ›
In 2018, MGM and Dubai World sold the hotel for $214 million to hotel investor Tiffany Lam and Panda Express founders Andrew and Peggy Cherng. In conjunction with the sale, MOHG ceased managing the property on August 31, 2018, and Hilton assumed management, rebranding it as a Waldorf Astoria.
What American brands does China own? ›
Keep reading to see which U.S. giants are backed by foreign conglomerates.
- AMC. Popular cinema company AMC, short for American Multi-Cinema, has been around for over a century and is headquartered in Leawood, KS. ...
- General Motors. ...
- Spotify. ...
- Snapchat. ...
- Hilton Hotels. ...
- General Electric Appliance Division. ...
- 49 Comments.
At the time, The Blackstone Group held a 45.8 percent stake in the company. In October 2016, China's HNA Group agreed to acquire a 25 percent equity interest in Hilton from Blackstone.
What famous people lived in the Waldorf Astoria? ›
Many famous people have lived in the Waldorf Astoria.
Grace Kelly, Frank Sinatra, and the Duke and duch*ess of Windsor also chose the hotel as to stand in as a (not so) humble abode.
Is the Astor family still wealthy? ›
Even though the family and its wealth are now mostly gone, you probably know the Astors thanks to Brooke's generous donations in the Astor name, and from the real estate legacy the family left in New York.
During the 20th century, the number of American Astors began to decline, but their legacy lives on in their many public works including the New York Public Library. English descendants of the Astors hold two hereditary peerages: Viscount Astor and Baron Astor of Hever.
Was William Astor the richest man in the world? ›
Astor was the richest passenger aboard the RMS Titanic and was thought to be among the richest people in the world at that time, with a net worth of roughly $87 million when he died (equivalent to $2.64 billion in 2022). Rhinebeck, New York, U.S. William Backhouse Astor Jr.
Who bought Mandarin Oriental New York? ›
Asia's biggest billionaire, Mukesh Ambani, has snapped up a controlling stake in the Mandarin Oriental in New York City for just over $98 million.
What is the purpose of Mandarin Oriental? ›
We provide a caring, motivating and rewarding environment for all. We value diversity and bring out the best in our people by investing in their personal development, enabling a fulfilling career with the Group and beyond.
Who does Mandarin Oriental belong to? ›
Mandarin Oriental has a strong pipeline of hotels and residences under development, and is a member of the Jardine Matheson Group.
