FORTUNE — In March 2011, Chinese investors paid $2.15 million cash for a restaurant complex on the Maumee River in Toledo, Ohio. Soon they put down another $3.8 million on 69 acres of newly decontaminated land in the city’s Marina District, promising to invest $200 million in a new residential-commercial development. That September, another Chinese firm spent $3 million for an aging hotel across a nearby bridge with a view of the minor league ballpark.
The investors have framed their purchases as a gateway for further investment opportunities in the Midwest. The newly sold hotel is about an hour’s drive from the Detroit airport, and on its website, the hotel’s purchaser, Five Lakes Global Group, advertises Toledo as a “5-star logistics region” with access to Cleveland, Columbus, Dayton, Chicago, and Detroit.
With a population of 287,000, Toledo is only the fourth largest city in Ohio, but it lies at the junction of two important highways — I-75 and I-80/90. “My vision is to make Toledo a true international city,” Toledo’s Mayor Mike Bell told the Toledo Blade.
Bell, an independent who took office in 2010, has made repeated visits to China to court investors. A welcome message from Bell, subtitled in Chinese, appears on Five Lakes’ Chinese website. Five Lakes’ Chinese name might be better translated as “Great Lakes” Global, and the company’s website advertises a regional investment forum to take place in Toledo in September, with speeches by Bell and Ohio Governor John R. Kasich.
While the national economic conversation on China is preoccupied with Chinese-held government debt, local governments have been working for deals that benefit local economies. Bell is not alone: many mayors and other local officials have traveled to China to meet with potential investors and visit joint ventures between U.S. and Chinese companies. Just recently, Iowa Governor Terry Branstad accepted an invitation to visit China after the state hosted visiting Chinese Vice President and presumptive next leader Xi Jinping. Indiana’s Lieutenant Governor Becky Skillman this month led her second trade mission to China. And Atlanta Mayor Kasim Reed led his own team a few weeks ago.
Chinese citizens are second only to Canadians in the number of real estate investments in the U.S., according to the National Association of Realtors. The Rhodium Group, a global economic research firm, ranks hospitality and real estate as the second-largest sector by value for private Chinese investment in the U.S., after information technology.
From 2003 to 2011, Rhodium counted 236 private investment deals worth a total of $6.3 billion. Of those, 10 fell under hospitality, real estate, and entertainment.
Toledo is not alone in experiencing an influx of overall Chinese investment in recent years. While most deals in Rhodium’s data took place on the coasts, seven China-Ohio deals were recorded from 2008 to 2011, compared with none from 2003 to 2007.
China’s super-rich have good reason to diversify their holdings. In China the possibility of a real estate bubble and uncertainty about the banking system can make U.S. real estate, even away from the metropolis, an appealing bet.
In early June, Beijing again cut interest rates, finally weakening demand for loans after years of rapid investment in things like airport infrastructure, which may or may not pay off. Peking University Professor Michael Pettis, in a newsletter, cautions that non-performing loans (NPLs) could cause banks to pass on losses to consumers.
There is at least one more reason some investors would turn to the U.S.: Foreign investors who put at least $1 million into a U.S. business and meet other requirements can be eligible to apply for a green card. The minimum investment in high-unemployment areas, such as East Toledo, is $500,000.
Just who is investing in Toledo? The restaurant complex and riverfront development investors have been identified as Yuan Xiaohong and Wu Kin Hung, working through a company called Dashing Pacific Group Ltd. The investors behind the Five Lakes Global Group have not been identified.
The Toledo Blade has covered the deals extensively, but both its reporting and a Chinese investigation the paper commissioned turned up only limited information about Yuan and Wu’s backgrounds and very little on Five Lakes.
One of the parties to the Five Lakes hotel sale told the Blade the investors behind Five Lakes Global are not the same as those from Dashing Pacific. They may be tied in some way, however. Both companies list the same Toledo lawyer as registered agent on their incorporation documents, and Simon Guo (Guo Zhixin), who was credited with introducing Bell to Wu and Yuan according to the Blade, is also listed as “chairman” of Five Lakes Global on the company’s Chinese website.
The Blade’s investigators found that Wu was once a government bureaucrat working on development in Shenzhen, a southern Chinese city near Hong Kong that has grown from a village to a hub of global manufacturing since China’s economic opening began in the ‘70s. The investigators speculated that a man with his background would have become quite rich and would have no trouble raising the $200 million proposed to develop the Toledo Marina District. Yuan told the paper she is a Hong Kong citizen originally from the Chinese province of Inner Mongolia.
More than a year after the riverfront land was purchased, the announced $200 million development has yet to break ground. Dashing Pacific is in a legal dispute with tenants at its restaurant complex. The lease provides for separate metering and billing for utilities, and the tenants claim Dashing Pacific has not lived up to the contract.
Joe Clarke, an attorney for the tenants, says he has asked the court to hold Dashing Pacific in contempt after it failed to respond to a preliminary injunction ordering that it install separate meters. An attorney listed for Dashing Pacific did not return a phone call seeking comment.
As for the two Chinese firms, Toledo residents are as curious as anyone. “Nobody here, including myself, knows much about them,” Clarke says.