ABSTRACT: In the past decade, Los Angeles has emerged as the single largest Chinese business center in the US. However, unlike the Chinese economies in New York and San Francisco which are concentrated in Chinatown, Chinese businesses in Los Angeles have formed multinuclear concentrations in suburban communities in the San Gabriel Valley. With an inflow of capital and entrepreneurs from the Chinese diaspora, the valley's economy has become an integral part of the Pacific Rim economy. The author analyzes the impact of Chinese ethnic economy on various communities in the San Gabriel Valley, focusing on the Chinese capital and investment activities in the Valley. The political responses of local residents and governments toward these activities are also discussed. Evidence shows that the local governments have tried to balance the development of American and Chinese businesses.