Diaspora: A Journal of Transnational Studies

Diaspora 5:3 1996 Looking to the Diaspora: The Overseas Chinese and China's Economic Development, 1978-1994 Paul J. Bolt1 United States Air Force Academy2 Throughout the second half of this century, many forces have come to erode the autonomy and sovereignty of states, both at the supranational and the subnational levels. At the supranational level, transnational organizations, both official and non-governmental , exert pressure on states to conform to their collective policies and standards. Multinational growth triangles also reject the nation-state as a fundamental economic unit. At the subnational level, the state faces the challenge of managing various regions in a manner that allows regional governments the flexibility to form policies corresponding to local conditions while the center continues to maintain sufficient power to deal with national problems. Another force that challenges the state and threatens to undermine our traditional conception ofit is the growing volume oftransnational activity involving ethnic groups, diasporas, and their homelands. Diasporas, which Gabriel Sheffer defines as "ethnic minority groups of migrant origins residing and acting in host countries but maintaining strong sentimental and material links with their countries of origin—their homeland," can challenge the very conception of the "nation-state" (3). In addition, it is clear that ethnicity is playing an increasingly important role in the global economy, with some claiming that ethnicity is bypassing the state as a fundamental organizing unit. Joel Kotkin, for instance, stresses that ethnic groups are crucial to the evolution of the global economy. In examining what he calls five global "tribes"—the Jews, British, Japanese, Chinese, and Indians—Kotkin explains their economic success largely in terms of their ethnic identity, which enables them to maintain unity through global changes and provides a worldwide network based on mutual trust that facilitates the expansion of business activity around the world. Kotkin claims: "The power ofglobal tribes derives from ... an intrinsic 'tribal' sense of a unique historical and ethnic identity and the ability to adapt to a cosmopolitan global economy" (16). Similarly, Lever-Tracy and Ip demonstrate the importance of networks and trust for Chinese Australian entrepreneurs seeking to do business in China. 467 468 Diaspora 5:3 1996 Nevertheless, states are not without influence in affecting transnational activities conducted by diaspora groups. States also attempt to use diasporas for their own goals, including economic development. Thus Milton Esman's seven classes ofdiaspora-related activities in international relations include attempts by home governments to achieve goals through their diasporas, as well as efforts by host countries to use diasporas for their own goals ("Diasporas" 340-3).3 China is one example of a state that has deliberately instituted policies to attract the resources of its diaspora in order to achieve rapid economic development. In this effort, China has been very successful, bringing in billions ofdollars in investments from ethnic Chinese living in Hong Kong, Taiwan, and Southeast Asia, as well as acquiring needed technology and management skills. In fact, the contributions of the overseas Chinese4 have been key to China's rapid economic development throughout the 1980s and 90s. However , in attempting to attract ethnic Chinese investments, China has created a dilemma for Southeast Asian governments. On the one hand, such governments wish to share in the fruits of China's economic boom. On the other hand, they are concerned about potential disruptions in their own societies related to long-standing questions regarding the place of ethnic Chinese. Taiwan, too, is concerned about its entrepreneurs investing in the mainland, fearing that close economic links may lead to political vulnerability. This article will examine China's efforts to attract the investments of Asia's ethnic Chinese, focusing on the period 1978-1994. After looking at the results of such efforts, it will move on to analyze the reactions of the governments of the states and territories where the ethnic Chinese live. I will argue that China has successfully shaped its policies and institutions in order to attract billions of dollars in foreign investments from Asia's Chinese diaspora . The reactions of the host states have, however, been mixed, based on the ethnic and political imperatives facing each society. 1. China's Efforts to Attract Ethnic Chinese Investments China's...