Diaspora Capitalism and the Homeland: Australian Chinese Networks into China

Diaspora 5:2 1996 Diaspora Capitalism and the Homeland: Australian Chinese Networks into China Constance Lever-Tracy Flinders University of South Australia David Ip University of Queensland Introduction: Earlier Perspectives on Diasporan Chinese Capitalism This article explores two new and related phenomena of the late twentieth century that will surely play a major role in shaping the world ofthe twenty-first: the economic development and opening up of China, and the emergence onto the world economic stage ofdiaspora Chinese businesses, producing a significant, identifiably Chinese current within global capitalism. Each of these has, we believe, been crucial and perhaps indispensable to the other. The growth rate of China's economy in the 1990s has been one of the fastest in the world; it has been at or near double digits throughout the decade. China's ranking as a global exporter has moved up faster in the last fifteen years than any other country's. A significant contribution to these achievements has been made by foreign investment. Between 1979 and 1993, 167,000 enterprises have been established by foreign investment in China, involving a total direct foreign investment of US $68.7 billion. Much ofthis has been very recent. The sums invested in 1992 and in 1993 each doubled those of the previous year. In 1994, another US $38.7 billion came in. What started in a few Special Economic Zones has spread through the coastal provinces and is now beginning to move inland (State Commercial Bureau; MOFTEC 1; Zhang and Tracy 2; Beijing Review 11, 14-20, 37; South China Morning Post). These huge sums did not, as one might expect, originate to any great extent from Western or Japanese multinational corporations. The share of the United States in these cumulative sums was under 7% and of Japan just over 4%. Over 80% came from areas where almost all investors would have been ethnic Chinese: Hong Kong, Taiwan, Macao, Singapore, and Thailand. Their share of such investment has been rising (State Commercial Bureau). A survey of 600 "foreign invested" firms in three provinces, carried out in 240 Diaspora 5:2 1996 1994 and 1995, found the proportion of ethnic Chinese investors to be even higher, including a number of Chinese North Americans as well (Lever-Tracy, Ip, and Tracy).1 Nor were these sums primarily capital provided by giant corporations; in most cases, they came from multitudes of what (at least at the time of initial entry) were small and medium family firms, although many of them have grown larger as a result of these investments. The average value of each new foreign investment in China, in 1992, was only US $1.13 million (Zhang and Tracy 5, 12). In this article we seek to explore how and how far a growing density oftransnational linkages between smaller diaspora Chinese businesses may have been encouraged by the magnet of an accessible China. In the 1980s, manufacturing, finance, and markets were developing within East and Southeast Asia with progressive integration of regional trade and investment flows. The previously discrete Chinese trading or manufacturing communities around the region now had the motive and opportunity to start diversifying and linking up, thus benefiting from and contributing to these developments . It is, however, the opening of China, with its vast potential labor force and markets that has made of the Chinese Business Sphere, according to the Nomura Research Institute, thefourth largest economic power bloc in the world, moving up to challenge Japan, Europe, and even the United States (Yamaguchi 4).2 Our article is based on exploratory, open-ended interviews with thirty-six ethnic Chinese Australians who had established or were seeking to establish economic relations of trade or investment with China. We sought to find out why and how such small diaspora businesses were entering and operating in China and what was the nature and impact oftheir activities. Little ofthe established research on diaspora Chinese capitalism has hitherto been able to predict or explain its dynamism, scale, or regional interlinkage in the 1990s; the massive cumulative impact ofthese multiple small investments on the development of mainland China was not anticipated. One problem lies in the very limited number of studies that transcend the boundaries...