adminDr Gift Mugano
The diaspora are variously seen as sources of financial flows, economic opportunities, technology transfer, political support, progressive attitudes, and a good image of the home country.
Countries of origin that actively court their diasporas do so in a variety of different ways and with different priorities. This week’s reviews Chinese and Indian policies and practices in attracting diaspora investments.
China
Political and economic tensions in the 20thcentury drove a dispersion of part of the Chinese diaspora (a scattering of the scattered) from Malaysia, Indonesia, Vietnam and Honk Kong, even as the traditional countries of immigration in the Western rescinded racist immigration legislation that had previously excluded Chinese. Today, overseas Chinese communities exist in virtually every country in the world, at an estimated strength of more than 35 million people.
The Government of the Peoples Republic of China (PRC) has actively (with the Cultural Revolution being the one significant hiatus) sought to maintain a sense of Chinese identity among overseas communities of emigrants and their descendants. This has important symbolic components, like the creation of an overseas Chinese museum and a World Overseas Chinese Cemetery in China. Since the implementation of China’s economic opening began in 1979, however, the economic dimension has been dominant and dynamic. In the late 1980s, China ratcheted up the effort to combine sentiment and incentives to attract investment from the diaspora, emphasizing patriotic feelings while offering generous investment packages to overseas Chinese. The campaign of attracting overseas Chinese capital escalated after the Tiananmen massacre in 1989, when many non-Chinese foreign firms fled China.
The Central Government was not the only, or even the major player, in attracting diaspora investors. Writing of investment from Taiwan into mainland China, the partners to the overseas Chinese investors in many cases were entrepreneurial local officials, making the most of their autonomy in the post-Mao era of economic and fiscal reform. They implemented simplified the process and regulation of investment and made concessions in taxes and fees for Taiwanese investors. Such flexibility was crucial to the success of Taiwanese investment. Local officials emphasise the ties of emigrant families to their ancestral villages, and receive investors who come back with a hero’s welcome. The fact that much of the Chinese diaspora originated in coastal southern China is certainly part of the explanation for that region’s emergence as China’s fastest growing area.
Foreign direct investment (FDI) has been a major factor in the emergence of China as a manufacturing and trading powerhouse in the 1990s. It is estimated that about half of the £26 billion ($48 billion) in FDI that flowed into China in 2002 originated with the Chinese diaspora.Ethnic Chinese also have an important impact on the volume of bilateral trade between the PRC and their countries of settlement.
The PRC government has encouraged diaspora engagement in both FDI and trade, as well as philanthropic contributions and other activities, through preferential policies and the encouragement of a sense of belonging to the Chinese homeland. Many analysts emphasise, however, that the chief motive for business ties is profit, and that “Chineseness” is too often seen uncritically as an undifferentiated attribute of what is in fact a large and highly diverse diaspora.
Exogenous factors such as the extremely rapid growth of Hong Kong, Taiwan and Singapore in the 1970s and 1980s, increased protectionism in the West, economic reform in China, and personal or local networks are more important than sentiment – or any effort by the Chinese Government to court its diaspora. The post-1978 economic reforms, including flexible labour laws, efficient administrative procedures, tax incentives for investment, and massive investment in physical and social infrastructure were attractive to non-Chinese as well as Chinese investors. In this enabling environment, the overseas Chinese could turn their linguistic, cultural and other capabilities into a comparative advantage.
To be continued
Dr Mugano is an Author and Expert in Trade, Investments and Development. He is a Research Associate at Nelson Mandela Metropolitan University and a Senior Lecturer at the Zimbabwe Ezekiel Guti University. Feedback: Email: [email protected], Cell: +263 772 541 209.
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