Noel Tracy

The Chinese diaspora and mainland China : an emerging economic synergy

Preface - Introduction - PART 1: RESOURCES AND OPPORTUNITIES - Chinese Diaspora Capitalism - China, Reforms and Opportunities - Towards a Synergy - Cobwebs Across the Divides - PART 2: INTO CHINA THROUGH TRANSNATIONAL NETWORKS - Introduction: The Sleepers - The Tycoons - Networking into China by Smaller Investors - Transnational Small and Medium Enterprise - PART 3: IMPACTS AND OUTCOMES - Introduction: Dependency and Development - Diaspora Tycoons and Development in China - Long Term Perspectives and Local Meshing - Ripples on a Pond - Diaspora Capitalists Come of Age - Labour and Capital - Conclusion - Index

China's export miracle : origins, results and prospects

List of Tables - Preface - Introduction - The Export Miracle - Explanations - The Rise of Guangdong - Are There New Resources to Continue Chinas Export Boom? - Destinations - The Future of Chinas Exports in the World Market - Bibliography - Index

Towards a Synergy

There can be little doubt that the opening of China to foreign investment was a critical moment in the evolution of Chinese diaspora business. The opening of the Pearl River Delta and the ten coastal cities in 1985 came at a crucial time for the business communities in Hong Kong, Taiwan and Singapore. The initial period of economic reform in China from 1979–85 had provided few such opportunities. Foreign investment was restricted to a number of Special Economic Zones administered by the central government and to certain designated industries dominated by the state sector. The opening of the Pearl River Delta and southern Fujian opened the way for the involvement of diaspora business in the economic reform process.

Ripples on a Pond

We suggested in Chapter 3 that the first spur to the Chinese economy, in the early years of reform, came from a boost in incomes and the liberation of production in the localities for domestic consumption; this, however, was not able to sustain its momentum, and the turn to exports became the main engine of further growth. Advocates of export oriented industrialisation have applauded this move into the world market as the key to economic development. Critics of export oriented policies and of the development of export processing zones in third world countries, on the other hand, argue that these would be no more than short term offshore production platforms for first world investors. High profits would be made from the super-exploitation of (mainly female) workers while the impact back into the rest of the country would be minimal. When cheaper sources of labour were offered elsewhere, the investors would move out, leaving little behind.

Are There New Resources to Continue China’s Export Boom?

While Guangdong’s rise to the position of China’s leading economic province and the leader in export-oriented industrialization came about a result of a ‘big bang’ in which economic reform was introduced rapidly and essentially on an experimental basis by the political leaders in Beijing, the process of economic change has proceeded much more sedately and incrementally in the regions which made up China’s industrial heartland before 1979. The benefits and upheavals which had accrued to and transformed Guangdong and Fujian since the early 1980s but which had rapidly accelerated after 1985 only began to have a widespread impact in much of the rest of coastal China after 1991 and have still to reach the bulk of the interior. The result is that the challenges to Guangdong’s pre-eminent position in China’s ‘export miracle’ are much less dramatic than those which originally propelled Guangdong into the forefront of China’s export-oriented industrialization and ‘opening to the world’. It is rather that Guangdong’s disproportionate share of China’s exports is likely to be gradually whittled away by a combination of growing exports from other sources, the increasing spread of foreign capital along the whole of the eastern seaboard using China as a production base for export and the changing direction of China’s trade towards Northeast Asia rather than the rise of a single province as challenger.

The Export Miracle

One of the most remarkable things about China’s rise as an international trader is the speed with which the economy changed from being essentially closed to one in which export volumes and the resultant trade surplus have begun to create problems for the international system. In November 1995, US trade ambassador, Charlene Barshefsky, went so far as to claim that China’s trade surplus with the United States was set to eclipse that of Japan, and that this level of trade imbalance between the two countries could be sustained neither economically nor politically.1 While we will want to quarrel with the US trade negotiators’ interpretation of the trade data and will do so below, that is not our point in raising the issue at this early stage in the study. We raise it to show the impact China’s exporting performance is having on what is still the world’s leading economy and only superpower. The rapid growth of China’s foreign trade is already reshaping international political economy: a major feat in so short a time span.

The Rise of Guangdong

In the eyes of many observers Guangdong has been the cutting edge of China’s economic reform process and its rise as an exporter and new dragon economy has become synonymous with China’s emergence as a potential economic superpower. In many ways China’s ‘export miracle’ could more properly have been called ‘Guangdong’s export miracle’. Guangdong, to quote one famous observer, Ezra Vogel, had always seemed ‘one step ahead in China’ as it responded to the opportunities created by the reform process. Despite its relative backwardness when economic reform was announced in 1978, by the late 1980s it had firmly established itself as China’s leader in export-oriented industrialization and controlled more than 30 per cent of China’ foreign trade. It was also a measure of the dominant position that Guangdong had established in China’s export performance that when for the first time in a decade its rate of export growth fell below that of China as a whole in 1995 (10.8 per cent as against 22.9 per cent) that the province was instantly seen as being in serious difficulties and its reign as China’s leading economic province as on the wane. While we would not want to deny that Guangdong faces some severe difficulties and overcoming these may not be remediable even by substantial adjustments in its industrial and trade policies, it is important to put these difficulties in perspective.

The Future of China’s Exports in the World Market

By the mid-1990s, China had firmly established itself as one of the world’s leading trading nations. By 1995 its international trade had topped US

The Relationship of Labour and Capital

280 billion, a figure that must have seemed unreachable to the architects of the economic reform process in the late 1970s. China’s growing prowess in world markets was evidenced by a trade surplus in that same year of US

Diaspora Capitalists Come of Age

16 billion and by a further surpluses of US