The Chinese Diaspora, Foreign Investment and Economic Development in China

Abstract

The opening of China to the capitalist world after 1979 was done in a spatial sequence designed to mobilize the resources of the overseas Chinese, with the Special Economic Zones located in the key areas of migrant origins. Including the ‘compatriots’ (tongbao) of Hong Kong, Macao and Taiwan, the great majority of foreign direct investment in China has come from the Chinese diaspora. Local development patterns have been strongly affected by the extent, or lack, of emigrant connections. This article examines the impact on local development of the mobilization of resources from the diaspora. Second, it is suggested that a new stage in the relationship is developing, where the capital of the overseas Chinese is becoming less significant, at least in richer areas such as the Pearl River Delta, as the differentials between Chinese inside and outside are changing. Some new patterns of transnational connections seem to be emerging, however, as China strategically endeavors to develop a knowledge-based economy. The effective interactions between overseas Taiwanese in Silicon Valley and the high-tech sector in Taiwan may be seen as a model for similar processes that are emerging between Taiwanese and certain regions of China, particularly in the Shanghai region.