Written By: Heidi Dahles.

The ‘One Belt, One Road’ (OBOR) initiative, since 2013 the centrepiece of China’s economic diplomacy, has been received with a measure of suspicion in Asia and beyond. OBOR, designed to promote regional and cross-continental connectivity between China and Eurasia, in particular with Central and South Asia, comprises infrastructural development, unimpeded trade, financial integration, and policy coordination. The ‘One Belt’ and ‘One Road’ refers to China’s proposed ‘Silk Road Economic Belt’ and ‘Maritime Silk Road’.

For OBOR to succeed, mobilising the worldwide network of ethnic Chinese businesses may be the right strategy for China to follow, in Central and South Asia as much as in the West.

Through a geopolitical lens, OBOR appears to be an attempt to reformat globalisation to China’s needs. Dubbed as the ‘new Chinese mercantilism’, it pursues the accumulation of capital and wealth for the nation through global trade led by state-owned enterprises. Those wary of China’s rise as a global power caution that the penetration of Central and South Asia with Chinese capitalism will have far-reaching consequences for global and regional power-relations. Southeast Asian nations with a substantial ethnic Chinese population within their borders are keeping a watchful eye on China’s attempts to expand and solidify its influence. First of all, concerns about China’s reclamation activities in the South China Sea divide the ASEAN community. In particular Vietnam, the Philippines and, increasingly, Indonesia rise against China’s assertiveness in the South China Sea. Concerns about Chinese domination are also fuelled by the fear of a massive arrival of Chinese migrants. Beyond their immediate political and social significance, these concerns reflect historically rooted issues about Chinese domination in Southeast Asia. As myriad conspiracy theories have it, the apparent economic domination of the national economies of Southeast Asia by the ethnic Chinese has been, and still is, firmly embedded in alliances between China, local (indigenous) bureaucrats and the ethnic Chinese, also dubbed as overseas Chinese or Chinese diaspora. [1]

The position of the ethnic Chinese in their Southeast Asian ‘host’ country, and their connection with China, are fraught with ambiguities. While the economic success of the ethnic Chinese has been met with both envy and fear, their political loyalty and cultural identity have always been questioned. [2] As China has become the dominant player in the global economy, the attention has shifted to the benefits of the far-flung and close-knit Chinese ‘diasporic’ network for China.

When China re-entered the world economy in the late 1980s, ethnic Chinese businesspeople from Southeast Asia, in particular Singapore, Malaysia and Indonesia, were among the first who took their business to China and persisted in an initially disorganised and hostile business environment where others failed. [3] The ethnic Chinese in Southeast Asia soon realized their potential to act as a bridge between China and their respective countries of residence. Similarly, investments in countries with a substantial ethnic Chinese population such as in Southeast Asia were among China’s first steps in an international business environment. The Chinese diaspora, the world’s most integrated intraregional trading system, has given China a unique resource.  Close-knit and far-flung personal networks (or guanxi) give members of the Chinese diaspora an edge over other trading partners in China. Rooted in Confucianism, guanxi has assisted Chinese business groups in setting up regional operations across Southeast Asian nations and beyond, and supported ventures into mainland China.

For China, multiple benefits accrue from such ethnically-based business operations. Ethnic Chinese businesses accumulate capital and knowledge for the Chinese economy to tap into, such as access to transnational trade networks and technologies, including logistics, marketing strategies, and customer services. They support China’s huge and largely inefficient state-owned companies and help China to develop its financial system and internationalise its currency.

Conversely, the ethnic Chinese have not only accumulated capital and wealth for Chinese business groups, but also accrue significant benefits for countries in Southeast Asia. The ethnic Chinese presence has a positive impact on Chinese tourists as they find a ‘home away from home’ in Chinatowns across the regions, including China-savvy travel agents and other service providers well-versed in mainland Chinese tastes. Similarly, the ethnic Chinese presence attracts property investments from China facilitated by developers and real estate agents knowledgeable about mainland Chinese demand. The property market also extends to Chinese retirees who seek a hassle-free retirement in a safe and friendly environment, offering facilities that appeal to this market segment. Overall, mainland Chinese consumers are attracted to the highly developed Southeast Asian nations. In particular, high standards of food security, advanced health services and sophisticated fashion design, contribute to rising demand among the middle class Chinese. Ten thousands of daigou (Chinese personal shoppers) operate in Southeast Asian and Western countries to provide mainland Chinese consumers with upmarket consumer goods and services. The increasing mainland Chinese demand, again, accelerates trade and increases investments in Southeast Asian countries.

Returning to China’s OBOR initiative, the question has to be raised whether the fear of increasing Chinese dominance in Southeast Asia and the world will be offset by advantages and benefits such as increased regional stability and prosperity? OBOR has already experienced setbacks in Sri Lanka where people expressed opposition to an industrial zone project funded by China. However, closer analysis of this case reveals that this opposition was fuelled by Beijing’s generous support of Sri Lanka’s former regime, and was not necessarily directed at China-funded infrastructure projects as such.

For OBOR to succeed, mobilising the worldwide network of ethnic Chinese businesses may be the right strategy for China to follow, in Central and South Asia as much as in the West. In line with China’s global macroeconomic policy, this network is likely to continue playing a bridging role that bolsters the objectives of OBOR. Despite assumptions otherwise, Western countries, including the United States, Canada, Australia, the UK and many member states of the European Union have to consider their options in order not to lose out in this the China-led model of globalisation. These countries should capitalise on the Chinese communities living within their borders – either members of a Chinese ‘diaspora’ residing there for generations or new arrivals – not only in terms of their spending power, but most of all in terms of their skills as mediators between their ‘diasporic’ home and China.

Endnotes

1. These concepts are contested, see e.g. Gungwu Wang (2000), The Chinese Overseas: From Earthbound China to the Quest for Autonomy. Cambridge (Mass.): Harvard University Press..
2. A plethora of scholarly work addresses this issue. For an introduction see: Aiwa Ong and Donald M. Nonini (Eds) (1997). Ungrounded Empires. The Cultural Politics of Modern Chinese Transnationalism. New York/London: Routledge. P.A. Kuhn (2006) Chinese Among Others. Emigration in Modern Times. Singapore: National University of Singapore Press.
3. See Heidi Dahles (2016). Chinese Capitalisms in Southeast Asia: Diverging Institutional Legacies of Southeast Asian Chinese Business Communities. In: Jane Nolan, Chris Rowley and Malcolm Warner. Business Networks in East Asian Capitalisms: enduring trends, emerging patterns. Elsevier, pp. 191-209.

Professor Heidi Dahles is Head of Department of International Business and Asian Studies in the Griffith Business School, and member of the Griffith Institute for Tourism (GIFT) in Australia. Her research interest is in business resilience & livelihoods (in particular in the tourism industry), small business and the informal economies of Southeast Asia, ethnic Chinese business networks and migrant entrepreneurship. Image credit: CC by xiquinhosilva/Flickr.