Summary:
Giovanni Arrighi argues that China's economic boom is not the result of direct investment by the West or Japan, but by direct investment by Chinese overseas, mainly in Hong Kong and Taiwan. Western and Japanese corporations faced burdened with regulations, not faced by Chinese ex-pats. This dictation by the Chinese government of the terms of access to Chinese labor etc., was an essential ingredient of the success of Chinese economic reforms.(Published: 23/04/2008)
Notes:
- China's attraction for foreign capital: not quantity of low-priced labour, but quality of it
- health, education and capacity for self-management
- foreign capital intervened late in process of development of China
- mainly facilitated by Chinese diaspora capital
- matchmaker between foreign capital and Chinese labour, entrepreneurs and government officials
- China under Deng sought assistance of the overseas Chinese in opening China to foreign trade and investment
- more fruitful alliance for Chinese government than open-door policy towards Western coroporations
- kept their investments to bare minimum needed to keep foothold in China
- bothered by regulations that restricted their freedom to hire and fire labour, buy and sell commodities, remit profits out of China
- overseas Chinese could bypass most regulations
- familiarity with local customs, habits and language; manipulation of kinship and community ties; preferential treatment received from CCP officials
- investment by overseas Chinese (mainly Hong Kong and Taiwan) far exceeded that of Western and Japanese corporations
- 1990: Hong Kong/Taiwan: 75% of all foreign investment; Japan: 5%
- investment by Japan grew rapidly after that (24% in 1993), but this followed rather than led the boom of foreign investment in China
- as Chinese ascent gained momentum under its own steam in 1990s, Japanese, US and European capital flocked ever more massively to China
- total foreign direct investment:
- 1990: $20b
- 2000: $200b
- 2003: $450b
- "But if foreigners were investing, it was only because the Chinese were investing more"
- foreign capital jumped on the bandwagon of an economic expansion which it neither started nor led
- foreign capital needed/needs China far more than China needs foreign capital
- US companies face simple imperative: invest in China to take advantage of country's cheap labour and its fast-growing economy, or lose out to rivals
- before: China just manufacturing center; now: China place to develop and sell high-tech goods
- capacity of Chinese government to dictate to (rather than being dictated by) foreign capital the terms of access to Chinese labour, entrepreneurship and markets has been essential ingredient of success of Chinese economic reforms
