SOSC 300K

1. SOSC 300K Lecture Note 12 From the “East Asian Miracle” to the “Rise of China”

2. Main topics • 1. Review: East Asian development from the World War II; the current wave of globalization and the “rise of China” • 2. Theoretical concept on an economic region (Fernand Braudel) • 3. The empirical discussion on Hong Kong and the “Greater China Economic Sphere” (Gary Hamilton) • 4. Transnational capitalism (Hsing You-tien, Vivien Wee)

3. The “East Asian Miracle” (review) • 1. Economic recovery of Japan from the 1950s: Japan became the “flying geese” of other Asian countries • 2. The “four tigers” • 3. Postreform China (from 1978) and Southeast Asia

4. Capitalism • Gary Hamilton’s concept of capitalism is adapted from Fernand Braudel’s theory • The lowest level--material life: everyday economic activities, barter, face-to-face exchange, etc. • The middle-level--market economy: economic exchange through the market institute; perfect competition • The highest-level--capitalism: the layer of monopolistic commerce; the attempt for some people (particularly political or economic elites) to control the economic activities

5. Demarcating an economic unit • Nation-state or any political sovereignty is not an absolute line to demarcate the boundary of economic activities • Cf. Immanuel Wallerstein’s world-system paradigm • In Hamilton’s words, “don’t think of capitalism in terms of countries, but rather think of capitalism in terms of people, firms, money, products, industries, and the interrelationships among these” (Hamilton, 1999: 14)

6. Maritime China as an economic unit • The historian Anthony Reid applies the concept to demarcate the region around the South China Sea as the economic zone of “maritime China” between the 16th-19th century • Hamilton follows this concept to demarcate this region as the region of “Greater China Economic Sphere” where Chinese capitalism nurtured

7. A. Chinese model: based on bottom-up individual and family-based strategies of seizing opportunities wherever they exist (family enterprises) Featured by small and medium-sized firms; family-centric business networks B. Japanese model: top-down corporatist strategies of linking state administrative capabilities with elite economic opportunities (e.g. the formation of zaibatsu) Industrialization Two trajectories of Asian capitalism

8. Maritime Asia under two trajectories of Asian capitalism The Japanese Empire 1943

9. Hong Kong and the “Greater China Economic Sphere” (before W. W. II) • Hong Kong was the center of Chinese capitalist expansion in the region from the early 20th. Century • Before World War II, most Chinese firms in Hong Kong were owned by people from or still living in districts in the Canton delta • These people jointly owned sets of firm including lodging houses, restaurants, insurance companies, import/export trade agents, banks, and investment and loan companies • These firms were designed to facilitate the flow of human and materials from Canton through Hong Kong to the rest of the world

10. Example of a Canton-based factory in pre-war Hong Kong • The Chow Ngai Hing Knitting Factory • Founded before 1911 by Chow Song Ting (周頌庭) in Canton • Set up the Hong Kong factory in 1927 • In 1934, the Shanghai office and the Singapore office were set up Source: CMU Zhinan, 1936: Section Yi and Section Bing-8 Source: Xinjiapo zhonghua zongshanghui guohuo kuoda zhanlan tuixiao dahui tekan, Oct. 1935

11. Hong Kong and the “Greater China Economic Sphere” (before W. W. II) • Hong Kong served as a capitalist funnel—remittances of money from Cantonese emigrants in Southeast Asia through Hong Kong to their home counties in Canton • In the “golden age of Chinese bourgeoisie” in early twentieth century China (defined by Marie-Claire Bergere between 1919 and 1927), Cantonese were the largest group of businessmen in Shanghai • --The Cantonese gathered in the Houkou (虹口) district in Shanghai

12. Hong Kong and the “Greater China Economic Sphere” (after W. W. II) • Hong Kong as an exceptional place where Chinese capitalism continued operating • --the Communist China: cut off the link with the external world • --S’pore and Taiwan: local capitalists had to give way to state capitalism • --Chinese capital in Southeast Asian countries: suppressed under the practices of economic nationalism (ethnic Chinese enterprises were discriminated institutionally)

13. Hong Kong and the “Greater China Economic Sphere” (after W. W. II) • What contributed to Hong Kong’s rapid industrialization after the war? • Manufacturing capital moved from Shanghai • Ample labor supply from refugees from mainland China • Respond to the changing global economy through linking up with the “big buyers” in the U. S., Great Britain, and Germany

14. Hong Kong and the “Greater China Economic Sphere” after the 1980s • Economic reform in China: foreign capital was welcomed to invest in mainland China from 1978 • Political stability and the relax of economic nationalism in Southeast Asia (particularly Thailand, Malaysia, Indonesia, and Singapore). Many of these overseas Chinese capital flew to mainland China • Hamilton: With Canton as its production base, “Hong Kong is again the center of this capitalist development”

15. Foreign investment in China by states Hsing You-tien, 1996: 241.

16. Institutional settings of the “Greater China Economic Sphere” • Hamilton’s assumption: Chinese ethnic ties could be directly translated into business connections • Hsing’s approach: the institutional settings • 1. Economic processes are socially structured by ethnicity, gender, and other social and institutional elements • 2. If the interpersonal networks are socially embedded and territorially specified, what would happen to the networks when the capitals expand from one territory to another?

17. Institutional settings • Economic autonomy of China’s local governments: • 1. the decentralization of economic resources from the central government to local governments at the county and municipality levels • Fiscal sovereignty and responsibility of local governments, esp. the Canton and Fujian provinces • These two provinces contributed to a huge lump sum of the revenue to Beijing; these two provinces could also retain a large portion of the foreign exchange which they earned from exports, tourism, and share of the remittances their residents received from abroad • Count on the business investment of overseas Chinese capital to fulfill the provincial fiscal responsibility

18. Institutional settings • 2. the increasing economic autonomy of local authorities and the active role played by local officials • Local officials could also be qualified partners for foreign capitals to establish joint stock ventures in China • Many Taiwanese and Hong Kong business people liked to make “flexible” deals with low-level mainland Chinese officials

19. Cultural affinity • Overseas Chinese business people such as those from Taiwan and Hong Kong can take advantage of the reform economy: the linguistic and cultural affinity • Interpersonal relationship • Flexible interpretation and implementation of laws (上有政策下有對策) • Gift exchange: overseas investors would be asked to sponsor an official’s personal expense (such as the education fund for his child)—the vague boundary between public and private spheres Chinese from Taiwan and Hong Kong feel that they can know the “cultures” better than other Chinese from Southeast Asia

20. “Cultural Economy” • The anthropologist Vivien Wee’s approach to explain the current wave of the growing Chinese business connections in the “Greater China Economic Sphere” • 1. Non-economic considerations come into play in economic practices • these non-economic considerations include ethnicity, nationalism, and kinship

21. “Cultural Economy” • 2. these cultural phenomena do not exist in a static, primordial state • for example, ethnic Chinese from Southeast Asia might lose their Chinese identity after W. W. II. • The World Huaren Federation does not even have Chinese-language web site

22. Wee’s View on “Chinese capitalism” • “Chinese capitalism”: not the manifestation of primordial identity and essentialist culture • Rather, any such phenomenon should be contextualized in the macro-politics of ethnicisation and the micro-politics of social interactions and individual agency • Though ethnic identity has long been regarded as the primordially embedded in business practices, ethnic identity can also be nurtured instrumentally to facilitate business practices • 

23. The “momentary growth of fraternity” • Flexible citizenship: anthropologist Aihwa Ong proposes to illustrate the local responses of the growing China-Southeast Asian economic ties • “Although citizenship is conventionally thought of as based on political rights and participation within a sovereign state, globalization has made economic calculation a major element in disporan subjects’ choice of citizenship, as well as in the ways nation-states redefine immigration laws” (Ong 1999:112) • Ethnic Chinese from Southeast Asia, Hong Kong, Taiwan and elsewhere now seek to benefit from the rise of China • 

24. Essential Chineseness? Cultural identity and ethnic affinity Instrumental/flexible identity? Economic strategies, profit-maximization? Chinese Ethnic Ties in the Making of Capitalism in China