OBOR's Success and the Link to the Chinese Diaspora

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Overseas Chinese may be the key to OBOR success.


A multitude of views have coloured the understanding of China’s One Belt, One Road (OBOR) strategy. Some view OBOR through the lens of geopolitical competition and are wary of China’s rise. Yet, the OBOR vision has intrinsic value beyond fears of Chinese geopolitical ambitions. This is especially so in regards to people-to-people connections in which the Chinese diaspora are inexorably involved.

Overseas Chinese are one of the largest and most enduring diasporas in the world and are expected to shape the political and economic landscape in the 21st century. This transnational Chinese community may prove to be one of the main determinants in securing the Chinese dream.

Overseas Chinese have an edge over other diasporas in the world when it comes to the Chinese market: personal networks or guanxi. Through these networks the ‘borderless economy’ has been a reality long before the globalisation discourse became popular. With these networking advantages, alongside the significant capital they have accumulated, overseas Chinese can become major lynchpins and beneficiaries of OBOR.

Some scholars have pointed out that a key tenet of Chinese foreign policy — non-interference in other countries’ internal affairs — might thwart China’s cooperation and proximity to its diaspora. Particularly during the 1980s, it was also a necessity for ethnic Chinese in ‘sensitive countries’ (such as Indonesia and Malaysia) to limit their investment activities in China in order to avoid accusations of disloyalty from their host countries.

Despite this, China’s enormous economic development over the past decade is truly intertwined with the continued coordination, leadership and financial control of the Chinese diaspora. Deng Xiaoping’s hallmark ‘reform and opening’ policy mostly attracted foreign direct investment from overseas Chinese rather than Western nations.

Referring to the data in the National Bureau of Statistics of China, Chinese tycoons — primarily those from Hong Kong, Macau, Taiwan and Southeast Asia — generated over 70 percent of China’s external trade and investment during the 20 years after the policy was announced in 1978.

The Confucian-rooted concept of guanxi has facilitated Chinese business groups in setting up transnational, regionally focused operations around relationships with other Chinese actors. This includes accumulating capital and knowledge as well as easing the venture process in mainland China.

Host countries’ sometimes virulent anti-communism was not tenacious enough to hinder the intransigent economic instinct of overseas Chinese to return to their roots.

OBOR itself rests on three primary pillars: utilising excess industrial capacity, nurturing a network of economic interdependence and seeking to maintain regional stability and prosperity. These can be viewed as the successor of China’s ‘Going Out’ (zou chuqu) policy that intended to deepen China’s access to foreign markets.

In the early stages of this strategy, the bulk of overseas investment was focused on trade and supporting businesses, such as marketing and distribution, which were largely executed by state-owned companies and the overseas Chinese. Therefore, in line with Beijing’s global-oriented macroeconomic policy, this worldwide network of businesses is likely to continue playing a rejuvenated role that bolsters the three pillars of OBOR.

Beijing’s approach to the overseas Chinese is also likely to ignite a new round of ancestral homeland ties. In the past, the ties between Beijing and ethnic Chinese business groups were based on business cooperation and had no political component. This made them reliant on guanxi — a highly informal network.

In the future, the greater political value placed on ties between China and its Asian neighbours are expected to shape the relations between overseas Chinese and the Chinese homeland. For example, in Indonesia, greater economic and political openness alongside the improved position of ethnic Chinese in Indonesia has furthered ties between Indonesian and Chinese business groups. These ties have been institutionalised through the establishment of the Indonesian–Chinese Entrepreneur Association.

Despite assumptions otherwise, the United States is not ostracised from OBOR. OBOR implies a new economic architecture, which some have interpreted as an effort by China to counter US-led trade agreements, such as the Trans-Pacific Partnership, that exclude China.

By establishing the Asian Infrastructure Investment Bank and designing OBOR in accordance with its historical trade route, the Silk Road, China has left out the United States and its allies such as Japan and Canada.

However, China and the United States must realise that the legacy of their bilateral relationship is not limited to formal trade and investment agreements. Tracing back their economic relationship since the 19th century, it is evident that the relationship has been driven by the role of Chinese labour in the United States’ infrastructure development.

The new global business relationship that Chinese business groups have come to concentrate on is provided by the Chinese diaspora in the United States, many of whom have prominent roles in the financial sector.

They have been catering for a single informal market for capital while positioning themselves as financier and go-between in lucrative business deals between government parties in China, overseas Chinese businessmen and US interests. Considering this, it is unlikely that the OBOR would deliberately exclude the United States.

Together, the United States and China will leverage a move into lucrative new markets, such as Africa. The next phase of expansion will trigger a massive reallocation of capital and overwhelm the existing investments in Africa. More importantly, for months to come, Beijing will likely shift focus from boosting Sino–African trade to strengthening direct investment in the Asia-Pacific region in exchange for resources.

Can overseas Chinese build China’s One Belt, One Road? is republished with permission from East Asia Forum

See also: Can the U.S. and China Achieve Mutually Assured Prosperity?