In mid-2002, the Prime Minister of New Zealand publicly apologized to the ethnic Chinese (Huaqiao) living in this country for the harassment they had suffered over the past hundred years, including a special tax to the New Zealand treasury. This seemingly insignificant fact actually shows how great the influence of Huaqiao (primarily economic) on the economy of various countries is now. If this is felt in New Zealand, it is all the more clear what the impact of ethnic Chinese on the economy of Southeast Asian countries, where there are more than 50 million of them.

Currently, the problem of forming a Chinese "common market" is very relevant ^.1 There is no doubt that China, due to the rapid growth of its economic potential and political weight, is at the stage of becoming a superpower. In an effort to catch up with and overtake the United States in absolute terms of GDP in the shortest possible time, Beijing is now preoccupied with solving major problems that go far beyond regional problems.

Due to the intensification of foreign economic expansion, understanding the aspirations of the Chinese in other countries of the region, and especially in neighboring Vietnam, becomes strategic and particularly relevant.

It is well known that Chinese immigration has had a great impact on the national composition of many Southeast Asian countries and in almost all countries-on the formation of the national bourgeoisie and the working class. In a number of Southeast Asian countries, the specifics of economic development consisted in the fact that trade and usurious capital was represented mainly by non-indigenous ethnic elements (Chinese, Indians, Arabs) ^.2

The history of migration of the Chinese population to the territory of modern Vietnam dates back almost two millennia. The first Chinese people began to settle in the country during Vietnam's thousand-year dependence on China (III century BC-VIII century AD). Later, after the Manchu dynasty reigned in China in the middle of the XVII century, many Chinese fled to various Southeast Asian countries, including Vietnam.

From the end of the 19th century to the beginning of the 20th century, migration began to undergo qualitative changes due to the active development of the colony by French capital, the emergence of capitalist relations in Vietnam, and the process known as the"awakening of Asia". One of the most important prerequisites for migration at that time was the need for labor resources to develop the natural resources of Southeast Asian countries. This mainly applied to Malaysia, Indonesia, British Borneo, Vietnam and, partly, Thailand.

In almost all countries of Southeast Asia, the Chinese population is one of the first places in terms of number after the main group of indigenous people. In the 70s of the XX century, up to 95% of all Chinese migrants living abroad were concentrated in Southeast Asia. In terms of the number of ethnic Chinese, only four countries in the region are ahead of Vietnam - Thailand, Indonesia, Malaysia, and Singapore.

People from China-Huaqiao, despite living in different countries of the region, do not forget their ethnicity and often help each other. This is especially true for the relatively well-off Chinese of Hong Kong, Singapore, and Taiwan, and their assistance to the Huaqiao, who live in less well-off countries such as Vietnam.

As a result of the analysis of the works of foreign researchers, such as Redding ³ or Amer ⁴, several social factors of economic success of foreign Chinese can be identified:

- strictly paternal relationships both within the same family and in the community as a whole;

- strong blood ties within the entire community as a whole; huaqiao helps not only relatives in another country, but also simply cares for their fellow tribesmen;

- unique organizational structure;

- ability to accurately predict certain events and prepare for them in time (this is largely due to the fact that the Chinese always have time to acquire a network of informants quite quickly);

- virtually no risk of fraud and foul play within firms;

- characteristic national traits - such as purposefulness, perseverance, figuratively speaking, "the ability to get through the eye of a needle".

Assistance from some Huaqiao to others is provided not only in the form of money transfers to relatives, but also in the form of direct private investment in those areas of economic activity in which the representation of their compatriots is the largest (both in quantitative and qualitative terms), as well as in those regions of Vietnam where the majority of Chinese live.

Foreign direct investment plays a major role in Vietnam's economy. They are regulated by the new version of the Law on Foreign Investment of 2000, which establishes four forms of direct investment: equity participation, joint ventures, enterprises with one hundred percent foreign capital and contracts on BOT (construction - operation - transfer) or on joint ventures (construction - transfer).

The chart (p.21) shows the volume of investment and the number of economic projects in Vietnam over the past decade. It shows that more than 3,000 projects were financed from abroad.

Sector in the economy with direct access to-

page 20

Foreign direct investment in Vietnam in 1991-2002 ⁵

Foreign direct investment accounted for 25 per cent of State budget revenues in 2001, but provided only 0.3 per cent of direct employment, although indirect employment through subcontractors or suppliers was slightly higher.

On the one hand, it is worth noting that in 1999 the rate of realized direct investment in Vietnam was 56 US dollars per 1000 US dollars of GNP. This is almost twice as much as the ASEAN countries as a whole ($21) and higher than in Thailand ($49), Malaysia ($47) and China ($41).

On the other hand, foreign direct investment attracted to the Vietnamese economy is very modest by regional standards. So, they make up only 2 percent of investment in the Chinese economy. But small volumes by these standards are quite significant for the economy of Vietnam, whose GNP in 2000 was $ 30.3 billion ^.6 The structure of investment by industry is shown in Table 1. Foreign and state - owned investments, directed primarily to industry and services, tend mainly to large cities-Hanoi, Haiphong and Ho Chi Minh City.

Investors from 73 different countries invest in Vietnam. Asian countries make up the vast majority-64 percent, Europe-21 percent, America and the Caribbean - 13 percent. The largest foreign investor between 1988 and 2002 is Singapore, with 254 projects worth US $ 6.9 billion in registered capital. Singapore is followed by Taiwan, Japan, South Korea, and Hong Kong. The top ten foreign investors are shown in table 2. Companies from these countries implement more than 75 percent of all foreign projects in Vietnam.

Given the great importance of foreign direct investment for the country's economy, it is very important to assess how significant the role of the Chinese diaspora is here. It is clear that ethnic ties are only one of the different types of business and social relationships. Recently, however, ethnic relations have become increasingly important, especially in the case of Chinese ethnic networks. In the economic literature, there is a claim that the economic success of the Southeast Asian countries is largely due to the Chinese diasporas, which have various forms of voluntary associations in the countries of the region. These associations are traditionally based on kinship ties, common dialects, and place of origin in China.

Some modern researchers have attempted to mathematically analyze the role of the Chinese ethnic network in promoting foreign direct investment (FDI) in the markets of different countries of the world (Vietnam is considered as one of such countries). Thus, we studied the bilateral relations of ⁷¹ countries in order to find the dependence of investment volume on the number of Chinese diasporas in these countries8 . The main questions that researchers are trying to solve in these works relate to the following problems::

1. Whether ethnic Chinese networks have a significant positive impact on the volume of bilateral FDI.

2. Are there any differences between ethnic Chinese networks in Southeast Asia and other regions?

3. Is there a specific impact of the Chinese ethnic diaspora on the economy in developing countries?

A regression analysis conducted by scientists from the Hong Kong Institute of Economics and Business, which takes into account the relationship of all countries in pairs (4970 combinations) with a Chinese population in their territories, under the influence of-

Table 1

Distribution of foreign direct investment in Vietnam by economic sector

page 21

Table 2

The largest investors in the Vietnamese economy (data as of July ², 2002.7 )

confirms the important role of Chinese ethnic diasporas in bilateral investment. An increase of 1 percent in the ethnic Chinese population was found to correspond to an increase in FDI between the two countries of about 0.32 percent.⁹ Moreover, if we consider separately from other regions of the Southeast Asian country, where 90% of all ethnic Chinese living outside the PRC live (see Table 3), then for them this figure will be even higher and will amount to 0.44%.

Southeast Asia has the most stable Chinese business connections. Ethnic organizations provide foreign investors with important information that may be difficult to access or very expensive if obtained otherwise.

An ethnic network can also be used to speed up or reduce the cost of various bureaucratic procedures. According to this assumption, ethnic ties will be more effective in countries where economic state institutions are poorly developed, that is, in developing countries, the Chinese ethnic diaspora will play a more significant role in the economy. However, studies have shown that in some cases in countries with a "high" level of bureaucracy, ethnic ties also have a major impact on the promotion of investment in the economy.

The disadvantage of the works discussed above is that the calculated regression coefficients have to be taken on faith, since there are no initial data for calculation. Only data on the size of the Chinese population in different countries of the world are given, some of which are questionable (for example, the number of Chinese in Vietnam in 2000 was estimated at 2 million people, which is almost twice the real figure).

We were able to compare data on the size of the Chinese population in Southeast Asia and some countries from other regions of the world ¹¹) with information on the investment of these countries in Vietnam ¹²) (see table 4). Correlation coefficients were calculated using EXCEL spreadsheets.

The correlation coefficient between the size of the Chinese population and the number of direct investment projects in Vietnam was 0.74 for all countries considered, which indicates a high direct relationship between these data. If we confine ourselves to considering investments in Vietnam only from the countries of the East and South-East Asia region, this indicator turns out to be slightly higher - 0.86, and if we exclude Indonesia, the correlation coefficient increases to 0.92, which is quite understandable. After the events of 1998, while maintaining a huge Chinese diaspora, there was a massive outflow of capital from this country.

The correlation between the size of the Chinese population and the volume of capital investment is much weaker - about 0.48. This can be explained by the fact that ties between Chinese communities contribute primarily to the creation of projects. As for the money supply, it depends less on the number of Chinese living in a particular country, and more on the investment potential of the country. So, if we consider the average cost of investment projects in different countries (column 3 of Table 2), it turns out that in many developed countries with a relatively small number of Chinese diasporas, the cost of projects is higher (often by an order of magnitude) than in countries with a high number of ethnic Chinese.

It is noteworthy that the largest investments are made in the regions of Vietnam with the largest Chinese diaspora (see table 5).

Calculated similarly to Table 4, the correlation coefficient between the size of the Chinese population in different provinces of Vietnam and the number of foreign projects implemented in them turned out to be very high-0.93. This allows us to speak with a high degree of confidence about the influence of Chinese communities on attracting foreign investment.

Interestingly, there is a direct correlation between investment and the number of Chinese provincial communities, and the correlation coefficient is also quite high-0.77. However, as in the case of foreign countries, it is lower than for the number of

Table 3

Huaqiao in Southeast Asia (1995) ¹⁰

page 22

Table 4

Global Huaqiao population (1990 data) ¹³) and private investment from these countries in Vietnam (up to July 2002) ¹⁴ )

Table 5

Structure of foreign investment in different regions of Vietnam. Data as of July 2, 2002 ^15,16 )

projects. If we exclude Hanoi from consideration, the correlation coefficients reach almost limiting values-0.99 and 0.95, respectively. This can be explained by the fact that Hanoi attracts additional investment as a capital, which somewhat blurs the overall picture.

Thus, the growing influence of Huaqiao on the Vietnamese economy (and on the economy of the entire Southeast Asian region) is beyond doubt. The Chinese are constantly increasing the size of their investments in the countries of the region. Even the most severe financial crisis did not force them to cut off capital flows, but only temporarily limit them.

Vietnam is undoubtedly one of the most promising countries in terms of attracting Chinese investment. More than one million (estimates vary from source to source) ethnic Chinese living in Vietnam guarantee a smooth flow of Chinese capital to at least those areas of the country where they live and to those sectors of the economy that are the objects of their greatest interest. In other words, the Chinese community in Vietnam is the engine of the country's economic development in areas where its population is particularly large.

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^{Gelbras V. G.} 1 Is the Chinese common market forming? // ASEAN and the leading countries of the Asia-Pacific Region: problems and Prospects. Moscow, "Humanitarii", Academy of Humanitarian Studies, 2002, p. 294.

^{Simoniya N. A.} 2 Trade and usury capital in Asia, Moscow, Nauka Publ., 1973, p. 22.

³ Redding S.G. The Spirit of Chinese Capitalism. Berlin: W. de Gruyter, 1990, p. 43. Cit. по: Lowe S. Incomparable Management Practices. The Comparative Advantage of Chinese Business. http://marketing.byu.edu/htmlpages/ccrs/proceedings99/lowe.htm.

^{Amer R.} 4 The Chinese Minority in Vietnam Since 1975: Impact of Economic and Political Changes. // A Malaysian Social Science Association Publication, 1992, N 22, p. 1 - 39.

^{Le Dang Doanh.} 5 Foreign Direct Investment in Viet Nam: Results, Achievements, Challenges and Prospects. // International Monetary Fund. Conference on Foreign Investment, Hanoi, August 16 - 17, 2002, p. 2 - 3.

⁶ Ibid., p. 3.

^{Freeman N. J.} 7 Foreign Direct Investment in Vietnam: an Overvicw.//The Workshop on Globalisation and Poverty in Vietnam. Hanoi, 23 - 24 September 2002, p. 18.

^{Tong S.Y.} 8 Foreign Direct Investment and Ethnic Chinese Networking. // HIEBS Working Paper, 2001, N 1024, p. 2.

⁹ Ibid., p. 10.

^{Yeung H.} 10 Wai-chung, Olds K. Globalizing Chinese Business Firms: Where are They Coming from, Where are They Heading? In The Glohalisation of Chinese Business Firms, Yeung H. Waichung and Kris Olds (eds.), London: Macmillan, 2000, p. 8.

^{Tong S.Y.} 11 Foreign Direct Investment... p. 28

¹² "Vietnam today". Tezyoi Publishing House: Hanoi, 2002, p. 28.

^{Tong S.Y.} 13 Foreign Direct Investment... p. 28.

¹⁴ "Vietnam today"... p. 28.

^{Le Dang Doanh.} 15 Foreign Direct Investment in Viet Nam... p. 5.

¹⁶ "Vietnam today"... p. 28.

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