The growth of the Chinese economy in the 1990s built upon the
Open Door policy. This encouraged private foreign investment in the
form of joint ventures centred initially on four Special Economic
Zones in southern China. At the same time, the PRC began accepting
multilateral and bilateral foreign aid. Trade not only expanded rapidly,
but was diversified as well. By 1989 the Soviet Union was China’s
fourth largest trading partner (not counting Hong Kong), behind
Japan, the US and West Germany. In the second half of the 1980s,
trade rose to average over a quarter of Gross National Product for the
first time in the history of the PRC.^9
One thing of note about this rapid increase in trade was that a
substantial proportion of it was in the hands of overseas Chinese in
Taiwan and Southeast Asia. Trade was indirect in the case of Taiwan,
so figures were impossible to pin down, but the total value of trade
between the PRC and Hong Kong was, by 1989, running at close to
double that for Japan, China’s next most important trading partner. Of
the countries in Southeast Asia, only Singapore ranked (at number
six) among China’s top dozen trading partners, though trade was
rapidly increasing with other Southeast Asian states.
By the end of the 1980s, a rising proportion of foreign direct
investment (FDI) was also coming from overseas Chinese, including
Taiwan. In the 1990s, both overseas Chinese investment and invest-
ment from Southeast Asia rose absolutely and proportionally with the
fall-off of Western and Japanese investment following the Tiananmen
massacre. The principal jump occurred between 1991 and 1994, but
the increase continued steadily through 1998.^10 Again, actual figures
for overseas Chinese investment were difficult to determine because
most capital came via Hong Kong. It was equally difficult to decide
who was investing how much from where in Southeast Asia, as more
than three-quarters of all investment from the region came from, or
via, Singapore.
What is notable about the 1990s is, first, that both overall wealth
and the ownership of liquid assets by overseas Chinese expanded
A Short History of China and Southeast Asia