greatly as Chinese business groups took advantage of globalisation.
In fact, Chinese capital within ASEAN countries became more impor-
tant than combined foreign investment in driving the economic
development of Southeast Asia. While the share of foreign ownership in
Southeast Asian economies fell, overseas Chinese ownership increased
in absolute terms, even in countries like Malaysia where economic
policy favoured Malays over Chinese and Indians.
A second point is that the PRC deliberately set out to attract
overseas Chinese capital for the benefit of China, just as the Qing and
the Nationalists had done. Paradoxically, it was able to do this because
nationality was no longer an issue. Ethnic Chinese in Southeast Asia
were citizens of the countries in which they resided, with no longer any
call on China. Yet ethnic Chinese were encouraged to invest in China
because they were Chinese, so possessing such advantages as language
and business networks. They were prepared to invest in China in part
because, as relations warmed between China and the countries of
Southeast Asia, overseas Chinese felt less insecure about their ethnic-
ity (except in Indonesia).
Together these developments caused some concern to govern-
ments in Southeast Asia. At the same time as ethnic Chinese were
accumulating a disproportionate amount of the national wealth in
their countries of citizenship, primary loyalties came once again to be
questioned.^11 Even though Southeast Asian Chinese capital accounted
for less than 8 per cent of total, foreign direct investment in China in
1997, over the decade the proportion of total investment in China, as
compared with Southeast Asia, swung heavily in China’s favour. From
1985 to 1990, FDI in Southeast Asia ran at approximately double that
in China. By 1997, FDI in China was attracting almost double the
figure for Southeast Asia.^12 The implications for increasing Chinese
economic dominance of the region were obvious.
Fresh beginnings