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Overseas Chinese are a valuable global resource to China

2 September 2013

Christopher Barrow of the Metropolitan Safe Custody group argues that, whilst migration flows from mainland China to high-income countries will continue to grow, the Overseas Chinese community is an increasingly important resource.

Last month, our editorial focused on the growing non-resident Indian community of 27 million people. This paper puts the spotlight on 50 million overseas Chinese. The sharply contrasting histories of India and China have resulted in strikingly distinct patterns of migration. Whilst three-quarters of the world’s overseas Indian population have settled fairly evenly across four regions, three-quarters of offshore Chinese are concentrated in the Asia Pacific region (with most of the balance settled in North America).     

The theme of our recent article “Overseas India expands as Domestic India slows” was captured in the title. The economic slowdown in India (together with its well-known problems of bureaucracy, corruption and infrastructure) has significantly increased emigration to the likes of Dubai, Singapore, North America and the UK.  By the same token, will mainland China’s recent slowdown, exacerbated by its towering debt problems, have a similar effect?  There are many drivers that influence the multiple causes of outward (and inward) migration. A key factor is the level of domestic economic activity. Low growth reduces opportunities at home, thus encouraging emigration and potentially discouraging the return of migrants.

Another major factor is demographic. China (like India) has a much younger age profile than most developed “destination” countries that continue to experience shrinking working-age populations. This is especially the case in Europe, but also applies to North America. This is likely to lead to continued relative openness to immigration by high-income countries, given the need to sustain their labour forces in the face of declining population growth rates. This, in turn, will potentially encourage further Chinese migration, especially during the current period of declining domestic demand for employment.

Overseas Chinese by Country
(excluding Hong Kong, Taiwan, Korea & Tibet)
	Country	Chinese	% x	% x
		Population	Country	Global
1	Thailand	9,392,792	14.25	18.79
2	Indonesia	8,800,000	3.70	17.60
3	Malaysia	6,960,900	23.36	13.92
4	US	3,794,673	1.20	7.59
5	Singapore	2,808,300	52.99	5.62
6	Myanmar	1,637,540	3.07	3.28
7	Canada	1,346,510	3.84	2.69
8	Peru	1,300,000	4.26	2.60
9	Philippines	1,146,000	1.17	2.29
10	Russia	998,000	0.70	2.00
11	Vietnam	970,927	1.09	1.94
12	Australia	866,200	3.73	1.73
13	Cambodia	782,600	5.18	1.57
14	France	700,000	1.07	1.40
15	Japan	674,871	0.53	1.35
16	UK	506,000	0.79	1.01
SUB-TOTAL		42,685,313	7.56	85.37
GLOBAL TOTAL		50,000,000

Mass emigration from mainland China occurred from the early 19^th century to 1949 as a result of wars, starvation and political corruption. This resulted in a huge exodus of poorly-educated Chinese immigrants into South-East Asia, as well as North & South America, South Africa and Australia. The above table reveals the extraordinary extent of this human flight to Thailand, Indonesia, Malaysia, Singapore, Myanmar, the Philippines, Vietnam and Cambodia. Around 32.5 million ethnic Chinese are estimated to live in these 8 countries, a conservative estimate that excludes the substantial number of mixed-blood Chinese families in these countries. Our table’s total 50 million Overseas Chinese does not include a further population of over 30 million ethnic Chinese, who live outside mainland China, in Taiwan (over 23 million), Hong Kong (6.5 million), South Korea (700,000) and Tibet.  

Just as millions of families have migrated from the countryside to urban areas in China, growing numbers of young, educated migrants have moved from China’s coastal provinces (notably Guangdong) to the world’s major cities. Besides the traditional Asian destinations, such as Hong Kong, Singapore and Bangkok, these migrants have a strong appetite for North America, especially New York, San Francisco, Los Angeles, Toronto and Vancouver (see table below).

Overseas Chinese by City
(excluding Hong Kong & Taipei)
	Metropolitan	Chinese	% x	% x
	Area	Population	City	Global
1	Bangkok	4,367,000	29.98	8.73
2	Singapore	3,940,000	74.17	7.88
3	Kuala Lumpur	1,818,700	31.91	3.64
4	Jakarta	1,633,539	5.83	3.27
5	New York	682,265	3.61	1.36
6	San Francisco	592,865	7.08	1.19
7	Toronto	537,060	9.62	1.07
8	Ho Chi Minh	520,000	5.78	1.04
9	Los Angeles	473,323	3.69	0.95
10	Vancouver	437,524	18.91	0.88
SUB-TOTAL		15,002,276	18.17	30.00
GLOBAL TOTAL		50,000,000

 

Recent international flows of migrants from China (and India) have been disproportionately drawn from the young, skilled and educated. According to some US reports, three-quarters of Indian immigrants and nearly a half of Chinese immigrants into the US have a tertiary education. The indications are that this trend will continue since highly-skilled individuals are generally more welcomed than low-skilled migrants, especially in countries with quality-selective immigration policies, such as Canada and Australia. The US system of visa allocations, favouring specific sectors such as IT, scientific research and engineering, will also continue to attract large numbers from China and India.   

Ultimately, as China catches up with the developed world in terms of per capita income and economic development, the pattern of international migration will change. Millions of ethnic Chinese overseas, especially those with deep-seated roots in mainland China, will shift their attention back to their homeland. China’s rapid economic growth during the past decade has already attracted some reverse flows of migrants. That trend may temporarily be affected by the recent economic slowdown and the country’s excessive reliance on bank lending. However, the economic impact of the Overseas Chinese community should not be underestimated. With an estimated US$2 trillion of liquid assets, over US$50 billion in annual remittances (into China) and a prominent role in many of South-East Asia’s business sectors, China possesses a very valuable offshore resource. As Overseas Chinese become more affluent, not least the more recent wave of graduates in the West, they will increasingly invest in China and provide not only financial resources, but also valuable cultural networks and business ideas.