Wealth hazards - Chinese citizens in Southeast Asia; includes related article about assimilation of Chinese peoples in Thai culture

National Review, Nov 21, 1994 by G. Bruce Knecht

WEDDING receptions for wealthy Indonesian-Chinese are always lavish, and the one I attended in Jakarta's Sahid Jaya Hotel had more than 2,500 guests. As I moved to the front of an interminable line of well-wishers, I thought I was the only non-Chinese in the giant ballroom. But then a powerfully built young man with a dark complexion cut into the procession just a few places ahead of me. It was Hutomo (Tommy) Suharto, the youngest son of Indonesia's president, arriving to offer his congratulations.

As Suharto ascended to the elevated stage where the wedding party was gathered, the line stopped moving and loud conversations turned into whispers. A photographer was prepared to record the moment, but it appeared that no one felt comfortable telling Suharto where to stand. Finally, after several awkward formal shots in which there were no smiles, Suharto strode toward the nearest exit, and the line began moving again.

The encounter reflects the strange status of the seven million ethnic Chinese who live in the world's fourth most populous nation. On the one hand, they have at least a civil relationship with the country's all-powerful ruling family, and they have amassed great wealth. On the other hand, Indonesian-Chinese live in perpetual fear. Although there have been only a handful of violent outbursts in the last decade, widespread resentment of the visibly foreign element in Indonesia's midst leaves the Chinese uncomfortably dependent on the 71-year-old president for protection.

This pattern is repeated throughout Southeast Asia. The 28 million ethnic Chinese who are scattered across the region are economic miracle workers, making crucial contributions to the rapid development that has characterized Southeast Asia during the last forty years. In most of their adopted countries, the achievements of the ethnic Chinese are out of all proportion to their numbers. In Indonesia, where they are less than 4 per cent of the population, they have 75 per cent of the wealth. In Thailand, Chinese represent 8 per cent of the population but control 80 per cent of the wealth. The numbers are even more amazing in the Philippines: less than 2 per cent and 70 per cent. Even in the backward economies-Burma, Cambodia, and Vietnam-Chinese entrepreneurs are behind the vast majority of private business ventures.

At the same time, however, resentment of their wealth-combined with gnawing questions about their patriotism and religious incongruities-has created undercurrents of tension and self-fulfilling cycles of distrust. For example, Chinese living abroad, nervous about potential confiscation, keep much of their wealth, estimated to be anywhere from $200 billion to $500 billion, hidden outside of the countries where they live, a tremendous lost opportunity (and potential source of contention) for capital-hungry nations.

Divided Loyalties

THE question of divided loyalties is bound to become increasingly pointed as the overseas Chinese invest more of their assets in their mother country. For China, the importance of its rich alumni network cannot be overstated. China would be nowhere without the overseas Chinese," says Robert Lloyd-George, a Hong Kong-based money manager. He says overseas Chinese account for 80 per cent of the $25 billion in direct foreign investment that has flowed into China since Deng Xiaoping set out to liberalize its economy.

But what is good for China may be troublesome for its offspring. Overseas Chinese have always sent remittances to their relatives in China, but if Southeast Asia's lengthy run of economic growth were to falter in the face of substantial China-bound capital flower if overseas-Chinese conglomerates were to set up businesses in China that started competing with older ones elsewhere-simmering animosities could quickly pass the boiling point. Deng's government recognizes the danger. In public, Peking will reject totally the idea that an overseas Chinese network exists," says one Asian diplomat. They know that if they said anything, there would be uprisings in Indonesia and Malaysia."

Every Asian businessman has a theory as to why most of the region's wealth ended up in Chinese hands. Not surprisingly, the old truism that Chinese work harder than anyone else and that they are instinctively entrepreneurial is the most popular. But Chinese shade the traditional hypothesis somewhat by suggesting that they are simply more single-minded: that they are motivated less by religion and other abstract" ideas about how life should be led than by the pragmatic imperative of providing for their families. "Entrepreneurship is not the reason. It's the result," says Emil Nguy, an Indonesian-Chinese who is the managing director of Lippo Investments, a large Indonesian company. He nonetheless acknowledges that immigrants are unusually driven.

Significant Chinese emigration began in the latter half of the nineteenth century. Moving to countries that prohibited them from owning agricultural land or holding government jobs, Chinese naturally gravitated toward business. And since there was a limited amount of indigenous commerce in these traditional agricultural societies, the Chinese immigrants-who had relatively sophisticated understandings o trade and mathematics, even though they came from the lowest levels o Chinese society-were well equipped to fill the void.