China, India and Southeast Asia

Paths to development and state-society relations

Edmund Terence Gomez, Kee Cheok Cheong, Vamsi Vakulabharanam

• Publisher: Taylor & Francis
• Year: 2018
• eBook ISBN: 9781351214766
• Edition: 1
• Topic: Social Sciences
• Subtopic: Ethnic Studies
• Index: Social Sciences

This volume studies the outcomes of the two-way flow of investments and people between China and India, and Southeast Asia. These cross-border flows have led to new settlements in Southeast Asia from which new outlooks have emerged among locally born generations that have given rise to new forms of solidarity and identification.The advent of new generations of ethnic Chinese and Indians in Southeast Asia, with no ties to China or India, has spawned important debates about identity shifts which have not been registered by government leaders in Southeast Asia, China and India, as reflected in policy statements and investment patterns. Identity changes are assessed in forms where they best manifest themselves: in social life and in business ventures forged, or unsuccessfully nurtured, through tie-ups involving foreign and domestic capital. A state-society distinction is employed to determine how the governments of these rapidly developing countries envision development, through state intervention as well as with the employment of highly entrepreneurial ethnic groups, and the outcomes of this on their societies and on their economies. The chapters were originally published as a special issue in The Round Table.

Introduction

EDMUND TERENCE GOMEZ, CHEONG KEE CHEOK AND VAMSI VAKULABHARANAM

Introduction

Over the past two decades, two events in Singapore and China, involving their citizens, drew attention to debates about state intervention in development processes as well as state–society relations, intra- and inter-ethnic social relations (between local and foreign residents) and transnational investment and labour flows generated through state-led race-based discourses. In 1992, Singapore’s government, after encouraging Chinese-owned enterprises in Southeast Asia to venture actively into China’s rapidly burgeoning economy, set the example by using its own state-owned enterprises (SOEs) to invest in the mainland. One core project, the Suzhou Industrial Park, involving co-investments by China’s SOEs was, by Singapore’s own admission, not successful because state leaders had failed to understand social relations involving local residents and foreigners even though both shared a similar ethnic identity.¹ In 2011, in Singapore, a migrant family from China lodged a complaint against their Singaporean Indian neighbour for cooking curry, as it emanated a smell they could not tolerate. When a government agency mediating the dispute ruled that the Singaporean Indian family could only cook curry when the foreigners were not at home, this led to an uproar in ethnically Chinese-dominant Singapore, resulting in a nationwide ‘Cook and Share a Pot of Curry!’ movement because of the need to affirm a ‘Singaporean’ identity.²

These two anecdotes should be set in the context of the core story of the last quarter of the 20th century: that of the rise of China and India on the world stage. Various kingdoms in the territory occupied by the current two states of India and China had flourished and attained global pre-eminence in such diverse areas as politics, social systems and science during their several millennia of history. In present times, it is in the arena of the economy that China and India have become increasingly renowned. The policies of these new political economic regimes in India and China have had far-reaching effects not only for these two countries in the past three decades but also for the global economy and other important players in the world, specifically the burgeoning economies of Southeast Asia.

Part of the current importance of China and India stems from geography; both are among a handful of ‘continental’ countries—those geographically so large that they occupy a major part of a continent. This has major implications for both economics (scale) and governance (decentralization) of society. Historically, it is this geography that contributed to the flow of peoples from India and China to other parts of Asia, including Southeast Asia, first as traders and subsequently as labour migrants. In contemporary times, a two-way flow of peoples and investments from India and China, on one hand, and from Southeast Asia on the other, and the impact both have had on each other has emerged as an intriguing socio-economic issue. Investment flows between Southeast Asia and China have been substantial, with important social, business and technological outcomes on the mainland. The flow of people from China and India is having major implications on employment and state–society relations in Southeast Asia, a region that since the 1930s has made it extremely difficult for migrants to become citizens. This stringent citizenship policy was recently reversed in Singapore, though not in other parts of Southeast Asia. This policy change, which had serious ramifications in terms of how Singaporean society now views the state and its economic agenda, was done to secure the scale and kind of human capital presumably needed to continue generating growth in the island state.

Lacuna

A major lacuna to be filled in this special issue then is this: Southeast Asia in China and India, and China and India in Southeast Asia—the outcomes of this two-way flow of investments and peoples. However, we recognize that an assessment of this lacuna necessitates a study of China and India from a historical perspective. Both countries have been characterized as ‘civilization’ states.³ These are states within which entire civilizations were located and had given these countries and their peoples their identity and coherence. These identities have been transplanted to Southeast Asia, through trade in the pre-colonial period, for employment during colonial rule and as investments since the 1980s. These cross-border flows over history have led to new settlements in Southeast Asia from which new outlooks have emerged among locally born generations that have given rise to new forms of solidarity and identification. The advent of new generations of ethnic Chinese and Indians in Southeast Asia with no ties to China or India has spawned important debates about identity shifts⁴ which have not been registered by state leaders in Southeast Asia, China and India, at least as reflected in policy statements. For example, since the early 1990s the governments of China and India have actively called for investments from what they see as the Chinese and Indian ‘diaspora’ of Southeast Asia, presumably because of the ties of these ethnic groups to their ancestral ‘motherlands’.⁵

Policy-based discourses on diasporas are primarily constructs of politics and business action rather than the product of inherited value systems imported from the migrants’ place of provenance. The presumption that ethnic Chinese and Indians in Southeast Asia can be seen as a ‘diaspora’ has been built by state leaders on the idea that common ethnic identity can be employed to encourage investment flows. The governments of China and India have actively advocated this idea with the support of Southeast Asian leaders such as Singapore’s Lee Kuan Yew and Malaysia’s Mahathir Mohamad. In the process, forms of employment of the term diaspora have created the notion that ethnic Chinese and Indians outside China and India, respectively, have a ‘homeland’ which is not the country of their birth. This idea that ethnic Chinese and Indian communities in Southeast Asia have a sense of belonging to China and India because they share a common ethnic identity has been challenged.⁶ However, how identity shapes intra-ethnic relations, employment patterns and investment opportunities when citizens of India and China come into contact with ethnic Indians and Chinese in Southeast Asia has not been reviewed adequately in comparative perspective. In this study, identity changes are assessed in forms where they best manifest themselves: in social life and in business ventures forged, or unsuccessfully nurtured, through tie-ups involving foreign and domestic capital.

Multiple Dimensions

This special issue, which has six articles, with two each focusing on China, India and Southeast Asia, deals with different dimensions of this question of state–society relations in these regions. These dimensions relate to the sources and consequences of income distribution, technological capacity and the impact of ethnic communities on their areas of historical origin (China and India) and the countries of their birth (Southeast Asia). These articles highlight the complexity of state–society relations that lies beneath Joel Migdal’s (2001) broad classification of state-in-society relations. While there is a huge body of literature on the role of the state in East Asia, South Asia and Southeast Asia, and correspondingly on economic and social processes and social change in these regions, there has rarely been a careful effort by scholars to engage in analysing state–society interactions as a focal topic in the broad spirit of Migdal (2001).⁷ Yet, these interactions, and how they have evolved with rapid industrialization, are essential to understanding the mechanics and consequences of development models.

The countries reviewed in this special issue, with the sole exception of China, fall in the list of Commonwealth countries, viz. India, Malaysia and Singapore. The inclusion of China along with these three Commonwealth countries was motivated by two important considerations. First, China has, over the last three decades, emerged as the world’s second largest economy and now actively invests in Commonwealth countries. China investments in Malaysia have become quite important for this Southeast Asian country’s economic development while highly trained Chinese human capital has been crucial for the growth of key fledgling industries in Singapore.⁸ Second, the growing immersion of companies and people from China in Southeast Asia, particularly in multi-ethnic Malaysia and Singapore, is extremely interesting because of the presence in these countries of a huge ethnic Chinese population; this is an issue of great interest to other countries in the Commonwealth.⁹ Furthermore, for these two reasons, issues surrounding economic and social inequality in China can have a bearing on Commonwealth countries. Put differently, the form of economic development and social change in China has become central to the unfolding histories of economic development in Southeast Asia and to state–society relations of these countries. By mapping this particular configuration of economic development and state–society relations in this special issue, we hope to highlight important concerns within the Commonwealth as well as the relations between these countries and a key player in the non-Commonwealth global space in the coming years and decades, China.

In the articles that follow, the first two outline the historical development of the economies of China and India. These papers review differing forms of state intervention to generate economic growth with a focus on the implications of rapid modernization on these societies, including the emergence of new wealth, income and spatial inequities. While these papers review forms of state intervention, they also draw attention to China and India’s similar employment of neoliberal-type policies in combination with state intervention, an indication of the mix-and-match approach to policy planning to drive economic growth. The second set of papers reviews investment flows between regions. The focus of one study here is on foreign investments in China and the implications of this on economic and technology development. The second study in this set deals with investment flows from China to Southeast Asia, and vice versa, with emphasis on Malaysia as a case study. This paper traces the employment of SOEs by the governments of China and Malaysia to facilitate investments that include privately owned ethnic Chinese capital. These two papers devote much attention to business development and the methods deployed by the state to link private and public capital, including through SOEs, to raise investments for infrastructure and technological development projects. The third set of papers concentrates on the issue of identity as viewed from the perspective of these states. The first paper reviews India, assessing specifically public policies to draw investments from the Indian ‘diaspora’. The second paper in this set deals with outcomes of offering employment and citizenship to peoples from India and China in Singapore.

The Centrality of State–Society Relations

A long history, involving state–society relations, which must surely be an important context for discussions of the development of China and India in modern times, is not much in evidence in the growing body of discourse on their rise. Indeed, comparing these two countries is of particular interest because of the starkly divergent paths they took, and to an extent still take, to achieve the impressive development the world now recognizes. A major subtext of this comparison is the competition between the world’s largest democracy and its most populous authoritarian state, with supporters of the former arguing that its ideology would ultimately triumph.¹⁰ This contest applies also to economics, with free markets pitted against state control. Although India is no Hong Kong, its home-grown entrepreneurs have been considered a more viable model than state-led entrepreneurship in the long-run (Huang and Khanna, 2003, p. 81).¹¹ This, as well as a host of other characteristics, such as fixed investment (Rattner, 2013), national savings, demographics (Herd and Dougherty, 2007) and pool of human capital (Sen, 2013), are deployed as the bases for comparing both countries. While the purpose of much of these studies was to determine which country was superior, this comparison of experiences and the contexts, strategies and policies that led to them help inform the ongoing debate on equitable social and economic development.

The role of the state looms large in this study, in terms of how it has structured economic development in these countries and in terms of how governments are fostering transnational ties involving local and foreign enterprises through business tie-ups. Crucially too, we are dealing with far stronger states than conventional definitions of such states imply, primarily in the context of China, Malaysia and Singapore, three of the core countries under study here. All three countries have been classified as single party dominant states.¹² These two Southeast Asian countries also have among the largest ethnic Chinese and Indian communities in the region, if not the world.

The literature on development models is dominated by narratives of the role of the state, of which the developmental state advanced by Chalmers Johnson (1982) writing about Japan represents one end of the continuum of state–society relations. Southeast Asian countries, along with China and India, have deployed models that involved an extensive state role. These Southeast Asian models have a major commonality with the Chinese and Indian models, i.e. the heavy hand of the state in specific areas of economic activity and even social life, as indicated in the population policy of Singapore and the employment of diaspora-based discourses to facilitate investment flows. Thus, while the state’s role is undoubtedly important, no less vital is the society which is the target of state policies and with which the state interacts. Yet, there has been precious little systematic work done that integrates the work of developmental state theorists and those dealing with state–society relations.

We therefore adopt not merely a statist approach, but a more eclectic framework that helps bring into perspective key transformations in society, a reason why Migdal is helpful here. Migdal (2001) makes the crucial point that societies are not ‘static’ formations but are constantly ‘becoming’, a logical reasoning in the context of rapidly modernizing India, China and Southeast Asia. It is because of these states’ poor understanding of these new ‘becomings’ that public policies are out of sync with the social realities of their societies. The focus of this study is based on a theoretical employment of Migdal’s (2001) state-in-society perspective with an empirical focus on developmental state outcomes through an assessment of technological outputs, business evolutions and intra-ethnic Indian and Chinese relations.

This approach involves understanding how the nature and structure of the state inform public policies that have a significant bearing on issues such as investments, transnational flow of labour, intra-ethnic ties and citizenship. As Migdal (2001, pp. 15–16) further notes, the state can be understood by the actual practices of its multiple parts. In the context of China and India, each with its specific societal structure and relationships, how the state has been and continues to be constructed and how this construction informs these states’ economic and social development need to be properly understood.

A state–society distinction is employed to determine how the governments of these rapidly developing countries envision development, through state intervention as well as with the employment of highly entrepreneurial ethnic groups, and the outcomes of this on their societies and on their economies. We adopt here neither a top-down nor a bottom-up approach; rather, it is an approach that focuses on understanding what happens when different societies constituting members of the same ethnic groups meet and what the consequences of these meetings indicate about the state and its policies, particularly when governments actively encourage transnational investment ties and labour flows.

China and India provide important studies of state–society rel...

Table of contents

• Cover
• Half Title
• Title
• Copyright
• Contents
• Citation Information
• Notes on Contributors
• 1. Introduction
• 2. Growth and Distribution Regimes in India after Independence
• 3. Income Inequality and Economic Growth in China in the Last Three Decades
• 4. Technology Catch-up with Chinese Characteristics: What Can Southeast Asia Learn from China?
• 5. State, Society and Enterprise Development: Southeast Asia–China Investment Flows
• 6. Diaspora, Development and the Indian State
• 7. The Influence of China and India on Smaller Nations in Southeast Asia: A Study of Singapore
• Index