Overseas Chinese is a term used to refer to the approximately 46 million ethnic Chinese staying outside of China, Hong Kong, Macau, and Taiwan. Most live in Southeast Asia, where they make up a majority of the population of Singapore and a significant minority population in Malaysia, Vietnam, the Philippines, Indonesia, and Thailand. The overseas population in those areas primarily arrived between the sixteenth and nineteenth centuries, mainly from the provinces of Hainan, Guangdong, and Fujian. During the nineteenth and twentieth Centuries, Chinese also migrated to Central and South America, and the United States, New Zealand, Australia, Canada, and the nations of Western Europe.

Overseas Chinese as a whole have retained their cultural identity and languages, as well as assimilated to varying degrees with the dominant culture of the country. They also dominate almost all the economies of Southeast Asia and have in one way or another played a paramount role in politics. During the Chinese revolution of 1911, most of the funding came from overseas Chinese. The People’s Republic of China and the Republic of China has always maintained cabinet level ministries to deal with overseas Chinese affairs and have some legislative representation for overseas Chinese.

Historical evolution of the Chinese diaspora

Chinese immigration first occurred thousands of years ago. Successive waves of immigration from China have resulted in the existence of subgroups among overseas Chinese, such as the new and old immigrants in Southern Asia, Latin America, Oceania, North America, Russia and South Africa. The mass emigration that occurred from the nineteenth century to 1949 was majorly contributed by wars and starvation in Mainland China, as well as civil unrest and political corruption. Many immigrants were illiterate or poorly educated coolies and peasants who were sent to labor in America, Southern Asia, Australia, Malaya, and many other European colonies.

Between 1850 and 1950s, an increasing number of Chinese workers, especially male peasants from coastal provinces, started leaving their homeland to seek employment opportunities in Southeast Asia. There was widespread instability and violence between the 1950’s and 1980’s in this region, shifting the destination of Chinese migrants to more industrialized areas including North America, Japan, Australia and Europe. Most of them were skilled workers motivated by the growing demand for cheap manual labor elsewhere. The process is still evolving, and Chinese immigrants have developed an increasing multi-skilled and multi-class profile at par with the requirements of whatever country they immigrate to.

Religious and economic concerns have also historically been major factors driving Chinese people abroad, for instance, the migration of the Buddhist pilgrims to Southern, Eastern, and Central Asia. Sustained growth has been a result of economic reforms in China, particularly the opening up policy enacted during the 1970s. As a result, there were major changes in all aspects of the society with labor flexibility and privatization leaving a large number of workers unemployed, unable to be reabsorbed by the internal market.

The polarization of the distribution of wealth, the consequent widening of the gap between the rich and poor, and also rural-urban mobility are all contributing factors to migration. Thus, people tend to migrate in search for a better quality of life (infrastructure and services) and also for integration in the areas of destination.

Recently, China has a number of professionals and students leave China. Currently, there are more than 5 million PRC nationals out of China either working or studying. Having sent over 2.6 million students overseas, China is the number one source of international students since 1978.

Global asset

Overseas Chinese make up a potentially significant asset for mainland China, their citizenship notwithstanding. They have total liquid assets estimation of $1.5-2 trillion. They possess a great amount of capital and also relationships and expertise that can be incorporated into the development continuity in the mainland as well as the entire world. Generally, overseas Chinese economic involvement with China is more than India’s with the Indian diaspora. Overseas Chinese are usually employed in farming, deforestation, and construction sectors while others run their own businesses in retail, importing and real estate.

The Chinese in Southeast Asian countries have established themselves in finance, manufacturing, and commerce while those in North America are in every profession from medicine to arts to academia. There was an article in Fortune magazine in 1987 which stated that most of the Asian wealth out of Japan was in the hands of the “so-called Overseas Chinese,” describing them as exceptionally enterprising people.

There are a number of billionaire and multi-millionaires businessmen among the overseas Chinese. Some notable names include Singapore’s Lee Seng Wee, Indonesia’s wealthiest businessman, Liem Sioe Liong, Hong Kong-based Y.K. Pao, and Li ka-Shing who has over the years acquired a net of $2.5 billion trading Hong Kong real estate and the founder and chairman of Formosa Plastics Group, Y.C. Wang.

China’s direct investment in the west started in the mid-2000s and currently, Chinese firms can operate in at least 35 out of 50 states in the US. The Chinese investment in the US also grew from less than $1 billion annually before 2008, to $5 billion in 2010. The growing Chinese investment in developed economies could open up new opportunities for private investment in China’s domestic market.

The changing commercial realities are the major contributing factor f the Chinese people looking to invest in the developed economies. Chinese firms have received the impetus to upgrade their technology, pursue high levels of the value chain previously conceded by foreign firms, and augment managerial skills and staffing to remain globally relevant and competitive. Investment overseas is just perfect since the developed economies will offer the regulatory environment, workforce, and assets that the Chinese multinationals are looking for. More investment flows should be expected in the coming years and the developed economies can expect to receive the substantial share of the $1 to $2 trillion in direct investment that China is going to make around the world in the coming decade.

The rising era of Chinese investments is definitely bitter-sweet for the western businesses. The emergence of these new Asian multinationals has obviously transformed the competitive landscape with the US firms finding new competitors. There is also enhanced competition for the scarce global assets, especially human talent.

Overseas Chinese encouraged to go back home

Despite the fact that India is ahead of China in total remittance amounts from its overseas Chinese population ( US $70 billion vs. US$ 50 billion annually), China is big on enticing talent and investment capital in such a structured fashion, especially in the areas below.


There is quite a number of successful steps taken by the Chinese government into attracting FDI from abroad, including setting up over 200 Chinese cultural centers and investor-attracting policies so that capital can flow into the manufacturing sector to help the diaspora be on par with the local Chinese government. In 2012, over 65% of the $25 billion of FDI was contributed significantly by the overseas Chinese population. Clearly, this demonstrates a strong investment activity level by Chinese living abroad.

Entrepreneurial and intellectual property

China has been big on getting its nationals to return back home and start companies. Initially, the students sent overseas were the brightest and most gifted in China. The high-value and scarce skills acquired overseas gave them an upper hand to get involved in China’s economic reforms upon return. Robin Li, a returnee entrepreneur who is now the second richest man in China has founded leading companies including Baidu, which is analogous to Google.

China has gone to great lengths to see to it that they attract returnee entrepreneurship, for instance by providing inducements and incentives such as a provision of preferential access to credit and banking, free office states in high-tech parks or real estate, streamlined regulatory processes, preferential tax treatment, and venture fund matching. China is experiencing the success of such incentives since returnees found about 1/4 of the tech start-ups available in China rather than local and international entrepreneurs.

Talent and labor

The number of Chinese students studying overseas catapulted since the millennium with a greater number of ambitious young people choosing to stay abroad. China has been working very hard to convince its overseas students to return and work in the mainland. The number increased from 25% in 2005 to 33% in 2010. Most of them cite the economic growth in China as well as the opportunity to be part of the success story as their main reason for coming back. The GDP growth is always a proposition so attractive to the entrepreneurs and investors and has also designed a fair amount of uncertainty and risk tolerance.

Policy development: keeping and attracting talent

The overseas Chinese community is a force to be reckoned with. It is such a dynamic economic force in their new-found countries and also scores high in education. China’s continued delivery of economic growth shouldn’t be the only challenge. It is inevitable that China has to create such a comprehensive package of attractive conditions for the wealthiest and smartest people who are anything but short of choices of where to stay and invest.

China cannot put all its bets on miracles, and as much as it’s now in a phase of an attractive growth story, it can’t afford to put its guard down. Leaders need to reconceive an attractive proposition for the next group of foreigners and overseas Chinese. President Xi is obviously ahead in countering the challenges via his new “China Dream” initiative which is focusing on transforming China. This will be through a broader vision incorporating national renewal, political reform, and a sustainable development vision with such a long-term mission of creating a better, stronger, and wealthier society.

To implement his vision will definitely require a return in top talent, the initial business styles to be done away with, and an environment for new ideas and businesses to be born. To achieve this, China has to work on the broad policy agenda which goes beyond migration and capital flow but touch on economic, political, and social issues that must be addressed for China to emerge an economically sustainable global leader.

Reducing China’s risk

China is at a scary position having passed the honeymoon period of showing admiration to China’s establishments and achievements as well as the global media putting it out there that China is quite a complex and difficult area for business.

Policy architects should redesign the system to reduce institutional and personal risk since with a less transparent playing field, talent and capital will keep seeking opportunities that are of lower economic risk abroad. China’s hurdles go beyond corruption. Hence, it has to terminate risk by bettering its red-tape and reducing entrepreneurship barriers.

Improvement on comparative and absolute returns

The US return to its economic health and also its exploitation option of shale gas structure poses quite a hurdle to China’s attractiveness, especially from a risk vs. reward perspective. The US has an upper hand since its domestic economy will be re-ignited, producing enough at home to get into global markets. As if the strong market performance disparity is not enough, the US stability in industry-level growth will aid in making the overseas Chinese and also foreign investors find it more attractive to exploit the US option than China where business and political issues always intersect.

Deregulation and Privatization

The next form of privatization and deregulation in China will offer the chance to attract more investment and talent. It targets two areas including first, sectors that are key drivers of innovation, growth and value creation in nations that are more advanced such as professional and business services, financial services, education and healthcare which cumulatively make up to 50% of the GDP in advanced nations. Second, target the industries that are lagging and continue with older employment rather than efficiency related policies such as chemicals, basic materials, and pharmaceuticals. With such an attractive story, a new form of interest from overseas Chinese, corporations, the world’s entrepreneurs, and capital market will be tapped.

Re-engineering of life’s quality

China’s rate of urbanization is beyond doubt going to grow from the current 52% to 60% in 2020. The two main challenges standing out include the environmental quality and the build-out that is fit for purpose. Widespread environmental degradation is now commonplace due to the country’s rapid development in the last three decades and the soil quality, food quality, air quality, and water quality are just some of the significant challenges. Despite all this, its economic growth narrative attractiveness has attracted overseas talent. However, delivering a better environment shouldn’t be underestimated.

China requires an initiative to upgrade the exciting public transport system and infrastructure and also transform the countries metropolitan areas into sustainable cities with a cosmopolitan feel such as London or New York.

Reducing Immigration Hurdles

China has to work on reducing the bureaucracy so that the overseas community can operate and work in China. China can borrow a leaf from India’s (OCI) program which allows its citizens to be registered citizens of the home country from overseas and avails a myriad of benefits such as an entry visa that is lifelong into the country. This will be big on encouraging the overseas Chinese to settle at home and also induce them to come back home to settle and work without the need of relinquishing their hard earned passports.

Fostering a cultural and intellectual base

Investing in great hubs of civilization will attract not only technological and scientific talent but also philosophers, free thinkers, poets, and artists. To attract such talent will mean the creation of creative thought, free access to the entire world and intellectual strength. China has no choice but to create a productive, world-class modern society. It has taken a step in the right direction having attracted Yale, NYU, Duke, and Harvard who are building schools in China.

There is rising Chinese overseas investment, and this should trigger Beijing to lower its obstacles to foreign investors. However, the bigger hurdle for China is huge with so many other people considering migration. Fortunately, President Xi and his administration have shown to be recognizing the focal issues and coming out strongly to address them. Even with migration relieving China of the unemployment burden, it comes with such a huge price, leading to brain drain. For China to fulfill the “China Dream,” a lot has to be done on reforms and policies for the ultimate attraction of the overseas Chinese, and also foreigners willing to invest in China.