Southeast Asia is home to an interesting anomaly: one where indigenous ethnic majorities are not the most prosperous ethnic group in the country.
In Malaysia, the Bumiputera (ethnic Malays) make up 66.4% of the country, but have the lowest average wealth among all the ethnic groups who call Malaysia home. A study by a University Kebangsaan Malaysia researcher Muhammed Abdul Khalid found that the Chinese, who make up a significant minority population at 22.5%, have the highest average wealth — on average 76% higher than the Bumiputera. Khalid found that the gap increased as he examined the distribution by percentiles, moving down the income scale. In the bottom 20% of the population, the Chinese on average hold 170% more wealth than ethnic Malays. The bottom 20% of Chinese hold more than almost half of the entire Bumiputera population.
A similar story plays out in Thailand, a country which faces some of the highest wealth inequalities in the world, and the Philippines.
These numbers did not occur by random chance. They are the result of a phenomenon centuries in the making, colloquially known as the “Bamboo Network.” In their book “Ethnic Business: Chinese Capitalism in Southeast Asia,” University of Malaysia professor Jomo K.S. and UC Berkeley professor Brian C. Folk found that this is largely attributable to the economic and business networks they have built up over the centuries, collectively known as the Bamboo Network. Chinese businesses in Southeast Asia are largely generational and family-style, and are predicated on the ideas of trust, network and “Chinese” values.
In simple terms, this Bamboo Network is the web of businesses in Southeast Asia that are owned and operated by overseas Chinese.
The fact that Chinese transplants are so successful, often outdoing the native population despite them being an ethnic minority, contributes to the hostility they face. This has led to some of the most aggressive affirmative action policies in the world. For example, pro-Bumiputera policies in Malaysia attempt to award positions on the basis of race by using quota systems for everything from qualification for public scholarships to ownership of businesses and corporate equity. Until 2009, companies listed on the Kuala Lumpur Stock Exchange were required to have at least 30% ethnic Malay ownership. This type of affirmative action exists throughout capital and financial asset policies. Despite this, the Chinese systematically continue to hold more wealth across the entire region.
K.S. and Folk find that Chinese businesses are largely homogenous throughout the Southeast Asian region, with little variation from country to country, implying that these affirmative action policies do not serve to efficiently redirect wealth to native populations. The size and scope of ethnic Chinese firms’ activities increased significantly in the early 1990s as trade liberalization became widespread, outpacing even Japan by estimates. The business world of the Chinese was so closed off to outsiders, trading and investing almost solely amongst themselves, that it was described as a “separate world” by prominent Asian affairs analyst Sterling Seagrave in his 1995 book “Lords of the Rim.” By 1994, the proportion of firms controlled by ethnic Chinese in Malaysia, Singapore, Thailand, Indonesia and the Philippines was above 50%. These same countries are consistently among the top 20 recipients of Chinese foreign direct investment.
It is clear that the Bamboo Network is alive and thriving in Southeast Asia. This inequity between native peoples and transplant Chinese has led to tensions between the two ethnic groups in most of the countries.
Cornell University’s Donald M. Nonini found that in spite of tensions between the two groups, Malaysian-Chinese racial politics tends to work in favor of the elites of each group. Chinese capitalists and Malay state officials often mutually benefit from one another, largely due to the corrupt and discriminatory economic system.
Nonini also found that despite living, working and owning and operating businesses in the region, most Chinese living abroad still identify as members of the broader ethnic Chinese society. They pride themselves in eloquence in Mandarin and exhibit behaviors they consider to be traditionally “Chinese.” This separation of cultures has led to a struggle on multiple levels: racial, ethnic and class. The question then becomes one of whether Chinese business presences in these countries sway native populations’ opinions on China, and the extent to which it does so.
The large presence of Chinese in Southeast Asia and the political and economic power the community exerts means that China has a strong foothold in the region. This, in turn, poses an issue for U.S. foreign policy. The United States continually turns to Southeast Asia in an attempt to stem the tide of China’s global rise. In 2003, China made it clear that despite their rapid rise to economic power, their goal was not to overturn the existing economic system, but to work alongside it. Despite this, the general sentiment of Americans toward China is anything but friendly. The primary concern is that China’s growing influence in important developing regions of the world will come at the cost of U.S. dominance.
Chinese and American scholars alike are aware of Southeast Asia’s unique position of being a laboratory for U.S. and Chinese foreign policy to collide for the first time. How the two countries work together within the region will likely determine whether continued conflict avoidance is feasible for the projected future.
Predictably, the conflict is divided among class lines. The general attitude toward Chinese transplants is less than favorable. One only has to look at Malaysia’s affirmative action policies to see that the government, driven by the voice of the people, is seeking to actively push the Chinese out of their position of power and return economic control to the native population. Despite this, it is clear that being involved in the Bamboo Network awards any given person, regardless of race or ethnicity, a great deal of power. The network controls a large percentage of capital flows and assets within Southeast Asia as a whole, as well as within many individual countries.
Because the network is predicated on what are identified as Chinese values, personal or familial connections and trust, being “in” the network helps. Chinese and native Southeast Asians of upper classes frequently have more in common than different classes of the same ethnicity would. And as per usual, power lies where economic and financial resources are concentrated.
Thus, despite the overall distaste that an ethnic Malay, Thai or Filipino may have toward their Chinese neighbor, the United States is right in predicting that China’s business networks have created an incredibly strong political foothold within the region. To see what will happen between the two economic giants, we must simply watch and wait.