Mt. Hua, Shaanxi Source: Chapter 15

15. Understanding the Chinese- Speaking Economies 15.1 The greater China area 15.2 A multiregional economic comparison 15.3 Cross-Strait economic relations 15.4 Overseas Chinese economics

Keywords: greater China, spatial (dis)economies, complementary condition, Hong Kong, Macau, Taiwan, cross-Strait relations, peaceful reunification, overseas Chinese

15.1 The greater China area Hong Kong Macau Taiwan Summary

Figure 15.1 Hong Kong and Macau

Figure 15.2 The Taiwan Strait

15.2 A multiregional economic comparison Social and economic differences Complementary conditions Summary

IndicatorTaiwanHong KongMacauMainland Area (sq. km) Population (million persons) GDP (2003, billion US$) GDP per capita (2003, US$) Average growth rate of GDP per capita (1978–2002, %) a 8.04 Exports (2003, billion US$) (15.7 b ) Life expectancy (1990s, Female/male, years) 77/ /75.871/68 Adult literacy rate (1990s, Female/male, %) c 86/9688/ d 73/90 (a): Growth rate for 1982–2002. (b): Exports of Hong Kong goods (re-exports are excluded). (c): ADB (1996, pp. 11 and 28), SSB (1996, pp. 769, 781 and 803); (d): Xie (1992, p. 115) for labor population. Source: websites of the respective governments except those that are noted otherwise. Table 15.1 Basic indicators of the greater China area

EconomyAdvantagesDisadvantages Mainland China Adequate and various agricultural products, energy, industrial materials, excess labor, some high- tech products, and huge domestic market. Relatively shortage of advanced equipments; shortage of international management experience and economic infrastructures, especially in the western, inland provinces. TaiwanHigh capital saving, advanced equipment ready to move out, vanguard agricultural and industrial products, and management experience. Shortage of energy and industrial resources, limited domestic market, and insufficiency of and high costs of labor supply. Hong Kong and Macau Capital surplus, favorable convenient conditions for international trade, the freest economic environment, and management experience in commercial and financial markets. Severe shortage of agricultural and industrial resources, especially fresh water, foodstuff, energy, and land and deficiency of labor; limited domestic market. Table 15.2 Mutually complementary conditions in the greater China area

15.3 Cross-Strait economic relations Historical evolution Bilateral economic cooperation Direct air and shipping services Future perspective

ItemTaiwan Mainland China Defense expense (US$ 100 million) Forces (1000 persons)4423,031 Defense expense as % of GNP Defense expense as % of budget Per capita defense (US$)49448 Forces per 1000 population Sources: The US Academy of Defense Agency (1993) and SSB (1996, pp. 230 and 580). Table 15.3 Military expenses, Taiwan and mainland China

Figure 15.3 Links for air and shipping services between Taiwan and mainland China

15.4 Overseas Chinese economics A history of Chinese emigration Distribution of overseas Chinese Global economic contributions

Explaining the remarkable growth of the overseas Chinese economy: (1) the thriftiness and hard-working nature of the overseas Chinese; (2) an elite group of intellectuals; (3) a positive role of overseas Chinese organizations; and (4) closer socioeconomic ties with mainland China.

Case study 9 Location, size and political economy of Chinese dynastic cycles

Figure 15.4 A comparison of the Chinese and Korean dynasties

(a) Chinese dynasties: lifespan versus territorial size Source: Tables 15.4 and 15.5 and the author’s calculation.

(b) Chinese dynasties: lifespan versus distance Figure 15.5 Location, territorial size and Chinese dynasties Source: Tables 15.4 and 15.5 and the author’s calculation.

Indicator Zhou ( BC) Han (206BC-- AD220) Jin ( ) Tang ( ) Song ( ) Ming ( ) Qing ( ) Capital city Hao (Xi’an) a ; Luoyi (Luoyang) b Chang’an (Xi’an) c ; Luoyang d Luoyang e ; Jiankang (Nanjing) f Chang’an (Xi’an) Kaifeng g ; Lin’an (Hangzhou) h Nanjing i ; Beijing j Beijing Distance between capital and farthest frontier (km) k 1200 a ; 950 b 3200 c ; 3300 d 3500 e ; 2000 f g ; 1700 h 2000 i ; 2600 j 3900 Area of territory (million km 2 ) l e ; 2.3 f g ; 4.0 h Length of existence (years) 825 (571) m Major force(s) for collapse Endogenous Exogenous & Endogenous Endo- genous Exogenous Endo- genous & Exo- genous Endo- genous Notes: ( a ): from 1046 to 771 BC. ( b ): from 771 to 221 BC. ( c ): from 206 BC to AD 25. ( d ): from AD 25 to 220. ( e ): from 265 to 316. ( f ): from 317 to 420. ( g ): from AD 960 to ( h ): from AD 1127 to ( i ): from AD 1368 to ( j ): from AD 1421 to ( k ): estimated by the author based on the maps of ancient China. ( l ): available at ( m ): figure within parenthesis does not include the “Warring States” period (from 475 to 221 BC). Source: Calculated by the author except those that are specifically cited. Table 15.4 A comparison of selected Chinese dynasties in terms of location, size and other parameters

Indicator Qin (221 – 206 BC) Sui (AD 581 – 618) Yuan (1279 – 1368) Capital city Xian’yang (near Xi’an) Chang’an a ; Luoyang b Dadu (Beijing) Length of lifespan (years), which is Less than that of its predecessor by810 (556) c Distance between capital and farthest frontier (km) d, which is a ; 3100 b 4000 Longer than that of its predecessor (km) by 800 e ; 1050 f -300 a ; 1100 b 2000 g ; 2300 h Area of territory (million sq. km) i, which is Larger than that of its predecessor (million sq. km) by a ; 6.1 b 12.2 g ; 12.8 h Major force for collapseEndogenous Compared to that of its predecessorEndogenous Exogenous & Endogenous Exogenous Notes: ( a ): from AD 581 to 605. ( b ): from AD 606 to 618. ( c ): figure within the parenthesis is based on that the Zhou dynasty does not include the “Warring States” period (from 475 to 221 BC). ( d ): estimated by the author based on relevant maps of ancient China. ( e ): based on the Western Zhou dynasty (1046 to 771 BC). ( f ): based on the Eastern Zhou dynasty (771 to 221 BC). ( g ): based on the North Song dynasty (AD 960 to 1127). ( h ): based on the South Song dynasty (AD 1127 to 1279). ( i ): available at://bbs.zanba.com/message/122377/ html. Source: Calculated by the author based on Table 15.4 except those that are specifically cited. Table 15.5 A comparison of China’s three short-lived dynasties and their predecessors

Chapter conclusion: Despite their common history and cultural homogeneity, the greater China area has followed during the past decades divergent political and economic systems, from which different social and economic performances have resulted. In this chapter, the social and economic influences of Hong Kong, Macau, Taiwan, and overseas Chinese, as well as their influences on the economic development of mainland China, are examined. Our focus is due to the great potential of comparative advantages as well as the close cultural linkages between Hong Kong, Macau, Taiwan and mainland China. The remaining part of this chapter analyzes the cross-Strait economic relations and the overseas Chinese economics.

Suggested reading Alesina, A. and E. Spolaore (1997). “On the Number and Size of Nations,” The Quarterly Journal of Economics, Volume 112 (Nov.), pp Alesina, A., E. Spolaore, and R. Wacziarg (2000). “Economic integration and political disintegration,” American Economic Review, Volume 90, pp. 1276–96. Bolton, P., and E. Spolaore (1996). “ Economic Theories of Integration and Break-up of Nations,” European Economic Review, Volume 81, pp Bolton, P., and G. Roland (1997). “The Breakup of Nations: A Political Economy Analysis,” The Quarterly Journal of Economics, Volume 112, pp Friedman, D. (1977). “A Theory of the Size and Shape of Nations,” Journal of Political Economy, Volume 85(1), pp Gao, T. (2003). “Ethnic Chinese networks and international investment: evidence from inward FDI in China,” Journal of Asian Economics, Volume 14, pp. 611–629

Suggested reading Goyal, S. and K. Staal (2003). “The political economy of regionalism,” European Economic Review, Volume 48, pp Harding, Harry (1993). "The Concept of 'Greater China': Themes, Variations and Reservations," The China Quarterly, Volume 136 (Special Issue: Greater China), pp Rauch, James E. and Vitor Trindade (2002). “Ethnic Chinese Networks in International Trade,” Review of Economics and Statistics, Volume 84, Issue 1, Shambaugh, David (1993). "Introduction: The Emergence of 'Greater China'," The China Quarterly, Volume 136 (Special Issue: Greater China). Smart, A. and J. Hsu (2004) “The Chinese Diaspora, Foreign Investment and Economic Development in China,” The Review of International Affairs, Volume 3, Issue 4, pp. 544 – 566 So, Alvin Y. (2011). “‘One Country, Two Systems’ and Hong Kong- China National Re-unification: A Crisis-Transformation Perspective,” Journal of Contemporary Asia, Volume 41, Issue 1, pp