Overseas Chinese communities supplied the dominant share of China’s foreign investment.

Evidence

In 1992, 80 percent of the foreign direct investment in China (11.3 billion) came from overseas Chinese, primarily in Hong Kong (68.3 percent), but also in Taiwan (9.3 percent), Singapore, Macao, and elsewhere. In contrast, Japan provided 6.6 percent and the United States 4.6 percent of the total. Of total accumulated foreign investment of 50 billion, 67 percent was from Chinese sources. Trade growth was equally impressive. Taiwan’s exports to China rose from almost nothing in 1986 to 8 percent of Taiwan’s total exports in 1992, expanding that year at a rate of 35 percent. Singapore’s exports to China increased 22 percent in 1992 compared with overall growth in its exports of less than 2 percent. — Samuel P. Huntington, The Clash of Civilizations and the…, 462

Categorization

• XREF: Connects to Milgrom’s law-merchant work on how shared culture and community ties substitute for formal institutions in enabling trade.