Op-Ed Contributors

Debate: Brain drain

(China Daily)
Updated: 2010-07-12 07:53

Adam McKeown

More emigrants, greater prosperity

News and commentary about the increased emigration of wealthy Chinese have been making the rounds in China and Asia. Their numbers are not especially big.

For example, the 1,000 Chinese who applied for immigrant investor visas to Canada and the United States in 2009 is only a drop in the bucket compared to the nearly 140,000 Chinese who get US visas every year to study, meet family members and work there. But many commentators have responded to the emigration of wealthy Chinese as a problem, as the drain of important resources.

Emigration should be seen as a gain rather than a loss. It offers access to the global circulation of wealth, knowledge and business connections, both for individual emigrants and the Chinese economy as a whole. Historically, economic growth has almost always been accompanied by emigration of a large number of wealthy as well as poor people. These emigrants created a link to the global economy that was a critical part of the economic development of their home nations. Chinese should promote the emigration of the wealthy and skilled, not view it with concern.

By living and investing abroad, wealthy emigrants gain social and business connections, new skills and knowledge, increased mobility, and access to new resources that they could not so easily get at home. They rarely lose touch with their interests at home, partly because of sentimental attachment but also because their success at home is the source of their opportunities abroad. Their knowledge of markets and business conditions at home is the foundation of new partnerships abroad. And the resources and security obtained abroad help generate more investment and innovation at home.

The practice of wealthy Chinese obtaining multiple passports, residences and political affiliations has a veritable lineage in China, going back at least 500 years. It is a strategy of portfolio diversification, a way to increase both opportunities and security. The ability to move money, people and goods across borders is a lucrative skill in itself, too.

China has always been an important beneficiary of such activities. Before the 19th century, overseas Chinese went on tribute missions from foreign countries to Beijing and were the main conduits for the foreign trade of silk and porcelain in exchange for marine and forest products from other Asian countries. In the early 20th century, overseas Chinese invested heavily in education, railroads and other industries in China. For example, the "big four" department stores (Sincere, Wing On, Yat Sun and Sun Sun) in Shanghai were founded by overseas Chinese.

The so-called Chinese "astronauts" that emerged in the 1980s are the most recent version of these practices. These are Chinese, mostly from Hong Kong and Taiwan, who constantly "orbit" the world between homes, jobs, schools and families in multiple countries. Some of these astronauts claim to feel at home at any place in the world, so long as there is an airport and a Chinese restaurant close by.

A huge emigrant industry emerged in Hong Kong in the 1980s and 1990s, feeding off the anxiety of the imminent reunification with the motherland. But few among the massive number of emigrants completely broke off ties with their homes. Many former Hong Kong residents established families abroad but continued to return to Hong Kong on work. In the end, emigration has become part of the very fabric of these places, impossible to separate from their current prosperity.

It is also no accident that some of the most prosperous areas in China today are the emigrant areas of the southern coast, stretching from the Pearl River Delta region to southern Fujian province. The ties to overseas Chinese were the key reason for setting up the Special Economic Zones in the south. Mass emigration (more than 650,000 a year in the 1920s) ended in 1949. But 30 to 40 years later, the strategy of appealing to the emigrants has paid off well, with overseas Chinese accounting for more than two-thirds of foreign investment in the 1980s and 1990s.

The impulse to see emigration as a drain was common in pre-modern states both in China and Europe. The Qing Dynasty (1644-1911) rulers feared that emigrants would become bandits and rebels. Beijing officials, however, were persuaded by the arguments of coastal officials about the importance of emigrants to the local economies and allowed the emigration of licensed merchants.

But the Chinese government never supported its overseas merchants in the way that European governments did, with the result that much less wealth was ultimately channeled back home. Shouldn't Chinese today be supportive rather than dismayed by the prospect of emigration?

Of course, emigration of the wealthy and educated does not always yield positive results. In countries with poor infrastructure and fewer opportunities to invest capital and skills, emigration can quickly become a net loss. This was often true in pre-1949 China where investments had mixed success outside of Shanghai and Guangzhou. It currently applies to many African and Latin American countries, where emigrants find fewer opportunities at home. But this is clearly not true for contemporary China.

Chinese abroad generally feel the economic future lies in China. Their sentimental attachment to China and the prospect of material gain make them want to be a part of that growth.

For a dynamic country such as China, any attempt to keep wealth within national borders will be counterproductive. When rich Chinese move abroad in search of greener pastures, their action should not be seen as disengagement with China but a step forward in China's engagement with the world.

The author is an associate professor of history at Columbia University.

(China Daily 07/12/2010 page9)