Overseas Chinese and Compatriots in China's Tourism Development

Alan A. Lew, Ph.D.
Professor, Northern Arizona University

There exists a China other than the People’s Republic of China (PRC).  This ‘other China’ is more than just the Republic of China (ROC) in Taiwan.  It consists of over 50 million ethnic Chinese around the world who are not under the direct rule of the PRC.  These include ‘compatriots’ in Hong Kong, Macao, and Taiwan, and overseas Chinese elsewhere in the world.  Most of the citizens of this other China maintain strong personal and cultural ties to their motherland.  Most of them have also experienced economic success in their adopted lands.  It is impossible to understand the dynamics of tourism development in China without including consideration of the other China.

Ethnic Chinese who live outside the PRC are a major force in the country’s tourism development.  They form the majority of travelers to China and are the principal foreign investors in its tourism industry.  The desire to visit China stems from a history of well maintained familial and cultural ties, despite many years of separation.  Investment in China’s hotels and resorts by ethnic Chinese residing outside the PRC reflects these close personal ties.  Such investments also reflect the personal wealth accumulated by Chinese who have been living in capitalist societies. Through the combination of these factors, the other China provides the PRC with a development resource the likes of which few countries can compare.

A Brief History of the Chinese Diaspora

For most of its recorded history, emigration from China proper has been minimal.  By the 3rd century A.D. (the Three Kingdoms period), expansion out of the north China cultural hearth had extended the area of Han Chinese settlement into what is today central and southern China.   While China became a major trading nation in the Indian Ocean during the Tang Dynasty (618-906), emigration during this and subsequent periods was both illegal and generally not on a large scale.  Most of the emigration that did occur consisted of traders (actually pirates) from the southern coastal province of Fujian.?

The first major period of emigration beyond China proper occurred in the late 14th and early 15th centuries, and again in the 16th century (during the Ming Dynasty) when Chinese traders and naval vessels again traveled the southern seas as far as Africa (Lyman 1974: 3).  These travelers encountered scattered Chinese settlements founded on the pirating and smuggling activities of previous centuries (Pan 1990: 4-6).  Throughout the Ming Dynasty large numbers of Chinese traders migrated and settled in the Philippines, the Malacca Strait area, and the islands of Indonesia.  The fall of the Ming to the Manchurian Qing Dynasty in 1644 resulted in yet a larger wave of emigration to Taiwan and Southeast Asia.  In 1712 the Qing, fearing revolutionary influences, made the return of Chinese from abroad punishable by death.

It was not until the mid-nineteenth century that treaties forced on China by European powers during the Opium Wars changed Qing Dynasty policy to legally allow emigration (Pan 1990: 48,51).  The colonial powers sought Chinese ‘coolie’ laborers to work in Southeast Asia and the Americas.  Chinese workers willingly sought these opportunities, in part to escape natural and manmade disasters that plagued their homeland in the 19th century (Lyman 1974: 3; Pan 1990: 13).  The vast majority of Chinese who took advantage of these opportunities were from the southern provinces of Guangdong and Fujian.  Emigrants from this period were the original settlers in most of the Chinatowns found throughout the world today.  Indeed, Lyman says that ‘Nineteenth century China is more alive in twentieth-century American Chinatowns than in the contemporary villages of Kwangtung [Guangdong] and Fukien [Fujian]’ (1974: 6).  It is the culture of the overseas Chinese from southern China that has largely defined the traditional relationship between China proper and the ethnic Chinese in Southeast Asia and the Americas.

The most recent wave of Chinese emigration began with the liberalization of mainland Chinese society in the late 1970s.   While southern Chinese still predominate, in general this new group of overseas Chinese comprises a broader mix of people from different parts of China than had previous periods of emigration.  Economic motivations, however, remain the dominant force in their decision to emigrate to their preferred destinations of the U.S., Canada, and Australia.

Taiwan has periodically experienced lengthy periods of independence from mainland China.  It was occupied in the seventh century by Chinese agriculturalists who migrated seasonally to Formosa and the Pescadore Islands (Lyman 1974: 3).  When the Ming Dynasty temporarily banned overseas trade in 1433, Formosa became a haven for Chinese pirates.  Ming Dynasty loyalists fled to the island in 1644 to escape the conquering Manchurians (Qing Dynasty).  The Ming maintained a separate Chinese state there until 1683 when they were overcome by Qing forces.  Japan controlled Taiwan from 1895 to 1945.  A repeat of the 17th century scenario occurred in 1949 when some two million Nationalist Chinese government officials, soldiers, and sympathizers fled to Taiwan, leaving the mainland to the Chinese Communist Party.  Although voices calling for the formal independence of Taiwan from China have existed since at least the 1940s, both the Nationalist and Communist governments of China consider Taiwan an integral part of the mainland (Andrews 1992a).
 

It was the last period of separation from the mainland that caused contemporary differences between Taiwan and the PRC to develop.  Cold War politics intensified divisions between the Nationalist ROC government on Taiwan and the Communist PRC government on the mainland.  Economic and cultural ties were nonexistent as both sides sought the support of the Chinese outside of East Asia.  This situation changed considerably with the liberalization of the mainland society and the death of the old Nationalist leaders in Taiwan.  Today, visitors and investments from Taiwan play a major role in China’s tourism development.

The Ming Dynasty ceded Macao to Portugal in 1557 as a gift for assistance in fighting pirates along the south China coast.  The mainland Chinese government, however, has always had considerable say in the policies of the tiny colony that will return to PRC administration in 1999.  No other European power was able to make significant inroads into trading and colonizing China, until the start of the Opium Wars in 1841.  By this time, Great Britain had become the major European colonial power in Asia, and opium from India had become the major product being traded for Chinese goods.  In an effort to stop the opium trade, the Chinese government confiscated European opium caches in Guangzhou.  British traders responded by calling on the English Royal Navy to attack the coast of China.  Hong Kong was subsequently ceded to the British government in a treaty signed while British gunboats threatened to destroy the coastal cities of China.

The population of Hong Kong grew rapidly as large numbers of Chinese from neighboring Guangdong Province migrated to the colony.  Hong Kong received a major influx of Shanghai industrialists and capital when the communists came to rule the mainland in 1949.  British colonial policies were based on liberal economic theory and Hong Kong developed into the epitome of laissez faire capitalism at the same time that mainland China sought to epitomize the communist ideal under the leadership of Mao Zedong.  In the early years of communism, the door between mainland China and Hong Kong was wide open.  By the mid-1950s, however, a ‘bamboo curtain@ was raised preventing mainland Chinese from migrating to Hong Kong and Macao.  Although Hong Kong will come under PRC administration in 1997, its economic and social policies, and its relationship to the mainland are scheduled by treaty to remain unchanged for 50 more years.

One important part of the relationship between Hong Kong and the mainland has been that even with the Bamboo Curtain, Hong Kong and Macao Chinese have always been able to travel easily into the PRC.  This special access to mainland China has given Hong Kong Chinese an advantage over all other groups, making them the single largest investor in China’s tourism industry and the largest visitor group by far to the PRC.
 

Tourism and the Existential Tie to China

The strong sense of nostalgia that Chinese of the other China feel toward their ancestral land is particularly pronounced among those who reside the farthest away from it.  Today, this feeling consists of sentiments that both pull them to China as a place where they feel a sense of belonging, and push them toward their adopted lands as a place where they prefer to physically live and work.  While the following discussion focuses on the overseas Chinese experience, the mixed emotions that all Chinese have as descendants of China extends to Taiwanese and Hong Kong Chinese, as well.?

Historically, the overseas Chinese experience has been described as one of a ‘sojourner.@  For the Chinese sojourner, the basic motivation for leaving home was to seek opportunities to increase one's status at home.  This was usually accomplished through increased economic opportunities in another place.  Unlike the economic immigrants of today, the sojourner had no intention of remaining in the host place.  While this situation has changed for overseas Chinese over the years, the sojourner model describes a basic foundation that explains how overseas Chinese today continue to relate to their motherland.

Woon (1984) has identified several reasons for sojourning (i.e., working away from home and returning home to retire.)  These include:

1. The importance of the extended family and a feeling of insecurity in a place without the extended family reference group.  A Chinese proverb says that ‘Being away from home only one li [about one?third mile] is not as good as being home.@  Unlike northern China, most of the villages in southern China are patrilocal, clan communities, with everyone in the village related by male lineage and marriage (Pan 1990: 18; Woon 1983).  Southern Chinese, in particular, identify themselves to one another in terms of the village or group of villages from which they descend.  Even when direct ties to home village relatives are severed, overseas Chinese will find comradeship with other Chinese from their home county or who have the same surname.  Surname-based associations often replaced village-based networks for Chinese when they arrived in a foreign land.

2. Group pressure from villagers to return home and acceptance upon returning home, despite having left.  A strong sense of filial piety, expressed in terms of caring for both aged parents and the graves of ancestors, is reinforced by village relatives on those who are working away from home.  In areas of southern China where ties between the home villagers and overseas sojourners were strong communist collectivization efforts in the 1960s were less successful (Peterson 1988).  In return for remittances for overseas relatives, villagers made every effort to maintain the property rights of sojourners.  Despite over 40 years of communist rule many of the Chinese who left before 1949 still maintain ownership of their village homes.

3. The existence of an open class society allowing upward socioeconomic mobility, particularly for males.  Southern China has been referred to as a ‘cultural borderland@ (Pan 1990: 13).  The Chinese of the south have a greater diversity of language and genetic influences than elsewhere in China.  A dominant Confucian land owning class was also less pronounced in the clan villages of southern China, and an openness to new ideas was more common.  The idea that one could leave China was, therefore, more accepted, as was the concept of an economic-based social class system.

Unfortunately, the unsettled political situation in China in the first half of the 1900s made it increasingly difficult for overseas Chinese sojourners to return.  The victory of the communists in 1949 all but closed the country to return migration.  In the 1950s anti-Chinese movements in Southeast Asia did result in some 50,000 ethnic Chinese returning to China to settle, but most of these were distrusted by the government and encouraged to leave in the early 1970s (Godley 1989).  The vast majority of the world’s overseas Chinese sojourners became resigned to remaining in their host country permanently.

The sentiments and ties to China of the earlier sojourner period, however, remained strong.  Money continued to be sent back to the village throughout the Maoist period, and this continued to be a source of prestige among overseas Chinese.  When China reopened to tourism in 1978, a new form of returning ‘sojourner-tourist@ quickly developed.

For overseas Chinese, China is an ‘existential home.@  It serves as the center of their personal and social value systems, which are based on the extended family.  Though they cannot live in China, it remains the place where they feel most at home.  Relph refers to this experience as ‘existential insideness,@ which includes the experience of permanent residents of a place (1976: 55).  Cohen, in describing different modes of tourist experiences, refers to the ‘existential tourist@ as one who is spiritually alienated from their place of physical residence and physically alienated from their spiritual center (1979).  The ‘spiritual center@ may be either elective or ancestral.  Cohen argues that existential tourism is increasing as forced and voluntary emigration has increased in recent decades.

There are many reasons why overseas Chinese find existential tourism preferable over sojourning.  The decades during which China was closed to most of the world fostered a greater degree of assimilation of overseas Chinese in their host society than in earlier periods.  When restrictions on return migration occurred among Southeast Asian Chinese in the 15th and 16th centuries a distinctive Southeast Asian Chinese culture developed, known as ‘Peranakan Chinese@ culture in Malaysia and Singapore (Clammer 1980).  Nineteenth and twentieth century emigrants faced a similar situation after the communist victory in 1949.  Greater assimilation contributed to a permanent state of sojourning.   Continuing difficulties in China made contributions sent home ever more valued.  This in turn relieved the pressure from home villagers for sojourners to return permanently.  When China became more open to tourism, returning overseas Chinese found that their status was greatly enhanced.  They were, however, expected to bring monetary gifts for all villagers on their visits.  (For some overseas Chinese, this expectation has actually limited the number of return trips they have chosen to take to their village.)  The rural areas of Guangdong and Fujian Provinces, where an estimated half of all overseas Chinese originate, are today among the wealthiest areas in China due to these continuing remittances (The Economist 1992: 22).

Pan has described the experience of the overseas Chinese tourist succinctly:

Each time they visit they ask themselves, ‘Why are we here?  Why do we keep coming back?’  Why must they return to this cruel, tormented, corrupt, hopeless place as though they still needed it?  Could they never achieve immunity?  And yet had China meant nothing to them, any other place thereafter would have meant less, and they would carry no pole within themselves, and they would not even guess what they had missed . . . yet they realize that they could never live there.  Deep in their hearts they know that they love China best when they live well away from the place.  (1990: 379)
?
The existential overseas Chinese tourist, therefore, can enjoy the benefits of two worlds.  Tourism allows them to strengthen their ties to the extended village and to pay proper respects to the ancestors.  This, in return, strengthens their personal self esteem by giving them a broader perspective of their place in the world.  It also increases their prestige among other overseas Chinese residing abroad.  In fact, the acceptance and value placed on ancestral-based existential tourism to China today has lessened the pressure for younger people to stay in the village and increased their propensity to seek opportunities abroad.

With each succeeding generation, direct ties to the village become weaker and weaker.  This is particularly true as a family becomes more assimilated into their new society.  In recent years, special offices in the major overseas Chinese areas of Guangdong and Fujian Provinces have been established to help second and third generation overseas Chinese find their ancestral villages.  However, even those who have lost all connections to China cannot avoid a sense of existential belonging when they visit, even if it based largely on racial grounds.  Even Hong Kong and Taiwan compatriots have a nostalgic preference for a single China that includes Hong Kong, Taiwan, and the PRC over the current divisive situation.  However, like the overseas Chinese, compatriots have grown too accustomed to their current governments to readily return to living under the rule of the PRC.  As with overseas Chinese, visiting relatives in China is also the principal motivation of compatriot visits to the mainland (Lee 1982)
 

Economic Impacts on Tourism in China

The economic impacts of the other China on tourism and travel in the PRC are twofold.  The first is in terms of visitations to China.  The second is in the area of foreign investments in tourism.  In both of these areas, Chinese living in the other China have been the dominant force in the development of international tourism and travel in the PRC.  However, it is first necessary to clarify the terms used to identify the different groups that comprise the other China.

Defining the Overseas Chinese

There exists two major categories of Chinese who reside outside of the PRC.  In addition, each of these has some significant subclassifications.  The first category consists of Chinese living in Hong Kong, Taiwan, and Macao.  The PRC considers each of these places an integral part of China proper and officially refers to their citizens as ‘compatriots.@  However, none of the three compatriot places has experienced direct rule under the communist government of China.  Indeed, they have often represented the very antithesis of the political and economic policies of the PRC.  While significant visa differences do exist, compatriot Chinese who visit the PRC experience similar border formalities as do other visitors.  There are two major types of compatriot Chinese: those from the British colony of Hong Kong and the Portuguese colony of Macao, and those from the ROC on the island province of Taiwan.
 

The term ‘overseas Chinese@ refers to ethnic Chinese who live beyond the areas claimed as territory by the PRC.  Overseas Chinese reside on every continent, although the vast majority are in Southeast Asia, followed by North America (Table 10.1).   The history of overseas Chinese in Southeast Asia dates back to at least the pirate traders of the 13th century, while many of those in other parts of the world trace their migration back to the Opium Wars of the mid-1800s.  Despite being separated from China for many generations, overseas Chinese still maintain close cultural and, for more recent immigrants, familial ties to their ancestral land.  In the following discussion, the overseas Chinese are classified into three types: those residing in Southeast Asia, many of whom are descendants of early emigrants from China’s Fujian Province; those who reside in North America (American Chinese); and those who live elsewhere in the world.  Most of the Chinese now residing in the U.S. and Canada trace their immigration from Guangdong Province in the 19th and 20th centuries.  Chinese residing in the rest of the world are widely scattered and are not discussed in detail here.

One problem in using the term ‘overseas Chinese@ is due to the way the classification of ‘Overseas Chinese@ is used in China’s tourism statistics.  For
 

TABLE 10.1  1990 Compatriot and Overseas Chinese Populations

Source: Kao 1993; The Economist 1992.

official purposes, ‘Overseas Chinese@ (upper case "O") refers to persons who hold a mainland Chinese passport, but live outside of China.  Visitors to China with these characteristics are significant only in Indonesia, where 1.5 million (1982) Chinese hold PRC citizenship, and in Thailand with 300,000 (1980) PRC citizens (Poston and Yu 1990).  In 1991, China recorded 133,427 ‘Overseas Chinese@ visits (Sun 1992).  However, the vast majority of overseas Chinese, as the term is used in this chapter, do not hold a Chinese passport.  These visitors are officially classified as ‘Foreign Visitors,@ along with non-ethnic Chinese travelers.  Thus, almost all of Singapore’s 98,097 visitors in 1991 (Sun 1992) were considered Foreign Visitors in China’s tourism statistics, despite the fact that 77 percent of the population of Singapore is ethnic Chinese.  A method to estimate the actual number of overseas ethnic Chinese visitors to China from around the world is introduced below.

Chinese Tourist Travel to China

Fortunately, compatriot visitations to the PRC are recorded and published on an annual basis, although like many numbers from China, especially in the past, these may be inflated.  The total number of annual compatriot Chinese trips to China has consistently been more than 20 million since 1986, and reached almost 34 million in 1992 (Table 10.2; see also Table 1.1 in Chapter 1).  Most of these visits are to see friends and relatives and for leisure travel (Chow 1988).  The city of Guangzhou, for example, claims to have 679,843 residents with close relatives in Hong Kong or Macao (Guangzhou Economic Yearbook 1984, cited in Chow 1988).  Family-oriented holidays, such as the Chinese New Year, witness large numbers of Hong Kong Chinese crossing into China.  An increasing number of compatriot business trips are also part of the PRC’s total visitor arrivals.

In 1992, the nearly six million residents of Hong Kong made 21.5 million visits across the border into the PRC (SCMP 1993).  Hong Kong compatriots are not required to have a visa to visit China--they only need to show a travel identity card.  In addition to family visits, many leisure travelers from Hong Kong visit resorts in the neighboring Shenzhen and Zhuhai Special Economic Zones (Table 10.3).  These are areas of China that border Hong Kong and Macao, respectively, and in which liberal economic policies (similar to those in Hong Kong) prevail.  Hotels and full featured resorts have been built in these areas, making for an easily accessible vacation destination for urban Hong Kong compatriots (Chow 1988; Lew 1987).  Visits to these destinations are also organized by schools, workplaces, and other organizations in Hong Kong.  Such groups also organize longer tours of China.

Taiwanese visits to the mainland have increased dramatically since the Taiwan government relaxed its restrictions on such visits in November 1987 (Andrews 1992b).  Illegal visits had been taking place through Hong Kong since the mid-1980s, when China began admitting Taiwanese without stamping their passports.  A rapid increase in Taiwanese visitors  occurred just in time to help compensate for part of the decline in tourism to China that resulted from the Tiananmen Square Incident in 1989 (Chang 1992; He 1991; Zhang 1990).  A peak of 1.5 million was reached in 1993.  The 1994 figures are likely to be considerably lower following the the robbery murder of a Taiwanese tour group in Hangzhou and subsequent travel restricts enacted by the government of Taiwan (Mark 1994a; 1994b).
 

Although the Taiwan government initially stipulated that travel to the PRC would only be allowed to visit relatives, this condition was gradually dropped (Andrews 1992).  Increasingly, these visits have included large numbers of business travelers.  Limited visits by mainland Chinese to Taiwan have been allowed since 1990, the same year that Taiwan sent a large delegation to the Asian Games held in Beijing.  Taiwan, however, still bans direct air and sea links to the mainland, although it may be only a matter of time before this restriction is liberalized, as well.
 

TABLE 10.2  Compatriot and Overseas Chinese Visitor Arrivals to China

1987                25.09 million                           <2,500              202,155             11.7
1988                29.34 million                           437,700            320,544             17.4
1989                22.43 million                           541,000            270,279             18.5
1990                24.68 million                           947,600            277,823             15.9
1991                29.56 million                           946,632            409,225             15.1
1992                32.63 million                           1,317,800         n/a                      n/a
1993                35.18 million                           1,526,969         n/a                      n/a

TABLE 10.3  Major Cities visited by Compatriots and Foreign Visitors, 1991ª

TOTAL                                                        30,506,231                                2,710,103

Southeast Asian Chinese also helped to compensate for the decline in tourist visits to the PRC in 1989 and 1990, though the numbers were less significant than among the Taiwanese.  Part of the reason for the Southeast Asian increase was due to new laws adopted by Southeast Asian countries making travel to China more accessible (Zhang 1990).  As in Taiwan, mainland China had become the new place to go for the more wealthy of Southeast Asia.  In 1991, China received 104,791 foreign visitors from the Philippines, making it the fourth largest market behind Japan, the U.S., and the U.K. (Sun 1992: 24-5).  The small city-state of Singapore was China’s fifth largest market with 98,097 visitors.  Germany was slightly ahead of Thailand, which was China’s seventh largest market at 88,624 visitors.

The per capita expenditures of Hong Kong Chinese, Taiwanese, and Southeast Asian Chinese are much lower than that of other international visitors, including American Chinese and overseas Chinese elsewhere in the world.  Compatriot and Southeast Asian Chinese are more likely to stay with relatives or in inexpensive Chinese hotels rather than in international hotels, while Taiwanese have received special incentive prices that cut into profits.  The rise in tourists from among these groups has provided a new market for the older Chinese hotels in the PRC (Zhang 1990).  It has also resulted in an increase in the production of rosewood furniture, screens, and calligraphy art which are popular among these groups.

As discussed above, estimating the total number of overseas Chinese visitors is difficult due to the way in which China collects tourism statistics.  One method  of estimating the true number of overseas Chinese visitors to China is to compare the number of foreign visitors from each country that are serviced by the China Travel Service (CTS).  CTS primarily handles the travel arrangements of ethnic Chinese living outside the PRC.  In 1991, CTS serviced 225,036 foreign visitors (Sun 1992).   This amounted to 8.3 percent of all foreign visitors and 21.9 percent of foreign visitors who traveled under the auspices of one of China’s major travel agencies.   (It is possible to travel without using a major travel agency by being on government business or as guests of trade associations, schools, and other organizations that provide their own travel agency-type services.)  Because most of the travel agencies that are not listed individually in the NTA statistics primarily handle non-ethnic Chinese visitors, a safe assumption is that about 15.1 percent of foreign visitors to China in 1991 were overseas Chinese.  (The figure of 15.1 percent is half-way between the low of 8.3 percent and the high of 21.9 percent.)  Using this estimated percentage, the total number of ethnic Chinese that comprise China’s foreign visitor count in 1991 would be 409,225.

While low in comparison to compatriot visits, the number of ethnic Chinese is a good proportion of the total foreign visitor count.  In addition, since the majority of overseas Chinese come from localized areas in Guangdong and Fujian, they frequently include these provinces on their itinerary.  Their concentration in these areas is a major source of  income and economic development for rural southern China.?
Table 10.2 shows the estimated number of ethnic overseas Chinese visitors dating back to 1987.  The low percentage of 11.7 in 1987 reflects restrictions on travel to China that were still in existence then in many Southeast Asian countries.  This began to change in 1988, while the high of 18.5 percent in 1989 accurately shows the importance of ethnic Chinese in supporting China’s tourism economy when visitors from most Western countries canceled their visits following the June 4th Tiananmen Square Incident.

It should be cautioned that these are rough estimates.  With the liberalization of travel services in China, CTS has started to handle larger numbers of non-ethnic Chinese visitors.   Using CTS as a guideline in the future will be more difficult.  In 1991, however, CTS was still the dominant travel agency for overseas ethnic Chinese.  This can be seen in the statistics for Singapore, where 77 percent of the population is ethnic Chinese.  In 1991, 88 percent of the Singaporeans who came to China under the auspices of one of the country’s two major travel agencies used CTS, while only 12 percent used CITS.  For Thailand, another major source of overseas Chinese visitors, 90 percent used CTS.  By contrast, only 16 percent of visitors from Japan, and 13 percent of those from France, used CTS in 1991.

Tourism Investment in China

It is estimated that the liquid assets of the 50 million overseas and compatriot Chinese worldwide are between $1.5 and $2 billion (The Economist 1992).  On a per capita basis, this amount is higher than the approximately $3 billion in liquid assets held by Japan’s 124 million people, and is far higher than any of the other countries in the world.  This personal wealth was built on the same traditions of family ties and economic mobility which drives overseas Chinese tourism to China today.  Family-owned businesses, combined with social and business networks built through larger family associations, enabled overseas Chinese communities to become dominant economic forces in many countries (Kao 1993; Sender 1991).  The reestablishment and strengthening of direct ties to China since 1978 has also worked through these traditional business networks.

The government of China has encouraged foreign investment to rapidly bring the country into the global economic system. Outside interests invested approximately $11 billion in China in 1991, and 1993 saw that amount more than double to $25 billion in pledges in the first quarter alone (although only $3 billion was actually spent during that period) (The Economist 1992; Koan and Kaye 1993).  While Japan is the main source of loans to China, Hong Kong and Taiwan comprise about two-thirds of the actual direct investments.  Some of this amount is in wholly foreign owned enterprises.  However, the vast majority (about 95 percent of all investments) are as ‘equity joint ventures@ (hezi jingying) and ‘cooperative or contractual agreements@ (hezou jingying) (Leung 1990: 406; Thoburn, et al. 1990: 16-7).   For both of these arrangements, foreign investors and local Chinese government entities or state companies share the cost, management, and profits of a factory or hotel.

Most Hong Kong compatriots speak the same language as in neighboring Guangdong province where they have placed 80 percent of their investments in China.  Hong Kong accounts for approximately two-thirds of all foreign investments in Guangdong Province (Thoburn, et al. 1990: 1).  Hong Kong developers are also leading the way in real estate investment in the PRC, and in particular in the development of resorts and golf courses (Karp 1992; PB 1993; Ross and Rosen 1992).  Along with the good, Hong Kong Chinese have also been involved in criminal activity, such as prostitution, in Guangdong Province (Mosher 1992).
 

In the early 1980s, Taiwan businesses, eager to become economically involved in the PRC, began to set up ‘paper@ companies in Hong Kong which they used as a trans-shipment point to export goods to China (Kao 1993).  This growing practice lead to a relaxation of ROC regulations governing investments in China in 1987.  By 1992, Taiwanese had officially invested $9 billion in the mainland (P. Liu 1993) (although unofficial estimates placed the number at two to three times the official amount.)  Most of the Taiwanese investment has gone into neighboring Fujian Province, where people speak a dialect of Chinese that is closely related to Taiwanese.  Mandarin is also more widely spoken in Taiwan than in Hong Kong, giving the island a potential edge in northern China.  Taiwanese have been particularly adept at working with China’s bureaucracy (Flannery 1991).  Kentucky Fried Chicken, for example, uses Taiwanese managers extensively in its many branches in mainland China (Goldstein 1992).

Southeast Asian Chinese direct investment accounts for 10 to 15 percent of all foreign investment in China.  The potential, however, is much greater given the large number of overseas Chinese in Southeast Asia and their tremendous wealth (Sender 1991).  With approximately US$3 billion in two-way trade, overseas Chinese dominated Singapore accounts for 44 percent of all trade between the PRC and Southeast Asia (Stoltenberg 1990).  Thailand, Malaysia, and Indonesia each traded close to US$1 billion with China in 1989.  Singaporeans and Thais (mostly Chinese businessmen) have invested the most in China among Southeast Asians.

The cultural advantage that overseas and compatriot Chinese hold has provided them with access to relatively safer investments than other foreign investors, including the Japanese.  Investments by American Chinese and  Chinese from other parts of the world have occurred to a much lesser degree.  These overseas Chinese are more likely to limit their financial contribution to remittances for building schools, hospitals, roads, and other public facilities in their home village areas.

Between 35 percent and 40 percent of direct foreign joint venture investments in China have been in property development, including hotels, luxury resorts, golf courses, apartments and condominiums for foreigners, and  office space (Leung 1990: 407; Asiaweek 1990; Associated Press 1993).  An additional 5 percent has been in transportation, restaurants, and related services.  Most of the five-star hotels, and many four-star hotels in China were built under provisions of the 1979 Joint Venture Law (with subsequent revisions in 1983 and 1986) (Pearson 1991).   By 1991, there were a total of 202 joint venture hotels in China (Sun 1992: 86).  This was an increase of 16 percent over the previous year (He 1991: 82).  In addition, four hotels were solely foreign owned and 215 hotels were operated under cooperative agreements.  While joint venture hotels are located throughout the country, the latter categories are almost entirely in Guangdong and Fujian Provinces, reflecting their exclusively overseas and compatriot Chinese influences.
 

A typical joint venture hotel has an upper management staff from a major international hotel chain based in Hong Kong.  This staff would normally include the general manager, financial manager, rooms manager, executive housekeeping, and head chef.  All other employees would be local Chinese.  Joint venture agreement consists of ten to twenty year leases (although a few couple have fifty year leases), after which the foreign partner will either renegotiate the agreement or withdraw leaving the facility to the local Chinese partner.  China’s first joint venture hotel, the Jianguo opened in Beijing in 1982.  It took only three years for foreign investors to recoup their costs and start earning a profit (Gerstlacher, et al. 1991: 39).  However, increasing competition and sluggish growth in attracting high-end international visitors has created problems for joint venture hotels in recent years.  The overall occupancy rate in 1991 was only 52.35 percent for joint venture hotels, compared to 59.58 percent for cooperative hotels and 63.47 percent for state-owned hotels (Sun 1992).  Cooperative and state-owned hotels tend to be of a lower caliber than joint venture hotels.

The PRC government levies a Joint Venture Tax of 33 percent on all foreign-generated income, with an additional 10 percent on income that is exported out of China (although many tax breaks also exist.)  Unlike joint venture hotels, cooperative hotels are managed entirely by the Chinese side, which also provides land and labor.  The foreign investor provides capital, equipment, and technology, in return for a share of the profits (or losses).  To further encourage foreign investment, China’s National Tourism Administration (NTA) announced in late 1992 the establishment of eleven ‘tourist zones@ where special tax incentives will be provided to encourage foreign investment in resort and hotel development, and in travel agencies and taxi services (PB 1993).

Few other countries in the world have the kind of financial and managerial resources that China has in its compatriot and overseas Chinese.  When the PRC first opened its doors to tourism in 1978, accommodations were woefully lacking in both number and quality.  Through joint ventures, the quality of hotel services in China is finally beginning to reach international standards.  On the down side, some of China’s cities are starting to experience an overcapacity in hotel rooms for the first time.  The economic experience, managerial knowledge, and financial resources of compatriot and overseas Chinese have clearly been important factors in modernizing (and internationalizing) tourism in China.
 

Conclusions: The Future of the Other China

There are five basic subdivisions of the other China: Hong Kong and Macao compatriots, Taiwan compatriots, Southeast Asian overseas Chinese, American overseas Chinese, and other overseas Chinese.  Each of these groups relates in their own way to mainland China.  The overseas Chinese sojourner experience helped in understanding the existential relationship that Chinese everywhere have with China.  Compatriot Chinese, however, have had the greatest overall economic impact on the PRC.

Being farther removed from their homeland, the overseas Chinese are more likely to find themselves belonging to two very disparate worlds: that of their adopted land and that of their ethnic heritage.  First generation sojourners typically maintained close contact with their home villages.  There was always the possibility that they would return some day and in some way.  For many, that way is as an existential tourist.  This has been especially true for overseas Chinese living outside Asia.  A large number of overseas Chinese in North America trace their origins to Guangdong Province, which has developed a rural culture built largely around their remittances.  Southeast Asian Chinese, like Taiwanese, have closer ties to Fujian Province where they send remittances and invest in development projects.
 

Hong Kong compatriots have had the closest ties to the mainland and are the most influential in its tourism development.  Their interests and influence are concentrated in Guangdong province, although in recent years they have increasingly invested in other parts of the country (Engardio 1992).  Taiwanese are rapidly pursuing opportunities in China as their legal access to the PRC has increased.  Much of their influence has been in neighboring Fujian Province where the language dialect is more closely related to that of Taiwan.  In time, they are likely to venture further into the mainland, as well.

In recent years, several trends have been developing which will further complicate the scenario described here.  The first is the imminent return of Hong Kong and Macao, and projected future return of Taiwan, to mainland Chinese control.  Many foresee the development of a ‘greater China@ in which the differences among these three entities gradually disappear.  In the near term, business people in Taiwan and Hong Kong see themselves as leaders in the development of a major economic trading center that includes coastal mainland China (Einhorn 1992).  Alternatively, the fear is that over investment in the mainland could allow the PRC government to hold the economies of Hong Kong and Taiwan hostage to their policies.  It appears, however, that culture and ethnicity are driving Hong Kong and Taiwan to become ever more closely tied by economics to the PRC.  As this process continues, the compatriot Chinese, as an external force in China’s tourism development will cease to exist.  In the future we will be talking of domestic travel between the mainland provinces and the provinces of Taiwan and Hong Kong.

A second trend is the gradual progression into second, third, and succeeding generations of overseas Chinese.  With each generation the direct ties to the home village become weaker.  Language is more difficult to maintain and familiar faces become fewer and fewer.  Remittances to the village fade away as the values of the adopted land overshadow those of the original homeland.  The children and grandchildren of the permanent sojourner are not themselves sojourners.  However, they remain ethnically and racially Chinese.  A link still exists, upon which tourism can occur.  As this group of descended sojourners grows larger and wealthier over time, they will offer new opportunities for mainland Chinese tourism and economic development.  Some areas are already taking advantage of this by offering services to visitors who are tracing their genealogy.  More of this type of service will be needed in the future, especially in the overseas Chinese areas of Guangzhou and Fujian Provinces.

A third trend is the new wave of emigration from China that has occurred in the 1980s and 1990s.  Large numbers of Chinese have both legally and illegally emigrated from China.  Their preferred destinations are the U.S., Canada, and Australia.  Like the last sojourners to leave China after World War II and before 1949, they sense that they will probably never permanently return to their homeland.  In all likelihood, however, they will maintain some of the traditional ties to their homeland that characterized the sojourners of old.  One major difference is that the new emigrants are more likely to be from urban areas and more likely to come from a variety of regions in China.  The traditional social organization of rural southern China does not exist for them, and just how they organize themselves in their adopted lands, and how they ultimately relate and contribute to their homeland remains to be seen.

All of these trends point to a transformation of the other China.  They also indicate that the other China will continue to exist for a long time to come.  And it will continue to play an important role in the development of tourism in China.
 

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