by Amy Chua
By contrast, ethnic Burmans have profited almost not at all from the country’s market-driven deforestation. Shan tribespeople continue to earn money smuggling teak to Yunnan, but adding insult to injury, the Shan, along with the paid-off Burmese border officials, spend their proceeds almost entirely on coveted consumer goods imported from China and sold by Burmese Chinese. As a result the Chinese end up with both the teak and the money, while the Shan and the Burmans are left with cheap Chinese-made ghetto blasters, Michael Jackson T-shirts, sports shoes, condoms, and beer.8
In addition to teak, Burma is famous for her gems: pigeon-blood rubies, ultramarine sapphires, and imperial jade. Prior to 1989, under Burmese-style socialist rule, only the state was permitted to engage in gem mining and gem sales. Thus in the 1980s, when a private miner discovered, and then sold on the black market, a raw ruby weighing an incredible 469.5 carats, he was promptly arrested and imprisoned. SLORC recaptured the ruby in 1990 and proudly proclaimed it the property of the state. Christened Na Wa Ta, or the “SLORC ruby,” its picture was displayed across the country in the state-owned Working People’s Daily. (Around the same time, the government also announced the discovery of two raw sapphires, one weighing 979 carats, the other around 1,300 carats.) During the socialist period, when all industry was nationalized, the Burmese government sold gems to foreign companies by holding annual “gem emporiums.” Private gem sales were conducted underground by hundreds of traders operating largely out of Mandalay’s 34th and 35th Street black markets.9
In a watershed pro-market reversal, the Burmese government in the early nineties privatized much of its gem industry. Since 1995, private mining concessions have been sold on the basis of competitive bidding, costing as much as $83,000 per acre for virgin gem mines. Once again, virtually all the concessionaires have been Sino-Burmese businessmen. One Chinese-owned jewelry company reportedly controls 100 gem mines and produces over 2,000 kilograms of raw rubies a year. Lo Hsing-han’s visible holdings, valued at an estimated $600 million, include valuable ruby concessions as well as “a mining stake in the northern ‘jade rush’ town of Phakent—said to harbor a 300-ton jade boulder, buried so deep in the jungle it can’t be moved.” Lo’s Asia World conglomerate is now the most popular partner for foreigners investing in Burma. Along with private mining, SLORC also legalized private gem sales. Today, Burma’s gem industry is dominated by thriving Burmese Chinese at every level, from the financiers to the concession operators to the owners of scores of new jewelry shops that sprang up all over Mandalay and Rangoon.10 Needless to say, SLORC officials are also handsomely paid off at every level.
It is an understatement to say that, in terms of financial and human capital, the vast majority of indigenous Burmans, roughly 69 percent of the population, cannot compete with the country’s 5 percent Chinese minority. Three-quarters of the Burmans live in extreme rural poverty, typically engaging in paddy production or subsistence farming. Despite land reforms during the socialist era, an estimated 40 percent of Burman peasants are landless. For rural Burmans, saving money is virtually impossible; anything earned is spent just to stay alive. As a result, most Burmans have little or no capital and have not profited from economic liberalization.11
Lack of financial capital is not the only problem. Since abandoning socialism in 1988, SLORC has slashed real spending on health and education. According to United Nations agencies, nearly 40 percent of Burmese children never enroll in school and up to 75 percent drop out before the fifth grade. Moreover, because of the ruling junta’s paranoia about student-led civil unrest, Burma’s universities were closed for three-and-a-half years, until July 2000. Human capital levels among indigenous Burmans are thus abysmal. All these factors, along with possible cultural obstacles—some have suggested that there is a native prejudice against “greedy” profit-seeking—make it extremely difficult for Burmans to compete in a market economy.12
In urban areas, Burmans may actually have suffered from marketization. Most of the native residents of Mandalay were historically artisans, who made their living weaving tapestry, carving gold leaf, crafting furniture, or polishing precious stones. In recent years, low wages in these traditional industries relative to the skyrocketing prices of consumer goods have pushed the standard of living of thousands below subsistence. Meanwhile, since 1989, the price of rice in Mandalay has been rising steadily—at one point, over 1,000 percent in seven years—with no end in sight. For many Burmans, whose average per capita income is only around $300 a year, this translates into something close to starvation.
Further, as ethnic Chinese developers in the nineties snapped up all the prime real estate in Mandalay—making fast fortunes as property values doubled and tripled in the chaotic new markets—indigenous Burmese Mandalayans were pushed farther and farther away from their native homes. (In 1990, SLORC had already forcibly relocated dissidents and Mandalayan monks.) Today, thousands of poor, displaced Burmans live in satellite shantytowns on the outskirts of Mandalay, within eyeshot of the gaudy, fenced-off mansions of the SLORC generals, many of whom are openly parasitic on Chinese businessmen.13
Free markets are supposed to lift all boats, and indeed often do. But this is distinctly not the perception of Burma’s roughly 30 million ethnic Burman majority. In their view, markets and economic liberalization have led to the domination and looting of their country by a relative handful of “outsiders,” chiefly ethnic Chinese, in symbiotic alliance with SLORC. Mandalay’s central business district is now filled with Chinese signs and Chinese music pouring out of Chinese shops. Burmese-made products have been almost entirely displaced by cheaper Chinese imports. Chinese restaurants serving grilled meat and fish overflow with loud Mandarin-speakers. “To go to Mandalay,” snaps a character in a local cartoon strip, “you need to master Chinese conversation.” When the sun sets, Mandalay’s new money heads to Chinese-owned karaoke bars, where young Chinese hostesses sing along to the latest songs from laser discs made in Hong Kong. On weekends, wealthy Chinese relax in the mountaintop resort of Maymyo, where they have bought up as vacation homes the grand Victorian houses left behind by British colonialists.14
Meanwhile, just below the surface, anti-Chinese hostility seethes among the Burman majority. As hatred of SLORC intensifies, hatred for the Chinese intensifies as well, not without justification: Crony capitalistic relationships between SLORC generals and Chinese entrepreneurs, not to mention arms sales from China, have been critical in propping up Burma’s reviled ruling junta. But in the current reign of fear, there is no avenue for venting resentment, whether against SLORC, the rich Chinese, or the market-oriented policies that have allowed both of these groups to make hundreds of millions while indigenous Burmans become an increasingly subjugated underclass in their own country. Alcoholism is sharply on the rise among Burmans, all the more startling given that liquor consumption is considered a sin according to one of the Five Commandments of Burmese Buddhism. Fittingly, the alcohol chiefly consumed is Chinese Tiger Beer, imported from China.15
Today, ordinary Burmans speak bitterly of “the Chinese invasion” or “recolonization by the Chinese.” “The people who put up these new buildings say they are Burmese, but we know they are really from China,” a Burman shopkeeper explained angrily. “They are taking over our business and pushing us out of our homes.”16 Notwithstanding massive government repression—the Internet and all forms of political organization and free expression are banned—indigenous hostility against the Burmese Chinese is palpable and growing.
Chinese Market-Dominance in Historical Context
No other country has Burma’s lurid combination of Orwellian government, bulging rubies, and vast fields of opium poppies (which the current junta insists are being replaced with limes and soybeans). Nevertheless, the basic dynamic in Burma just described—Chinese market dominance and intense resentment among the indigenous majority—is characteristic of virtually every country in Southeast Asia.
Ethnic Chinese have played a disproportionate role in
the commercial life of Southeast Asia since long before the colonial era. In the early 1400s, when the Grand Eunuch Admiral Cheng Ho led a fleet of three hundred vessels around Southeast Asia on behalf of the Ming dynasty, he discovered an enclave of fellow Chinese already prospering in Java, now in Indonesia. The admiral observed that the Chinese had fine food and clothing, in contrast to “the natives of the country, who were very dirty and were fond of eating snakes, insects, and worms, and who slept and ate together with the dogs.”17
Around the same time, in another part of what is now Indonesia, the much more advanced Tabanan was the seat of one of Bali’s most powerful and cultured royal courts. The Tabanan kingdom, recounts Clifford Geertz, was full of “rebellious conspiracies, strategic marriages, calculated affronts, and artful blandishments woven into a delicate pattern of Machiavellian statecraft.” Tabanan was also the center of the now world-famous Balinese music and theater arts. Nevertheless, even six hundred years ago, all foreign trade in the kingdom was conducted by a single wealthy Chinese, with the remainder of the tiny Chinese community acting as his agents. Indigenous commerce was practically nonexistent. Half a millennium later, little in this respect had changed. As late as 1950, virtually all the stores and factories in Tabanan were Chinese owned.18
In the Philippines, when the Spanish in 1571 founded the city of Manila on the island of Luzon, they encountered Chinese settlements that had preceded them by more than a century as well as belligerent Chinese traders, who sailed up in their junks, firing rockets and cannons. Animosity between the Chinese and the Spanish is a constant theme in the Philippines’ colonial history. The Spaniards subjected the Chinese to severe taxes and restrictions, and sequestered them in fenced-in quarters called the Parián. At the same time, the Spanish were utterly dependent on the Chinese, who, as traders, tailors, locksmiths, bakers, and so on, seemed to occupy every critical economic niche.
On May 23, 1603, three Chinese mandarins, wearing all their official insignia, and carrying a box of seals as if they were still in China, arrived in the Philippines. After receiving homage from Manila’s Chinese residents, the mandarins
presented a letter to the Spanish Governor explaining that they had come to investigate a hill of gold and silver, as yet unexploited they understood, of which the Chinese Emperor had heard tell. They bore themselves with the dignity befitting the emissaries of All Under Heaven, moving through Manila as though it were Chinese territory, and administering floggings as they saw fit. The Spaniards did not quite know what to make of it. Was it a curtain-raiser to a Chinese takeover of the Philippines? . . . Taking immediate precautions, the Governor issued orders for all Chinese on the island to be registered, and for the men to be divided and housed in groups of three hundred.19
The Chinese resisted, and hostilities broke out. After a Spanish envoy was killed in Parián, the Spanish took their vengeance, massacring twenty-three thousand Chinese and hungrily looting their property. Afterward, however, the Spanish regretted having killed so many Chinese, for, as one of them lamented, they had no food and “no shoes to wear, not even at excessive prices.”20
The Chinese eventually returned and were massacred by the Spanish many more times. In the end, the Chinese outlasted the Spanish.
Chinese economic dominance in Vietnam dates back even further. Vietnam’s recorded history begins in 208 B.C., when a renegade Chinese general conquered Au Lac, a domain in the northern mountains of Vietnam populated by the Viet people, and declared himself emperor of Nam Viet. A century later the powerful Han dynasty incorporated Nam Viet into the Chinese empire, and for the next thousand years Vietnam was ruled as a province of China. During this period of Chinese colonization, and for many centuries afterward, waves of Chinese immigrants—bureaucrats, scholars, and merchants as well as soldiers, fugitives, and prisoners of war—settled in Vietnam. By the end of the seventeenth century a distinct Chinese community, known in Vietnam as the Hoa, had formed within Vietnamese society.21
The Chinese in Vietnam were notoriously enterprising. Unlike the British, Dutch, and Japanese, the Chinese were not only traders but also manufacturers, of everything from black incense to fine silk. They acted as middlemen between the Europeans and the local Vietnamese. In Hoi An, Vietnam’s busiest trading port from the sixteenth to eighteenth centuries, Chinese merchants monopolized Vietnam’s gold export business and dominated the local trade in paper, tea, pepper, silver bars, arms, sulphur, lead, and lead oxide. Resentment against Chinese success coupled with repeated attempts by China to conquer Vietnam sparked recurrent anti-Hoa reprisals, including the 1782 massacre of Chinese in Cholon, Saigon’s Chinatown. Nevertheless, by the time the French arrived in the mid-eighteenth century, Vietnam’s tiny Chinese minority dominated the indigenous Vietnamese majority in virtually every urban market sector as well as in trade and mining.22
As throughout Southeast Asia, the Chinese prospered under colonial laissez-faire policies. Indeed, favorable economic conditions brought a rapid influx of Chinese immigrants, which continued until the middle of the twentieth century. Almost all of these Chinese settled in South Vietnam. By the 1930s the gaps between the large-scale manufacturing, commercial, and financial enterprises of the French were filled by the smaller businesses of the Chinese. The magnitude of the Chinese minority’s economic power was astounding. Constituting just 1 percent of Vietnam’s population, the Chinese controlled an estimated 90 percent of non-European private capital in the mid-1950s and dominated Vietnam’s retail trade, its financial, manufacturing, and transportation sectors, and all aspects of the country’s rice economy. Although there were also numerous wealthy Vietnamese in the commercial class, Chinese economic dominance produced a bitter outcry against “the Chinese stranglehold on Indochina,” “the Chinese cyst,” and “the Chinese excrescence.”
During the Vietnam War (which the Vietnamese call the American War), the wealth of the Chinese in South Vietnam, particularly Saigon, intensified. Vietnamese Chinese pounced on the lucrative business opportunities that came with the arrival of American troops, who needed a trade and services network. At the same time the South Vietnamese government deregulated the economy, adopting relatively liberal market practices. Local Chinese businessmen aggressively seized these opportunities as well, extending their dominance to include light industry.
Following the country’s reunification in 1976, the revolutionary Vietnamese government singled out the entrepreneurial Chinese of the south as “bourgeois” and perpetrators of “world capitalism,” arresting and brutalizing thousands and confiscating their property along with that of their Vietnamese counterparts. “Employing the techniques Hitler used to inflame hatred against the Jews,” reported U.S. News & World Report’s Ray Wallace in 1979, “Hanoi is blaming day-to-day problems in Vietnam on resented Chinese control of commerce and the Mekong Delta.”23 As Vietnam was transformed into a socialist economy, thousands of Chinese either died laboring in Vietnam’s “new economic zones” or fled the country.
Today in Vietnam, both markets and the Chinese are back. The government’s post-1988 shift to market liberalization, or doi moi (“renovation”), has led to an astounding resurgence of Chinese commercial dominance in the country’s urban areas. Vietnam’s 3 percent Chinese minority cluster in Ho Chi Minh City (still Saigon to most Vietnamese), where they control roughly 50 percent of that city’s market activity and overwhelmingly dominate light industry, import-export, shopping malls, and private banking. Once again, resentment among the indigenous Vietnamese is building.24
Globalization and the Explosion of Chinese Wealth
Vietnam, however, is still technically a socialist country, with the state retaining control over major sectors of the economy. By contrast, in most of Southeast Asia, global markets have catapulted wealth creation—and wealth disparities—to an entirely different order of magnitude. In Thailand, Malaysia, the Philippines, and Indonesia, ethnic Chinese tycoons, richer than entire nations, oversee multibillion-dollar financial empires stretching
from Shanghai to Kalimantan to Mexico City.
For several decades prior to the 1980s, most of the Southeast Asian governments pursued disastrous non-market economic policies. Starting in the 1980s and 1990s, in what the World Bank has called “the third wave of globalization,” the countries of Southeast Asia embarked on aggressive market reforms, including free trade and pro-foreign investment policies, deregulation, and privatization of state-owned enterprises. These reforms generated rapid economic growth throughout the region, particularly in the labor-intensive, export-oriented manufacturing industries. At the same time, the turn to free markets unleashed the entrepreneurial energies of Southeast Asia’s Chinese minorities, enormously enhancing their visibility and economic dominance.
Thailand, for example, was isolationist in the fifties and sixties, its economy mired in state-owned enterprises. Over the next several decades, internationalization and market-oriented policies led to the dramatic emergence of a massive export-oriented, large-scale manufacturing sector, which in turn jump-started the economy. Virtually all of the new manufacturing establishments, including the now behemoth Siam Motors, were Chinese controlled. Indeed, a recent survey of Thailand’s roughly seventy most powerful business groups found that all but three were owned by Thai Chinese. (Of these non-Chinese groups, one was controlled by the Military Bank, another by the Crown Property Bureau, and the third by a Thai-Indian family.)25
In Malaysia, too, privatization and other market policies have starkly magnified the economic dominance of the country’s Chinese minority. This is true despite extensive affirmative action policies for the indigenous Malay majority, which have been in place ever since bloody anti-Chinese riots in 1969 left nearly a thousand dead in Kuala Lumpur. Today, the Malaysian Chinese—the largest Chinese minority in Southeast Asia, representing about a third of the population—account for 70 percent of the country’s market capitalization.26
