Introduction

Introduction

Over the past two decades, two events in Singapore and China, involving their citizens, drew attention to debates about state intervention in development processes as well as state–society relations, intra- and inter-ethnic social relations (between local and foreign residents) and transnational investment and labour flows generated through state-led race-based discourses. In 1992, Singapore’s government, after encouraging Chinese-owned enterprises in Southeast Asia to venture actively into China’s rapidly burgeoning economy, set the example by using its own state-owned enterprises (SOEs) to invest in the mainland. One core project, the Suzhou Industrial Park, involving co-investments by China’s SOEs was, by Singapore’s own admission, not successful because state leaders had failed to understand social relations involving local residents and foreigners even though both shared a similar ethnic identity.¹ In 2011, in Singapore, a migrant family from China lodged a complaint against their Singaporean Indian neighbour for cooking curry, as it emanated a smell they could not tolerate. When a government agency mediating the dispute ruled that the Singaporean Indian family could only cook curry when the foreigners were not at home, this led to an uproar in ethnically Chinese-dominant Singapore, resulting in a nationwide ‘Cook and Share a Pot of Curry!’ movement because of the need to affirm a ‘Singaporean’ identity.²

These two anecdotes should be set in the context of the core story of the last quarter of the 20th century: that of the rise of China and India on the world stage. Various kingdoms in the territory occupied by the current two states of India and China had flourished and attained global pre-eminence in such diverse areas as politics, social systems and science during their several millennia of history. In present times, it is in the arena of the economy that China and India have become increasingly renowned. The policies of these new political economic regimes in India and China have had far-reaching effects not only for these two countries in the past three decades but also for the global economy and other important players in the world, specifically the burgeoning economies of Southeast Asia.

Part of the current importance of China and India stems from geography; both are among a handful of ‘continental’ countries—those geographically so large that they occupy a major part of a continent. This has major implications for both economics (scale) and governance (decentralization) of society. Historically, it is this geography that contributed to the flow of peoples from India and China to other parts of Asia, including Southeast Asia, first as traders and subsequently as labour migrants. In contemporary times, a two-way flow of peoples and investments from India and China, on one hand, and from Southeast Asia on the other, and the impact both have had on each other has emerged as an intriguing socio-economic issue. Investment flows between Southeast Asia and China have been substantial, with important social, business and technological outcomes on the mainland. The flow of people from China and India is having major implications on employment and state–society relations in Southeast Asia, a region that since the 1930s has made it extremely difficult for migrants to become citizens. This stringent citizenship policy was recently reversed in Singapore, though not in other parts of Southeast Asia. This policy change, which had serious ramifications in terms of how Singaporean society now views the state and its economic agenda, was done to secure the scale and kind of human capital presumably needed to continue generating growth in the island state.

Lacuna

A major lacuna to be filled in this special issue then is this: Southeast Asia in China and India, and China and India in Southeast Asia—the outcomes of this two-way flow of investments and peoples. However, we recognize that an assessment of this lacuna necessitates a study of China and India from a historical perspective. Both countries have been characterized as ‘civilization’ states.³ These are states within which entire civilizations were located and had given these countries and their peoples their identity and coherence. These identities have been transplanted to Southeast Asia, through trade in the pre-colonial period, for employment during colonial rule and as investments since the 1980s. These cross-border flows over history have led to new settlements in Southeast Asia from which new outlooks have emerged among locally born generations that have given rise to new forms of solidarity and identification. The advent of new generations of ethnic Chinese and Indians in Southeast Asia with no ties to China or India has spawned important debates about identity shifts⁴ which have not been registered by state leaders in Southeast Asia, China and India, at least as reflected in policy statements. For example, since the early 1990s the governments of China and India have actively called for investments from what they see as the Chinese and Indian ‘diaspora’ of Southeast Asia, presumably because of the ties of these ethnic groups to their ancestral ‘motherlands’.⁵

Policy-based discourses on diasporas are primarily constructs of politics and business action rather than the product of inherited value systems imported from the migrants’ place of provenance. The presumption that ethnic Chinese and Indians in Southeast Asia can be seen as a ‘diaspora’ has been built by state leaders on the idea that common ethnic identity can be employed to encourage investment flows. The governments of China and India have actively advocated this idea with the support of Southeast Asian leaders such as Singapore’s Lee Kuan Yew and Malaysia’s Mahathir Mohamad. In the process, forms of employment of the term diaspora have created the notion that ethnic Chinese and Indians outside China and India, respectively, have a ‘homeland’ which is not the country of their birth. This idea that ethnic Chinese and Indian communities in Southeast Asia have a sense of belonging to China and India because they share a common ethnic identity has been challenged.⁶ However, how identity shapes intra-ethnic relations, employment patterns and investment opportunities when citizens of India and China come into contact with ethnic Indians and Chinese in Southeast Asia has not been reviewed adequately in comparative perspective. In this study, identity changes are assessed in forms where they best manifest themselves: in social life and in business ventures forged, or unsuccessfully nurtured, through tie-ups involving foreign and domestic capital.

Multiple Dimensions

This special issue, which has six articles, with two each focusing on China, India and Southeast Asia, deals with different dimensions of this question of state–society relations in these regions. These dimensions relate to the sources and consequences of income distribution, technological capacity and the impact of ethnic communities on their areas of historical origin (China and India) and the countries of their birth (Southeast Asia). These articles highlight the complexity of state–society relations that lies beneath Joel Migdal’s (2001) broad classification of state-in-society relations. While there is a huge body of literature on the role of the state in East Asia, South Asia and Southeast Asia, and correspondingly on economic and social processes and social change in these regions, there has rarely been a careful effort by scholars to engage in analysing state–society interactions as a focal topic in the broad spirit of Migdal (2001).⁷ Yet, these interactions, and how they have evolved with rapid industrialization, are essential to understanding the mechanics and consequences of development models.

The countries reviewed in this special issue, with the sole exception of China, fall in the list of Commonwealth countries, viz. India, Malaysia and Singapore. The inclusion of China along with these three Commonwealth countries was motivated by two important considerations. First, China has, over the last three decades, emerged as the world’s second largest economy and now actively invests in Commonwealth countries. China investments in Malaysia have become quite important for this Southeast Asian country’s economic development while highly trained Chinese human capital has been crucial for the growth of key fledgling industries in Singapore.⁸ Second, the growing immersion of companies and people from China in Southeast Asia, particularly in multi-ethnic Malaysia and Singapore, is extremely interesting because of the presence in these countries of a huge ethnic Chinese population; this is an issue of great interest to other countries in the Commonwealth.⁹ Furthermore, for these two reasons, issues surrounding economic and social inequality in China can have a bearing on Commonwealth countries. Put differently, the form of economic development and social change in China has become central to the unfolding histories of economic development in Southeast Asia and to state–society relations of these countries. By mapping this particular configuration of economic development and state–society relations in this special issue, we hope to highlight important concerns within the Commonwealth as well as the relations between these countries and a key player in the non-Commonwealth global space in the coming years and decades, China.

In the articles that follow, the first two outline the historical development of the economies of China and India. These papers review differing forms of state intervention to generate economic growth with a focus on the implications of rapid modernization on these societies, including the emergence of new wealth, income and spatial inequities. While these papers review forms of state intervention, they also draw attention to China and India’s similar employment of neoliberal-type policies in combination with state intervention, an indication of the mix-and-match approach to policy planning to drive economic growth. The second set of papers reviews investment flows between regions. The focus of one study here is on foreign investments in China and the implications of this on economic and technology development. The second study in this set deals with investment flows from China to Southeast Asia, and vice versa, with emphasis on Malaysia as a case study. This paper traces the employment of SOEs by the governments of China and Malaysia to facilitate investments that include privately owned ethnic Chinese capital. These two papers devote much attention to business development and the methods deployed by the state to link private and public capital, including through SOEs, to raise investments for infrastructure and technological development projects. The third set of papers concentrates on the issue of identity as viewed from the perspective of these states. The first paper reviews India, assessing specifically public policies to draw investments from the Indian ‘diaspora’. The second paper in this set deals with outcomes of offering employment and citizenship to peoples from India and China in Singapore.

The Centrality of State–Society Relations

A long history, involving state–society relations, which must surely be an important context for discussions of the development of China and India in modern times, is not much in evidence in the growing body of discourse on their rise. Indeed, comparing these two countries is of particular interest because of the starkly divergent paths they took, and to an extent still take, to achieve the impressive development the world now recognizes. A major subtext of this comparison is the competition between the world’s largest democracy and its most populous authoritarian state, with supporters of the former arguing that its ideology would ultimately triumph.¹⁰ This contest applies also to economics, with free markets pitted against state control. Although India is no Hong Kong, its home-grown entrepreneurs have been considered a more viable model than state-led entrepreneurship in the long-run (Huang and Khanna, 2003, p. 81).¹¹ This, as well as a host of other characteristics, such as fixed investment (Rattner, 2013), national savings, demographics (Herd and Dougherty, 2007) and pool of human capital (Sen, 2013), are deployed as the bases for comparing both countries. While the purpose of much of these studies was to determine which country was superior, this comparison of experiences and the contexts, strategies and policies that led to them help inform the ongoing debate on equitable social and economic development.

The role of the state looms large in this study, in terms of how it has structured economic development in these countries and in terms of how governments are fostering transnational ties involving local and foreign enterprises through business tie-ups. Crucially too, we are dealing with far stronger states than conventional definitions of such states imply, primarily in the context of China, Malaysia and Singapore, three of the core countries under study here. All three countries have been classified as single party dominant states.¹² These two Southeast Asian countries also have among the largest ethnic Chinese and Indian communities in the region, if not the world.

The literature on development models is dominated by narratives of the role of the state, of which the developmental state advanced by Chalmers Johnson (1982) writing about Japan represents one end of the continuum of state–society relations. Southeast Asian countries, along with China and India, have deployed models that involved an extensive state role. These Southeast Asian models have a major commonality with the Chinese and Indian models, i.e. the heavy hand of the state in specific areas of economic activity and even social life, as indicated in the population policy of Singapore and the employment of diaspora-based discourses to facilitate investment flows. Thus, while the state’s role is undoubtedly important, no less vital is the society which is the target of state policies and with which the state interacts. Yet, there has been precious little systematic work done that integrates the work of developmental state theorists and those dealing with state–society relations.

We therefore adopt not merely a statist approach, but a more eclectic framework that helps bring into perspective key transformations in society, a reason why Migdal is helpful here. Migdal (2001) makes the crucial point that societies are not ‘static’ formations but are constantly ‘becoming’, a logical reasoning in the context of rapidly modernizing India, China and Southeast Asia. It is because of these states’ poor understanding of these new ‘becomings’ that public policies are out of sync with the social realities of their societies. The focus of this study is based on a theoretical employment of Migdal’s (2001) state-in-society perspective with an empirical focus on developmental state outcomes through an assessment of technological outputs, business evolutions and intra-ethnic Indian and Chinese relations.

This approach involves understanding how the nature and structure of the state inform public policies that have a significant bearing on issues such as investments, transnational flow of labour, intra-ethnic ties and citizenship. As Migdal (2001, pp. 15–16) further notes, the state can be understood by the actual practices of its multiple parts. In the context of China and India, each with its specific societal structure and relationships, how the state has been and continues to be constructed and how this construction informs these states’ economic and social development need to be properly understood.

A state–society distinction is employed to determine how the governments of these rapidly developing countries envision development, through state intervention as well as with the employment of highly entrepreneurial ethnic groups, and the outcomes of this on their societies and on their economies. We adopt here neither a top-down nor a bottom-up approach; rather, it is an approach that focuses on understanding what happens when different societies constituting members of the same ethnic groups meet and what the consequences of these meetings indicate about the state and its policies, particularly when governments actively encourage transnational investment ties and labour flows.

China and India provide important studies of state–society relations for several reasons. First, while China represents an important example of what can be characterized as a strong state, Vamsi Vakulabharanam and Rahul De note that India fits the mould of strong societies where social movements are a major force to be reckoned with. The Indian case is important too, for a different reason. It is an example of a state that essentially came out of the progressive struggle for independence against British rule but has delivered mixed results for the larger society. The larger Indian society has been active in the form of various radical struggles and social movements but has not been able to alter what may be termed as largely elite-driven state policies during the last seven decades. Crucially too, there has been increasing elite bias in state policy over the last two decades in India despite popular movements pushing for progressive change.

What is particularly interesting about the developmental plans of India and China is how, in terms of investments and their outreach to the Indian and Chinese ‘diaspora’ for investments to generate growth, these have had a significant bearing on states and societies in Southeast Asia. Governments of Southeast Asia, in particular Malaysia and Singapore, have created close ties with those in China and India, including through their SOEs, hoping that such state–state linkages will facilitate investment flows to each other. These governments also hope that state–state links through SOEs will encourage investment flows from ethnic Chinese and Indians from Southeast Asia into China and South Asia.¹³

When such transnational economic and social engagements have occurred, this has led to contact between similar ethnic communities from India, China and Southeast Asia. In this special issue, the articles by Edmund Terence Gomez, Khor Yuleng and Zhao Fang (on transnational investments) and Faizal bin Yahya (on social relations in Singapore) indicate that when intra-ethnic contact is made in societies in these regions, social boundaries are created. Interestingly enough, and in contrast to what much of the literature argues, these social boundaries are created based on resistance and contestation—not cooperation—when ethnic Chinese and Indians from these countries come into contact with each other. As Migdal (2001) notes, these social boundaries also enact the separation between the public and private spheres.

The reason why contact between similar ethnic groups has not led to mutually supportive alliances and accommodations lies in part in the development paths that China, India and Southeast Asia have followed. In China and India, they represent two distinct development models, both of which involved a strong role of the state interacting with society, a fact submerged by the democracy–authoritarianism comparison. These models possess similarities as well as contrasts. They and the state–society relations they engendered have been influenced by millennia of history during which institutions for managing the latter have evolved in parallel to Western institutions that emerged much later. Thus, Vakulabharanam and De (2010) explain Indian and Chinese consumption inequality through a class-based narrative, the respective classes themselves rooted in these countries’ histories. They show that the recent rise in inequality in both societies is driven simultaneously by emerging class structures and the responsiveness of the states to their respective dominant classes that have evolved in a historically contingent fashion. China’s hukou system, inevitably attributed to the present Chinese government, in fact has its roots deep in the country’s history (Yip, 2012).

State–society relations in these countries are very complex, and in many areas state and society overlap to an extent that the distinction between them becomes fuzzy. This complexity is acknowledged even by Western scholars in their critique of the Weberian state (see, for example, Sellers, 2011). China’s arguably unique state–society relationship with the state embedded in society has also received attention from a number of scholars (see, for instance, Wakeman, 1993; Huang, 2008). Interestingly, some scholars also came to the same conclusion about India (see Fuller and Harriss, 2001, p. 9). However, the interesting question in the Indian case is to ask how the state is differently embedded in society, since there is a much more vital role here for electoral democracy and deep social movements. It is also, therefore, puzzling that the Indian state too has been captured largely by the upper classes/strata, especially since the 1990s despite the presence of various democratic vehicles. The deeper social dynamics do not seem to largely alter the way the Indian state functions, with some notable exceptions, such as the introduction of the National Rural Employment Guarantee Scheme in the last decade that benefits the least privileged in the country.

An important dimension of development is a country’s economic relationship with the rest of the world. In this respect, China, through a deliberate process of globalization abetted by the state, has reaped significant benefits from trade and foreign direct investment. This process has reshaped society by raising incomes and employment but also increasing income and wealth inequalities. India, with a smaller share of trade in its gross domestic product, has also, through its multinational corporations, emerged as a global player in some sectors. How do these state-promoted or sanctioned interfaces interact with the outside world? For both China and India, one major dimension of this domestic–external interphase is the presence of ethnic Chinese and Indian populations in other parts of the world, though especially Southeast Asia.

Developmental models that have been adopted have undoubtedly led to major transformations in societies in India, China and Southeast Asia, including the rise of a new middle class. The emergence of this new middle class, particularly for purposes involving employment and investments, has primarily been due to public policies. In India, as the article by Amit Kumar Mishra indicates, a whole range of policies and incentives have been created to draw in investments from the Indian diaspora. Faizal, on the other hand, looks at what happens in society when the Singapore state alters immigration policies to allow foreigners, particularly professional or well-educated Indians and Chinese, to become citizens. The hostilities that have emerged between these new citizens and Singaporeans was a contributing factor to the long-standing ruling party, the People’s Action Party (PAP), losing unprecedented support during the 2011 general election. The papers by Mishra and Faizal capture well how the state policies are not aligned with the transformations that have occurred among ethnic Chinese and Indians in Asia. The same can be said about the states in Singapore and Malaysia. Why is it that these states have shown poor understanding of societal transformations?

Migdal (2001) provides important insights here through his assessment of the nature of the relationship between state and society. He shifts the emphasis from one with a focus on structure to one of process. Much of this is due to the imperatives of development that condition the thinking of state leaders in these countries. The articles in this issue that focus on the role of the state and development capture this imperative, seen specifically in the studies by Vakulabharanam and De, Gomez et al. and Cheong Kee Cheok, Wong Chan Yuan and Goh Kim Leng. State practices, along with the emergence of new generations of ethnic Chinese and Indians in Southeast Asia, have led to transformations in identity that have not been fully understood or are no longer considered vital by governments concerned primarily with identifying new methods to generate economic growth and draw foreign investments and relevant human capital. These state practices are best exemplified through policies introduced to encourage technological development. This is seen cogently in the study by Cheong et al., whose narrative of China’s strategies for technological advance is devoid of any mention of a role for ethnic Chinese either as entrepreneurs or as contributors of human capital, suggesting a lack of transnational cohesiveness between ethnic Chinese overseas and Chinese entities entrusted with driving innovation. Technology development in all countries is still state-driven in spite of the emergence of a vibrant, even entrepreneurial, middle class.

The articles by Cheong et al. and Gomez et al. on state-driven R&D and joint business ventures, respectively, indicate that the outcomes had not transpired in the manner expected of public policies. But, as Gomez et al. indicate, the state still persists, at least publicly, with old ideas when employing state–state-led projects as a mechanism to draw in ethnically based private capital. For example, the implementation of jointly funded major infrastructure projects involving their SOEs continues to be employed by the governments of China, Malaysia and Singapore even though history has indicated that such endeavours are difficult to sustain as they have contributed to, among other things, intra-ethnic conflicts. The continued deployment of such methods to draw investments indicates an outdated or poor understanding by these states of identity transformations in their societies.

Dimensions of State–Society Relations

State practices are well illustrated through public policies as they set out how governments plan to reach out to society, both domestic and foreign. In their study of India, Vakulabharanam and De depart from the prevalent analysis of sources of income inequality (see, for instance, Borooah et al., 2006) and examine in detail the trajectories of economic growth and income distribution since independence in 1947. They highlight ‘periods of short-lived stability that were in turn shaped and produced by various crises and contingencies’. In this process, they reveal how the dominance of the Indian state, with a broad progressive vision until the 1980s, was virtually transformed from the 1990s with its capture by private capital and professional classes. As urban capitalist classes gained ascendancy, the feeble voice of rural residents and the poor became even weaker. This has spawned significant resistance from India’s rural and urban poor, necessitating a response from the state and raising serious questions about how state–society relations have been altered by various growth and distribution regimes since independence. While India’s growth has been phenomenal since the 1990s, this has not caused large-scale migrations from rural to urban areas (unlike the Chinese case and in Southeast Asia), since employment generation in the high-growth urban sectors has been quite sluggish. This then creates a deep contradiction in the Indian growth model that may be surfacing in the significant economic slowdown since 2010. This study throws further light on the causes of this slowdown through its historical analysis of India’s growth and distribution experience.

Taking a different tack, Li’s paper on China focuses on the sources of inequality, moving beyond the popular discourse that relates economic growth to income inequality. By reviewing separately the rural and urban sectors of the economy, Li identifies three separate sources of inequality: those within the two sectors and that between the sectors. He concludes that changes in income inequality within rural areas were the product of economic growth while the change in income inequality within urban areas was more affected by the country’s economic transition towards a more market-oriented economy through a series of major reforms. Inter-sector income disparity was more likely affected by pro-urban economic policies. In terms of state–society relations, Li’s analysis speaks not only to the dominant role of the state, as befits its strong state status, but also to its ability to engage different segments of society differently. Income inequality in China has risen not only because of the different modes of state–society engagement, but also because of the differences between the modes.

Technological capability is now recognized as the key to moving up the development ladder. In both China and India, this capability is advancing rapidly. But just like about everything else in their development, the nature of this capability and consequently the competitive advantage such capacity confers differ between the two countries. India is emerging as a leading innovation centre for information technology while China has been upgrading the technology embodied in manufacturing and simultaneously moving into the development of alternative energy. In pursuing its own strategy of technology catch-up, each country faces greater obstacles compared with those faced by early starters South Korea and Taiwan in that World Trade Organization rules imply much more limited scope for imitation.

In their article on technology development, Cheong et al. discuss the various strategies China simultaneously deployed to achieve catch-up. While some strategies were borrowed from the early starters, several were unique to China. The latter included achievement of major cost reduction from mature technologies and ‘forward engineering’—the institutionalized commercialization of university- and research institute-based R&D (Lee et al., 2011, p. 494). In this area, different levels of the state (central, provincial and local) engage with citizenry. This engagement, sometimes coordinated or overlapping (for example, when subnational administrations operate under national policies), is at other times competitive (as when different provinces compete to establish technology clusters). The ability to pursue different strategies simultaneously comes from the geographical and population size of the country, traits that India also possesses. Whatever strategies have been adopted, the state’s overall objective is to benefit society through technology acquisition and use.

The studies by Vakulabharanam and De and Cheong et al. indicate actual practices of the state in a process of engagement with society through the creation of rents to drive technology development. It becomes problematic, however, when these development plans include the diaspora due to a poor grasp of how this transnational society thinks and views China and India. It is this issue that the next three papers grapple with, an area that has received insufficient attention in terms of state–society relations, i.e. the role played by what China and India see as ‘diasporic’ populations, of which both are in large numbers and a major source of investment and relevant human capital. These populations imply yet another dimension of state–society relations in that such ethnic groups have an impact on both the states in which they are domiciled and their countries of origin. For ethnic Chinese and Indian populations in Southeast Asia who are prominent in business, their economically powerful business groups have played important roles in the development of their own countries and have, to some extent, shaped economic and enterprise development in India and China.

Mishra deals with India’s engagement with ethnic Indians outside this country, a diaspora as this state sees them. Mishra tackles this issue from the perspectives of state–society relations and how this diaspora has responded to the Indian state’s economic initiatives. While pointing to the state’s positive stance vis-à-vis ethnic Indians in other countries, Mishra points to several areas that have been overlooked or misread in this engagement. The first is the exploitation that migrants are subjected to in the countries of destination, especially in the Middle East. The second is the high cost of migration, which makes this avenue of achieving higher income accessible only to those who can afford these costs, while those without the wherewithal incur heavy debt in pursuing this course of action. The third is the overstated benefit of employment generation, which is belied by the fact that more than half those migrating for work overseas are already employed at home. Finally, the appeal to religious- and culture-based ties to cement economic relations between ethnic Indians born and bred outside India and their ancestral homeland; this, as Mishra notes, may have unintended consequences for both countries of origin and destination. He warns that the Indian state’s homogenous construction of this ‘diaspora’, evidently a distorted view, can lead to ‘copious concessions without cautious checks (that) may result in manipulation of such policies’.

Mishra’s thesis is particularly useful as it emphasizes how flawed policy planning can be if the Indian government, when appealing to the ‘diaspora’ to invest in their ‘motherland’, makes no distinction between migrants from this country and ethnic Indians born and bred in Southeast Asia, as well as those in North America, Europe, Africa and the Gulf countries. The absence of this crucial distinction is an indication that the Indian state has little, or no, understanding of identity transformations that are occurring or that have transpired among ethnic Indians around the world. While the Indian government, like that of China, had created a host of inducements to draw investments from this Indian and Chinese ‘diaspora’, they did not understand the need to tailor these incentives according to the type of investments they were trying to obtain.

These arguments can be further substantiated through an analysis of investment flows by these two ‘diasporas’. Ethnic Indians from North America and Europe are investing in India in large amounts, a situation not seen by the same community from Southeast Asia. On the other hand, ethnic Chinese in Southeast Asia who own major enterprises have invested extensively in China while there is little evidence of ethnic Chinese from North America and Europe investing in the mainland. A related question arises: Why are Indians in industrialized countries such as Britain and the United States developing highly entrepreneurial firms in these two economies? Many of these Indians are migrants or of the first generation; when they migrated they carried with them ‘class resources’ (Light and Bonacich, 1988) such as wealth and a good education. These resources allowed them to integrate much better into these English-speaking industrialized economies, even becoming citizens of these countries, though they probably still have strong ties with India. In Southeast Asia, the Indians brought into the region were primarily indentured labour to serve the plantations sector. Caught in a web of poverty, these ethic Indians, now many in their third or fourth generation, have little or no links with India. They have struggled to move out of the poverty trap they have found themselves in primarily due to the low quality of education they have been privy to in the plantation estates. The key inference drawn from these studies is that ethnic Indians and Chinese, referred to by the states of India and China, respectively, as peoples of their diaspora, have no sense of belonging to these countries, do not see these countries as their ‘motherland’ and have no desire to ‘return home’, all ideas that may still be held by the migrant cohort.

To corroborate these arguments, Gomez et al. assess intra-ethnic Chinese engagements in both origin and destination countries. They review this from the perspective of investments by Malaysian Chinese in Malaysia and in China, an assessment that also offers insights into ethnic and national identities. Their study reveals that as Malaysian Chinese experienced intergenerational transition, intra-ethnic ties, whether in business or otherwise, loosened, rendering obsolete the idea that transnational ties can be forged based on common ethnic identity. Instead, Malaysian Chinese investments in China have been shaped by ‘competition and fragmentation’. Indeed, it was the governments of Malaysia and China that engendered bilateral direct investments through state–state collaborations, employing SOEs as catalysts to encourage private sector participation. These state–state ventures were led by SOEs from Malaysia and China to promote transnational investments that ‘are situational and episodic, patterned to serve their own and these governments’ interests rather than to support the supposed interests of the larger Chinese community’.

The contentious nature of relations between ethnic Chinese and Indians in Southeast Asia and citizens of China and India when these two communities meet are assessed in the article by Faizal on Singapore. Present-day migrants from China and India in Singapore are only there because of the island state’s need for the labour they can provide to drive economic growth. Singaporean society was not prepared for the rapid influx of foreign labour, particularly those with class resources like them, who were being offered citizenship. There were class dimensions to this issue; migrants with class resources were occupying jobs Singaporeans felt they were equipped to handle. Singaporeans were also concerned with the growing influx of working-class labour from South Asia, particularly Bangladesh, to serve the construction industry. State–society relations have become clearly conflictual with the growing presence of Chinese and South Asian migrants, reflected well in the 2011 election results when the PAP registered a huge decline in popular support. The PAP obtained only 61% of the popular vote, an indication of being increasingly out of touch with demands made by society. Even PAP leaders would admit the need to focus less on economic imperatives and concentrate more on social issues that lend to greater cohesiveness where Singaporeans feel secure in their country.

That these lessons have been learnt by the PAP government only now is not surprising as state elites have long been in the forefront of articulating the need for ethnic Chinese-owned enterprises in Southeast Asia to invest in China. Since the early 1990s, former Singapore Prime Minister Lee had been an advocate of the benefits of investing in the mainland’s economy, which was beginning to open up to foreign investments. State leaders in China would build on Lee’s argument, though they had also learnt from what had transpired in India which had begun, earlier, to call on the Indian ‘diaspora’ to invest in the subcontinent. Prime Minister Mahathir would make a similar rallying cry to his countrymen to invest in China, preferably through Malaysian Chinese–Malay joint ventures (Gomez, 2006). Lee and Mahathir both played on one common idea when encouraging investment flows from their countries to China—exploit your common ethnic (even sub-ethnic) identity to gain entry into a rapidly developing economy in Asia. Key members of Mahathir’s administration would also call on Malaysian businesses to invest in not only India but also Sri Lanka, particularly as the civil war in the latter was coming to an end. Businesses in Malaysia and Singapore would respond to this call by their state leaders, though a majority of the investment flows would still be into China (Gomez, 2006). This is not surprising; the leading private enterprises in both countries are owned by ethnic Chinese.

Lee would make another core point when calling on ethnic Chinese in Southeast Asia to invest in China. He would contend that since the Chinese in Southeast Asia were a minority community, with no political influence in the region, there was a need for them to combine their massive economic resources and build on it by investing in China’s economy, which was then emerging as a major industrial powerhouse (Fortune, 4 August 1997). Their collective economic might would increase their influence in Southeast Asia, thus ensuring that the marginalization they were subjected to would diminish. Such ideas embedded even more deeply in the minds of indigenous communities in Southeast Asia that their ethnic Chinese populations had no loyalty to the countries of their birth. Arguments of this nature would lead to problems between ethnic Chinese and Indians in Malaysia and Singapore and their state leaders. A similar problem was evident in China, with the failure of Singaporean SOEs to develop a viable working relationship with local society during the implementation of the Suzhou Industrial Park project (New York Times, 1 October 1999). These incidents, though specifically the incident in Suzhou, draw attention to Migdal’s (1988) important point that local leaders in society, and resources under their control, can be hostile, even inimical, to a strong state.

Conclusion

While Migdal’s state-in-society approach is premised on the principle of the mutually transformative nature of relations between state and society, the articles here focus on two key points. First, the comparison between India, China and Southeast Asia indicates that fundamental differences in state structure and state–society relations, and their form of evolution with rapid industrialization, have created differential degrees of developmental capacity involving specifically how entrepreneurial ethnic Chinese and Indians can contribute to further economic growth. Second, how the state constitutes society (and the ‘diaspora’) is fundamentally different from how society constitutes itself (and in contact with this ‘diaspora’).

A careful assessment of the evolution of state and society following generational change is imperative as the studies on Southeast Asia indicate when conceiving inclusive and equitable developmental plans. Significant transformations have occurred in Southeast Asian society with unprecedented industrialization, including the emergence of dynamic private capital that comprises those owned by ethnic Chinese and Indians. However, in spite of the incentives that have been created and offered by China and India, these states have not been able to penetrate Southeast Asian societies, specifically ethnic Chinese- and Indian-owned businesses, in their attempts to secure foreign investments to sustain economic growth. Southeast Asian governments have similarly not been able to draw independent privately owned Chinese capital into major infrastructure projects involving joint ventures that include their SOEs and those from China.

This inability to sustain ethnically owned businesses in state-driven developmental agendas has occurred in countries where the state is a dominant and single centre, including in India more recently. While these states are deeply embedded in their economies in a variety of forms including through SOEs, they also have to deal with a component of society that can hardly be classified as ‘weak’ in transnational ventures. These large-scale Chinese-owned enterprises from Southeast Asia have shown the ability to dictate their own agenda in terms of investment flows, raising vital questions about their commitment to their ancestral homeland. Crucially too, the nature and outcomes of state practices, including through policies and investments by SOEs, provide insights into these governments’ poor understanding of crucial transformations in society, as well as identity perspectives held by ethnic Indians and Chinese outside India and China. It is this flawed appreciation of social transformations that brings into question the viability of state endeavours to draw investments and sustain them in these countries.

The problems that occur when people from China and India encounter co-ethnics in Southeast Asia are most evident in the economy, during business ventures involving highly entrepreneurial private-owned firms. These problems have occurred in spite of the promising prospect of high profits through joint ventures involving other ethnic Chinese-owned firms in Southeast Asia as well as with SOEs from China. Social boundaries have emerged among co-ethnics during cross-national labour flows for employment and when they live together, seen most patently in Singapore. The studies here indicate that states are oblivious to these business and social boundaries in society and the difficulties that co-ethnics from different countries struggle to transcend. Boundaries that are particularly difficult to transcend are those that are based on class difference, perceived or real, as seen in Singapore and China.

The core reason why identity-driven policies have failed is that an ethnic group’s identity cannot always be easily determined. The identities of individuals intersect along numerous lines of clan, gender, age, class, religion and profession. Values linked with particular identities may displace other loyalties and become the core of identity. Identities may become totalizing, making conflict likely. Identities can, however, also provide a basis for social cohesion and development, with the case studies in Singapore and China indicating the relevance of a national identity. The studies here draw out the implicit importance of national identity, especially when similar ethnic groups from different countries meet, demonstrating the need to avoid essentializing identity when conceiving and implementing policies. As these papers contend, identity is socially, culturally and historically contingent, and in constant flux; and identities are personal and often a matter of choice. However, the perpetuation of cultural stereotypes, including through development and social policies, can lead to racism and polarizing attitudes.

It is obvious that the state in all four countries neglects, even evades, the issues of social boundaries and of boundary-crossings that come with generational change as ‘new identities’ emerge, in favour of fixed identities; this, after all, facilitates policy planning. Our studies, however, through a long historical approach, stress people’s fluid cultural experiences and practices that evidently contradict the state’s reification of identity. Interestingly too, when similar ethnic groups from China, India and Southeast Asia meet, particularly through attempts by these states to generate development and employment, they have led to alliances among co-nationals that transcend ethnicity. This attests to the view that society is in a constant state of flux and that economic signals are translated, negotiated and reinterpreted according to context as well as individual desire and agency, irrespective of state control. Far from being objects of policy, the people are subjects invested with agency. The studies here thus stress the need to replace the hegemonic notion of diaspora as exile with that of ethnic groups with a sense of attachment, rootedness and national desire in the countries of their birth.

The extent to which these ethnic Chinese and Indian groups really do represent increasing economic integration across frontiers is clearly dubious. Their economic strength, as Cheong et al. argue, is due to investment in new technologies and learning through R&D as well as availing themselves to opportunities emerging from incentives created by the state to generate industrial development. These technological and entrepreneurial innovations are done by individuals, not as groups and clearly not in collaboration through co-ethnics in a transnational domain. The growth of ethnic Chinese investments in China owes less to ‘tribalism’ than to the capacity of entrepreneurial businesspeople to seize the opportunities created through relevant state policies.

A crucial development in recent times is that the governments of China, Malaysia and Singapore have resorted far more actively to state–state ties, through SOEs, to facilitate investment flows between their countries. The growing global investments by enterprises from China and India further suggest that their state leaders are beginning to look beyond large-scale privately owned Chinese and Indian enterprises as a source of co-funding.¹⁴ The study on Malaysia, which highlights burgeoning state–state linkages through SOEs, also suggests this desire to look beyond the diaspora, though state leaders still have lingering hopes of drawing in private (ethnic Chinese) investments.

China and India are major countries that therefore should be studied in their own right and in their own different forms of reaching out to entrepreneurial groups in Southeast Asia. That each, with deep historical roots that saw them dominant on the world stage at various times, nevertheless followed divergent paths to recovery and growth. Yet, there are issues of far more importance than just growth alone. These states and their societies, and the interaction between them, had evolved over millennia to take distinctive forms.

The studies in this special issue reveal the complexity of these state–society relations in the distinctive context of these two countries, as well as in Southeast Asia. The state had to engage multiple segments of society, each with its own priorities and interests. At the same time, society had to deal with multiple levels and entities of the state. Some intra-society interactions are collaborative, as when all parts of civil society seek enhancement in their living standards, but others are competitive, as when one segment gains at the expense of other segments through, say, capture of the state. The same is true of intra-state interaction—technology policies seek to upgrade capability for all parts of the country while subnational administrations seek to gain an edge over other administrations. Globalization also results in state–society relations affecting states and societies far beyond its shores.

Notes

1. See The New York Times (1 October 1999) for the views of Singaporean government leaders about the problems they encountered when trying to implement this project.

2. For a succinct write-up on this controversy, see:

https://sg.news.yahoo.com/blogs/singaporescene/shanmugam-clarifies-curry-issue-050053270.html.

3. See Jacques (2012).

4. See, for example, Edmunds and Turner (2002) and Portes and Rumbaut (2001).

5. There are, however, signs that China’s view of its diaspora is changing. Wang Gungwu, in a personal communication with one of the authors, argued that the Chinese state has come to realize that the Chinese diaspora has progressively less to offer, lacking technology and capital for investment in the mainland.

6. See, for example, Ang (2003) and Gomez and Hsiao (2004).

7. See also Migdal (1988).

8. See, for example, Shen and Chen (2010) and White (2005).

9. See, for example, Sanders (2013).

10. The most blatant of this genre is Garton-Ash (2013), with the title of his piece ‘Come on, India! Show us that freedom can outdo tyranny’.

11. Similarly, Shilling (2012), in positing that India would displace China as the global growth engine, had, in the preceding piece, lauded India’s ‘accelerating shift towards free markets’.

12. For a review on the nature of the single dominant parties in these countries, see Friedman and Wong (2008), Case (2010) and Chan (1976).

13. Malaysian firms have been investing not only in India, but also in Sri Lanka and Pakistan.

14. We are indebted to Wang Gungwu for this point.