Notes Introduction 1 See, for example, ‘Taking on the World’, Business China, vol. 26, 20 Novem- ber 2000; ‘Bank of China Thinks Global’, Far Eastern Economic Review, 7 December 2000; ‘China Business Goes Global’, Far Eastern Economic Review, 28 March 2002; and ‘Chinese Insurer Targets Global Markets’, Wall Street Journal, 18 January 2000. 2 One of the most recent is Kevin Cai’s ‘Outward Foreign Direct Investment: A Novel Dimension of China’s Integration into the Regional and Global Economy’, in China Quarterly (Cai 1999). Otherwise, there are two technical papers published by the Organisation for Economic Cooperation and Devel- opment (OECD), one by Yun-Wing Sung (1991) on Chinese Outward Invest- ment in Hong Kong: Trends, Prospects and Policy Implications, and the other by David Wall (1996) on Outflows of Capital from China. Other essays have made their way into Transnational Corporations, including James Zhan’s ‘Transna- tionalisation and Outward Investment: The Case of Chinese Firms’ (1995). There are also some book chapters, most notably by Tseng Choo-Sin (1994, 1996), and Haiyan Zhang and Daniel van den Bulcke (1994, 1996). We may add to the list three working papers published by the Strathclyde Interna- tional Business Unit. Occasional discussions on the international business conducted by individual Chinese firms also appear in such studies as Nolan (1996, 1998) and Steinfeld (1998). The primary focus of these studies is not, however, the transnationalisation of the firm concerned. 3 Throughout this study, we use ‘firms’, ‘enterprises’ and ‘companies’ in the Chinese context interchangeably and advisably to avoid definitional prob- lems associated with the transitional nature of China’s industrial organisa- tion. See Nolan (1998: 6). 4 The respective figures are: for Hong Kong, $154.856 billion; Singapore, $47.63 billion; Taiwan, $38.003 billion. See UNCTAD (1999: 497–8). The figure for China’s outward FDI here obviously does not include China’s investment stocks in Hong Kong. 5 For example, in recognition of this fact, UNCTAD began to list the top 50 multinational corporations from developing countries in the World Invest- ment Report 1995. Also in 1995, Fortune Global 500 included eight multina- tional corporations from Korea alone. Daewoo, which is listed as the largest multinational corporation from developing countries in both the 1997 and 1998 World Investment Report, is comparable in its foreign assets and transna- tionality index to many of the top 100 multinational corporations from developed countries. 6 Geoffrey Jones adopts a similar practice in defining multinational traders most recently. In his words, ‘A multinational trading company engages in trader intermediation between countries, and owns assets in more than one country’ (Jones 1998: 2). 231 232 Notes to pages 7–25 7 Hong Kong’s membership in the ADB and APEC, and its guaranteed mem- bership in the WTO when eventually admitted, further reinforce its special status as a separate economic entity in the region. 8 It is interesting to note how Dunning defines what is ‘foreign’ in analysing the internationalisation process of firms. In his words, ‘by foreign, we mean outside the physical confines of a particular country. Using this definition, colonies and overseas possessions are treated as foreign territories’ (Dunning 1993: 133). 1 Economic Reform and the Internationalisation of the State 1 Italics in original text. Contributors to the same book also try to grapple with multiple definitions of internationalisation. In Richard Falk’s formulation, for example, internationalisation has three dimensions: the projection of power, political, economic, cultural and whatever, beyond national bound- aries; the degree of openness or closedness which reflects receptivity of a society to ideas and practices coming from beyond its borders; and the increasing porousness of states, even strong states. Shuichi Kato refers to internationalisation simply as ‘a country’s closer relations with foreign part- ners, or integration into the international community, whose members share some common values’ (Falk 1992). 2 Others offer similar definitions. For example, Welch and Luostarinen define internationalisation as ‘the process of increasing involvement in interna- tional operations’ (1993: 157). 3 I have explored elsewhere the political and economic explanations of this anomaly of China in international society post-1949 (see Zhang 1998: chapters 2 and 3). China’s limited trade and investment activities in this period are discussed in Chapters 2 and 4 respectively. 4 Take G7 members as an example. Before 1970, only France had full diplomatic relations with China after its recognition of the PRC in 1964. Britain recognised the PRC in January 1950. However, full diplomatic rela- tions between Britain and China were not possible until 1972. The other five G7 members only recognised the PRC in the course of the 1970s: Canada and Italy in 1970, Germany and Japan in 1972 and the United States in 1978. 5 The six NICs identified by Milner and Keohane (1996: 11) as the ‘first NICs’ are Brazil, Mexico, Hong Kong, South Korea, Singapore and Taiwan. 2 The Internationalisation of the Chinese Economy: Empirical Evidence 1 For a simpler discussion of China and globalization, see Pang Zhongying (1999), ‘Globalisation and China: China’s Response to the Asian Economic Crisis’; and Moore, Thomas G. (1999), ‘China and Globalisation’, both in Asian Perspective, vol. 23, no. 1. Notes to pages 26–34 233 2 These figures are in current US dollars. Except otherwise indicated, $ in this study means US dollar. 3 China moved up to be the tenth largest in 1998. In 1999, China was ranked by WTO as the ninth largest (WTO 2000: 19). 4 In 1978, China’s exports accounted for a meager 0.75 per cent of the world export total. Within a decade, in 1988, this had increased to 1.43 per cent and by 1996 to 2.93 per cent. 5 In 1997, the ratio was 41.6 per cent (Beijing Review, 30 March–5 April 1998: 10). 6 In 1993, their share increased to 27.5 per cent at $25.24 billion; and in 1994 to 28.7 per cent at $34.71 billion. These figures are from State Statistics Bureau (1995: 537–9, 553). The calculation is my own. 7 The importance of foreign-funded firms in China’s foreign trade is also captured nicely by the World Bank. According to its report, already in 1995 ‘one third of China’s exports and half of its imports involved joint ventures between Chinese and foreign partners’ (World Bank 1997b: 90). 8 According to Lardy, in 2000, foreign-funded enterprises exported $119.4 billion, 48 per cent of China’s total exports of $249.2 billion (Lardy 2002: 7). According to MOFTEC, in 1999, foreign-funded enterprises exported $88.63 billion, 45.5 per cent of China’s total exports of $194.93 billion (www.moftec.gov.cn/moftec_cn/tjsi/wztj). 9 At the same time, only 10 per cent of commercial bank lending flowed into China. 10 It is also important to note that in the 1990s, FDI became the largest single source of capital inflow into China. It is in 1992 that, for the first time, FDI inflows surpassed the total of capital inflows from other sources put together, including loans from commercial banks, export credits, international bond issues, intergovernmental loans and loans from international organisations (Lardy 1994: 63) . 11 China’s trade minister Shi Guangsheng is particularly proud of this achieve- ment when he claimed that in six consecutive years, from 1993 to 1998, China was the world’s second largest FDI recipient country, second only to the United States (Shi 1999). 12 According to Barnett’s calculation, from 1970 to 1977, China’s total bor- rowing was $4.86 billion, with $3.74 billion (77 per cent) in short-term loans ‘generally for periods ranging from six to eighteen months’ (see Barnett 1981: 225–6). 13 In an earlier report, the World Bank noted, however, that on a per capita basis, total lending to China amounts to only $2.50, the lowest proportion of lending per capita in the entire East Asia region. 14 Lardy noted that the only other transition economy which has ready access to international capital markets is the Czech Republic (Lardy 1995: 1065). 15 It was a Yen bond issued by the Bank of China (BOC) in Tokyo. At the same time, CITIC was also negotiating for the issue of another 20 billion Yen bond on the Tokyo market. 16 The China Daily reported on the same day that China was considering allowing Chinese enterprises to issue bonds on international capital markets. 234 Notes to pages 35–41 17 B-shares are shares quoted in RMB in both the Shanghai and the Shenzhen stock exchanges, but settled in American dollars in Shanghai and in Hong Kong dollars in Shenzhen. They are not, however, convertible to A-shares which are traded in RMB mostly by domestic investors. This restricts their liquidity. 18 The nine companies are Qingdao Breweries, the Shanghai Petrochemical Complex, the Yizheng Joint Corporation of Chemical Fibre, the Kunming Machine Tool Plant, the Maanshan Iron and Steel Company, the Dongfang Electric Company, the Tianjin Bohai Chemical Industry Company, the Beijing Renmin Machinery General Plant, and the Guangzhou Shipyard International Co. Ltd. Six of them were successfully floated in 1993, and the other three, in 1994. 19 By the end of September 1995, seventeen Chinese companies had been floated on the Hong Kong Stock Exchange, raising a total of HK$19.09 billion (Davis 1996: 63, Lin and Jian 1995: 33–4). 20 Liu’s figure of Chinese companies floated on the New York Stock Exchange seems to be inaccurate. According to Lees and Liaw, quoting the Wall Street Journal (22 February 1995), by the end of 1994, six Chinese companies were listed on the New York Stock Exchange: Brilliance China Automotive Holdings, China Tire Holdings, EK Chor China Motorcycle, Shanghai Petrochemical, Shandong Huaneng Electrical Power and Huaneng Power (Lees and Liaw 1996: 72–3).