The Ethnic Chinese Variable in Domestic and Foreign Policies in Malaysia and Indonesia

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The Ethnic Chinese Variable in Domestic and Foreign Policies in Malaysia and Indonesia THE ETHNIC CHINESE VARIABLE IN DOMESTIC AND FOREIGN POLICIES IN MALAYSIA AND INDONESIA Lauren Carter B.A., University of British Columbia THESIS SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE DEGREE OF MASTER OF ARTS in the Department of POLITICAL SCIENCE O Lauren Carter SIMON FRASER UNIVERSITY April, 1995 All rights reserved. This work may not be reproduced in whole or in part, by photocopy or other means, without permission of the author. APPROVAL Name: Lauren Louise Carter Degree: Master of Arts Title of Thesis: The Ethnic Chinese Variable in Domestic and Foreign Policies in Malaysia and Indonesia Examining Committee: Chair: Dr. Michael Howlett ~QrirPeggyL. Mityer Senior Supervisor Dr. Tsuyosiii Kawasaki or. Jan W. Walls Date Approved: PARTIAL COPYRIGHT LICENSE I hereby grant to Simon Fraser Universi the right to lend my thesis, pro'ect or extended essay (the title o7 which is shown below) to users oiJ the Simon Fraser University Library, and to make partial or single copies only for such users or in response to a request from the library of any other university, or other educational institution, on its own behalf or for one of its users. I further agree that permission for multiple copying of this work for scholarly purposes may be granted by me or the Dean of Graduate Studies. It is understood that copying or publication of this work for financial gain shall not be allowed without my written permission. Title of Thesis/Project/Extended Essay The Ethnic Chinese Variable in Domestic and Foreign Politics in Malaysia and Indonesia Author:- (signature) Lauren Carter .. lll ABSTRACT This thesis examines domestic politics as a major variable in relations between developing countries. Specifically, it will analyse the role played by the ethnic Chinese in Southeast Asia in both the national politics of Malaysia and Indonesia and in relations between these countries and the People's Republic of China. The disproportionate economic strength of the ethnic Chlnese in Southeast Asia has resulted in political and social repression. The local governments need their financial support, but mistrust their loyalties and commitment, perceiving them as agents for Chinese hegemony. Changing relations with the PRC have a major impact on the domestic social, economic, and political environments. The PRC has presented itself as the patron and sponsor of the overseas Chinese and has shown itself willing to intervene in the internal affairs of other states to protect their compatriots. The overseas Chinese play a role as an instrument of foreign policy for the government in Beijing. Beijing draws upon their financial resources to assist in the economic development of China. Paradoxically, where the governments in Southeast Asia view the ethnic Chinese as an obstacle to better relations with the PRC, the Chinese government sees them as a potential asset in state-to-state relations. This is currently an irresolvable dilemma, ensuring the ethnic Chinese presence will remain a central factor in both domestic and international relations for some time to come. TABLE OF CONTENTS CHAPTER 1. INTRODUCTION ............................................................. 1 2 . THE ETHNIC CHINESE IN MALAYSIA AND INDONESIA AND THEIR IMPACT ON DOMESTIC AND FOREIGN RELATIONS ..... 10 .The Colonial Legacy .................................................... 11 . Malaysia. Domestic Policies. and the PRC .......................... 13 .Indonesia. Domestic Policies. and the PRC ......................... 26 . Conclusion ................................................................ 39 3. CHINA AND THE OVERSEAS CHINESE ............................... 43 . History .................................................................... 44 .Defining the Overseas Chinese Population ........................... 46 . Domestic Overseas Chinese ............................................ 48 . Overseas Chinese Abroad .............................................. 54 .Party-to-Party Relations ................................................ 61 .China and the Overseas Chinese Today .............................. 67 .Conclusion ............................................................... 70 4 . OTHER PROBLEMS AND COMMON CONCERNS ................... 73 5 . CONCLUSION ................................................................ 86 APPENDICES I. 11. and I11 ....................................................... 96 BIBLIOGRAPHY .......................................................... 99 CHAPTER ONE: INTRODUCTION The ethnic Chinese population of Malaysia and Indonesia occupies an interesting niche in the international arena, for this relatively small group is representative of the constant interplay between national and international politics.1 In addition to being a constant source of domestic friction, they also constitute a critical factor in relations between their adopted countries of residence and the People's Republic of China. The analysis of the role of this group and their effect on both internal and external politics highlights the reciprocal nature of domestic and foreign policies. In Southeast Asia, the resident Chinese population makes up roughly five percent of the regional total, but together they reputedly control over 60% of local industry, trade, and ~ommerce.~This economic dominance has made them the target of indigenous nationalistic envy, in the form of continued social and political repression. Both the Malaysian and Indonesian governments have enacted laws to curb the economic power of the ethnic Chinese and to advance the interests of the indigenous populations, while at the same time attempting to tightly control relations with the PRC. Foreign policies are used to augment and reinforce domestic policies. This thesis will examine the internal and external determinants of ethnic Chinese policies and how these policies then affect relations with China. For Malaysia and Indonesia, the ethnic Chinese problem and relations with China are two sides of the same coin, and both The term 'Chinese' refers strictly to ethnic origin, not nationality. Many of the Southeast Asian Chinese are locally born, with their residence abroad dating back several generations. The nationality question is a separate issue entirely and will be dealt with in detail in Chapter 3. For a country by country 'guesstimation' on percentages of ethnic Chinese ownership in different sectors, see "The Chinese Abroad, Rich not Red," The Economist, April 28, 1984, 80; "The Overseas Chinese - A Driving Force," The Economist, July 18, 1992,21; and James Mackie, "Changing Patterns of Chinese Big Business in Southeast Asia," Southeast Asian Capitalists, Ruth McVey, ed. (Ithaca, N.Y.: Cornell Univ. Press, 1992). have wide ranging implications: for economics, ideology, politics, societal relations, and national security. Concurrently, ever since the dawn of Republican China in 191 1, successive Chinese governments have appealed to the Chinese abroad for political and financial support. This has meant that the ethnic Chinese are suspected of having dual loyalties, despite having resided in Southeast Asia for generations. The overseas Chinese are seen as pawns to be used by Beijing. In the past, the ethnic Chinese were potentially the vanguard for Chinese communism and a subversive force for internal destabilization. And now, with China's entry into the global marketplace and its concurrent economic expansion, the ethnic Chinese 'problem' has once again surfaced, for the overseas Chinese are now a possible conduit for the economic and political hegemony of the PRC.3 The PRC is perceived as a powerful patron and sponsor of the overseas Chinese, potentially ready and able to intervene in the domestic affairs of other nations to protect their kinfolk. Other economically powerful ethnic minorities exist in other parts of the world, but without the ongoing connections to and the perceived protection of their state of origin. For the governments of Southeast Asia, changing relations with the PRC can have a major impact on their respective domestic social, economic, and political situations. For them, domestic affairs must be considered before and over relations with the People's Republic of China, the regional powerhouse. The author of this thesis does not wish to appear to be making a value judgment by use of the word 'problem' in conjunction with the existence of an overseas Chinese community within Southeast Asia. However this is how the issue is referred to by a number of authors, beginning with the Indonesian government. See Leo Suryadinata, "Appendix 6: Text of the Instruction of the Cabinet Presidium No. 37/U/IN/6/1967 concerning The Basic Policy for the Solution of the Chinese Problem," in China and the ASEAN States: the Ethnic Chinese Dimension, (Singapore: Univ. of Singapore Press, 1985) 173 - 177. Wang Gungwu refers to Indonesia as "... the largest country in the world with a Chlnese 'problem,"' in Communitv and Nation: China. Southeast Asia. and Australia. (St. Leonards, Aust.: Allen & Unwin, 1992) 287. See also Pan Yi Ning. "The Development of China-Malaysian Relations By the Year 2000: The Chinese Dimension." China Asean Relations: Political, Economic and Ethnic Dimensions Theresa C. Carino, ed. (Manila, De La Salle Univ. 1991). p. 127; and Rodney Tasker's article, "The roots of the problem" Far Eastern Economic Review. (May 5, 1983) 21-24. The People's Republic of China looms over Southeast Asia. Its immense size in both population and territory, its military strength, and its
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