The role of remittances sent to China by Chinese migrants’ overseas

In 2017, the world counted 258 million international migrants (3.4% of the world’s population). India is the country with the largest diaspora in the world with 16.6 million people living abroad followed by Mexico with 13 million, Russia (10.6 million) and China with 10 million citizens living abroad. According to a World Bank’s report, in 2018 China received USD 67.4 billion in remittances which represents almost half of all remittances received in the East Asia and Pacific region (USD 142 billion). Remittances are transfers of financial or material nature sent by migrants to their families or communities in their countries of origin.

The World Bank estimates that remittances towards the East Asia and Pacific region will continue to grow in 2020 by 4.7% to reach USD 155 billion. It should be noted that official data presented by the World Bank in its report do not seize the globality of remittances flows as they can also be sent through informal channels for example. Therefore, the real scale of global remittances is expected to be higher than existing estimations.

Remittances are playing a progressively more important function in the economies of numerous countries as they can help promote economic development and the welfare of those countries. New businesses can create jobs and transform economies, mainly in rural areas, supporting their development. For example, remittances sent by Chinese immigrants played a significant role in making the original capital available in the initial phase of expansion in China's coastal areas. In 2017 the total Official Development Assistance (ODA) reaches USD 146.6 billion while remittances reached 613 billion the same year, underlining its significant development potential. Moreover, during disasters or emergencies, remittances can also be a critical source of revenue for individuals whose other types of income may have been ruined by conflict or natural disaster. This is being more and more established as central by aid actors who are considering new approaches of assisting individuals in emergency responses.

Remarkably, in Chinese culture, the family is the primary unit of society. This can explain why culturally there is an expectation for Chinese migrants to send remittances in order to care for their family back in China. Notably, the Chinese definition of family is broader than the Western conception of family as it also includes people with whom the individual has close relations such as close friends. When immigrant workers send money back home, it can be considered as a form of insurance that helps to diminish the weight of financial difficulties or emergencies for families and communities such as the loss of crops and ordinary expenditures including food, medical expenses, school fees and housing expenses. It is an accepted source of revenue for family members left behind in the country of origin. But it can also be seen as an insurance for the migrant sending the remittances himself. For example, when the money is being used to buy a property or start a business that can generate income.

Author: Fanny Tittel-Mosser