In Japan, awareness of "Kakyo" and "Kajin," Chinese living overseas, has been important since before World War II.

Kakyo refers to people of Chinese ancestry who live outside China but have not acquired the nationality of the countries in which they live. Kajin are ethnic Chinese living overseas who have taken the nationality of their countries of residence.

During the 1930s and 1940s, Kakyo studies that mainly focused on how to deal with and make use of these people became active with Japan's overseas expansion policy. Later, prompted by Japan's postwar economic recovery, in particular during the high economic growth period in the 1960s, research on development of cooperative relations with Kakyo and Kajin became active. After a temporary slump, with a sharp rise in the advancement of Japanese capitals triggered by the strong yen in the late 1980s, research on promoting cooperation with Kakyo and Kajin boomed.

Although interest in the subject somewhat declined during ``the lost decade'' following the collapse of Japan's asset-inflated economy in 1991, it is still very much a matter of concern in Japan.

Despite this fact, however,the Japanese media still confuse the concepts of Kakyo and Kajin.

Kakyo-Kajin studies in academic circles also still tend to be centered on Kakyo studies. The Japanese public also mixes up Southeast Asian Kajin, calling them Chinese, people of Chinese ancestry, Kakyo or Kajin, and makes no clear distinction between them. Kakyo-Kajin studies are closely tied with China's reform and open-door policy and the advancement of socialist market economy. Research on Kakyo-Kajin economies also became active with the establishment of the concepts of the Kajin, or ethnic Chinese, economic community (ECEC) and the Chuka, or Chinese, economic community (CEC).

Of course, ECEC and CEC are not established organizations like the European Union, the North America Free Trade Agreement, the Association of Southeast Asian Nations or the Singapore-Johore-Indonesia Growth Triangle. They are not more than vague groupings of economies such as the newly industrialized economies and the Sea of Japan economic zone.

As it is well-known, Kajin economies started showing signs of growth in the 1960s in Southeast Asian countries. From the late 1980s to 1997, when the region was hit by an economic crisis, they attained rapid growth and development. Transcending conventional trade associations as well as family and community ties, Kakyo and Kajin made themselves leading players on the world economic stage centering on the Asia-Pacific region. Sharing a common language (Chinese plus local dialects spoken in such provinces as Fujian, Guangdong, Hainan and elsewhere), culture (philosophies and ethics rooted in Sinocentrism and Confusianism) as well as human networks, overseas and ethnic Chinese have continued to advance, showing the strength of their economic power.

Kajin business groups and financial combines are now more prosperous than ever. They are actively tying up with each other and advancing into regional and global markets. As a result, the concepts of ECEC and CEC have come to be proposed.

Strictly speaking, the 1.28 billion Chinese who live in the four Chinese areas _continental China, Hong Kong, Macau and Taiwan _ are not called Kajin. Hence, these four areas do not form part of ECEC. Likewise, Southeast Asian Kakyo-Kajin societies comprised of 27.19 million Chinese living overseas are not called greater Chinese societies because they are of a different nature from the Chinese societies in the four Chinese areas. Since Southeast Asian nations are multi-ethnic, it is common sense to distinguish local ethnic Chinese societies from the Chinese societies and people in the four areas. Therefore, it is not right to include Southeast Asian Kajin economies in the greater Chinese economic community. The Chinese government is also intent on avoiding the advocacy of the concept of greater Chinese economies and the Chinese economic community.

Actually, however, the terms Kajin and Chinese economic communities as they are conventionally used include the economies of the four Chinese areas as well as those of Southeast Asia. The English translation of Kajin economies would be ``ethnic Chinese economies'' but the term ``Chinese economies'' is also acceptable. ``Chinese economies'' written in Chinese characters would be ``Chuka economies.''

Kajin economies and Chuka economies would both be ``Chinese economies'' and Kajin economic community and Chuka economic community would be both ``Chinese economic community.'' However, in Chinese, there is no neutral word that corresponds to the English word Chinese, which can mean both Kajin and Chuka.

It is true that the expressions Kajin economic community and Chuka economic community can be misleading. However, there is no other way but to use the term Chinese economic community (CEC) here. The economic power of CEC is huge. For instance, foreign currency reserves of mainland China ($168.3 billion or 21.03 trillion yen), Hong Kong ($102.7 billion), Macau ($2.8 billion) and Taiwan ($106.7 billion) put together amount to $380.5 billion. When the economy of Singapore, a Kajin society, is added, the total amount surpasses the foreign currency reserves of Japan, whose amount is the world's largest at $357.1 billion, by $103.6 billion as of May 2001.

Incidentally, the total population of the four areas is 1.3076 billion, 10.3 times that of Japan's at 126.9 million. The four areas made exports worth $592.5 billion (mainland China $240 billion, Hong Kong $202 billion, Macau $2.5 billion and Taiwan $148 billion) in 2000, 1.3 times more than Japan's at $460 billion.

Asian countries, Thailand, the Republic of Korea (South Korea), Indonesia and Malaysia in particular, were strongly hit by the 1997 Asian economic crisis. By contrast, the economies of the four Chinese areas and Singapore were not seriously affected. Although the Taiwan economy has recently begun to show signs of slowing down, these Chinese economies are expected to continue steady growth into the future.

The policy of government intervention on economic affairs in the form of foreign exchange control and regulation on the inflow of short-term capitals in these Kajin and Chinese societies are highly evaluated as effective measures in preventing the spread of the Asian economic crisis.

Asian economies and the Japanese economy are mutually complementary. Asian Kajin businesses are good partners of Japanese businesses in terms of capital, technical and management know-how. Quite a few Kajin business groups in Asian countries grew as a result of cooperation with Japanese companies.

The Malaysia-based Loh Boon Siew business group is known to have advanced thanks to cooperation with Honda Motor Co. When Loh, a former auto mechanic, rode a taxi during his visit to Tokyo in 1958, it was overtaken by a motorcycle that passed with a roaring engine. Surprised, he asked the taxi driver to speed, caught up with the motor cycle and stopped it. He asked the driver to show the engine and asked him how much the motorcycle cost. Confident that it would sell in Malaysia, Loh immediately acquired the right to be Honda's sales agent in his country and made a fortune.

Other cases of successful tie-ups include, the Singapore Hong Leong Group, which built a cement factory in a joint venture with Mitsui & Co. and the former Onoda Cement Co. and Indonesia's Salim Group and Lippo Group, which established Central Sari Metropolitian together with the former Long-Term Credit Bank of Japan and Japan Leasing Corp. The Lippo Group also established Daiwa Lippo Finance jointly with Daiwa Bank.

With the rise of nationalism in Asian countries, Japanese companies also need to be always careful about establishing cooperative relations with local national businesses. However, for Japanese companies to advance into Asia, cooperation with Kajin businesses is indispensable.

At the same time, China's economic development of the last 23 years under its policy of reform and openness also owes largely to technical, capital and management know-how provided by Japan as well as Japan's official development assistance (ODA). A major problem for Japan is how to recover its ``lost decade,'' achieve economic reconstruction and contribute to the recovery of Asian economies after the Asian economic crisis.

Using Japanese ODA for the development of mainland's local companies and small and medium-sized Asian businesses is expected to produce positive results. Japan is also urged to help Asian countries in their effort to reorganize their financial industries and settle bad debts.

Now that we have entered the new century, it has become even more import ant for Japan to advance economic cooperation with Chinese economies as well as for Japanese companies to cooperate with local Asian businesses. At the same time, they must also make use of the capital of Kajin businesses with which they have developed strong ties over a long time. The use of extensive product distribution networks and Kajin business philosophies of attaching importance to trust and selling large quantities of products at a narrow profit margin is also indispensable. Likewise, Chinese people in mainland China, Hong Kong, Macau and Taiwan as well as Kakyo and Kajin communities in South east Asia also need Japanese capital and technology to develop in the Asia-Pacific region. Open Kajin and Chinese economies that can withstand difficult times are the key to long-term advancement.

Born in Malaysia, the author is a professor and deputy director of the Institute of Asia-Pacific Studies at Waseda University.