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108 Jack Linchuan Qiuto the genesis and growth of China’s Internet. Despite repeated officialendeavors to regularize technology transfer and minimize intellectual propertyinfringement, especially after China joined the World Trade Organization,success has been spotty. There still is more piracy in China than anywhereelse, so the issue lingers (Yu, 2000, 2001). Another under-researched phenomenonis the fast growth of Linux (e.g. “Red Flag Linux”) under the auspices ofthe Chinese state and as part of the global open source movement (AsianBusiness, 2002; Lohr, 2003).Foreign direct investment (FDI) in China has also steadily increased.Although only a portion of the FDI has been used in computer networkconstruction, the increase in FDI volume has facilitated the rapid diffusion ofthe Internet. In 2002, China attracted US$ 53 billion of FDI, surpassing that ofthe United States, although China’s FDI would have been only a fraction ofthe US figure had there not been major financial scandals and the subsequentdownturn of Western investment markets in 2001–2002 (The Economist,2003). In addition, official policies limit foreign investors in China to networkconstruction and the manufacture of hardware and software and ban themfrom more lucrative service provision sectors (Mueller and Lovelock, 2000).Still, the steady growth of FDI and the increasing integration between China’sInternet industry and the global market was at least in part a response toChina’s development strategies. Since the 1990s, hi-tech industries usingforeign resources have prospered in the Beijing–Tianjin region and the PearlRiver Delta in South China. Especially notable is the re-positioning ofShanghai as the country’s new economic center. Intel, Motorola, NEC, andother major firms established factories in Shanghai and adjacent areas (Fries,2000: 95), as did many major Taiwanese microchip producers. Even thoughhi-tech production in the region is still in the take-off stage and only a few ofthe foreign enterprises are now profitable, it appears that the lower YangtzeDelta, with Shanghai as its dragonhead, will become an even more critical linkbetween China and the world economy (Wu, 2000; Koehn, 2002).Yet what percentage of China’s FDI is actually foreign? Who is investingin China’s Internet? These questions suggest a key but little publicized factorin the success of the Chinese developmental state – the networks of globalChinese diaspora that connect the Mainland with Hong Kong, Taiwan,Singapore, and Chinese communities around the world. Lawrence Ma estimatedthat the population of overseas Chinese was approximately 32.8 millionin 1998 (Ma and Cartier, 2003: 19), more than one-quarter of the world’s totalmigrant stock of 125 million (Gelbard et al., 1999). The diligence and highsaving rates of many Chinese expatriates helped them accumulate formidablewealth, perhaps approaching US$ 600 billion (Brauchli and Biers, 1995),including more than half of Southeast Asia’s top 1,000 companies (Kao,1993). Most important, the Chinese expatriates often rely on family and