Wasn't that a result of the Dutch and English importing Chinese as middleman minority, rather than a policy from Chinese state side?
Actually there were two different waves of Chinese emigration to SE Asia. The first wave occurred in the 16-1700s with Chinese settling in Malaya and elsewhere as merchants. These adopted many local ways, speaking Malay as a first language. They grew to be known as the Peranakans (which means something like "those born here", in reference to their relative de-sinicization). They grew to form an urban middle-class and under the British became one of the backbones of colonial rule. They mostly converted to Catholicism, Methodism or Anglicanism, sent their children to British mission schools, adopted English as a first language alongside Malay and basically behaved like English gentry. They were rabidly loyal to Britain (the British called them the King's Chinese) and suffered for it during the War. Currently many Peranakan families are still among the upper middle classes of Singapore and, to a lesser extent Malaysia.
The second wave was of generally poorly educated coolies, small merchants and labourers from Southern China (mostly Hokkien speakers with a few Cantonese and Hakka)- these formed the bulk of the working class, except for the few who prospered or who came from higher class families (like Lee Kuan Yew's family- his great-grandfather was an Imperial mandarin) who generally adopted the ways of the Peranakan.