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Chapter 3 Economic Development of Southeast Asian Countries in GMS and their Expectation and
Cautiousness to China
In the Mekong subregion, there are some regional cooperation mechanisms to assist in the development of the region. Among them, the GMS cooperation is an important platform for the cooperation among China and the five countries in the Indochina Peninsula. It is intended to focus on economic construction, but issues of energy, safety and strategic partnership can not be underestimated. On the basis of existing cooperation, China’s OBOR initiative will bring a lot of economic benefits. At the same time, China is more focused on its own interests. The ambition China showed is worthy of attention. In this chapter, we will discuss the above-mentioned points, as well as trying to understand the attitude of the Indochina Peninsula countries when facing China’s growing influence in the region.
3.1 Economic development and construction of OBOR 3.1.1 Profile
The Greater Mekong Subregion cooperation (GMS Program) was launched by the Asian Development Bank (ADB) in 1992, with a cooperative organization of six countries, including China, Myanmar, Laos, Thailand, Cambodia and Vietnam. The GMS program is driven by a standing mechanism that includes political and executive levels, following a series of general principles. GMS consists of nine cooperatives sectors, including agriculture, energy, environment, human resources development, investment, telecommunications, tourism, trade and transport. The organizational structure can be divided into three levels. The highest is the summit, which is the highest level of the meeting, and in principle, was held every three years, mainly to assess the effectiveness of the project and to provide endorsement in the political hierarchy. The first summit was held in Phnom Penh, Cambodia in
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2002 and is currently held to the fifth meeting in Bangkok, Thailand in 2014.
The middle level is the ministerial conference which is to provide policy direction and supervision of the progress of cooperation projects. The meeting was held once a year and until 2015, 20 meetings have been held. The basic level is the working groups and forums, which refer to various departments.
The high-level officials of the relevant units from member countries organized meetings and conferences during the year and reported to the ministerial meeting about the progress, making sure that the policy can be implemented.
This part is the substantive level of policy operation. Extensive working meetings and forums cover a wide range of issues, such as transportation, energy, communications, environment, agriculture, tourism, investment and trade.
The Mekong River Basin is rich in natural resources and possess a huge business opportunities. It is also the most potential emerging development area.
In the time of economic globalization and international order going to stabilization, the Mekong Subregion cooperation was opened. About the countries, international or regional organizations participating in the Mekong Subregion cooperation, there are three important organizations, including the
“Greater Mekong Subregion Cooperation”, the “ASEAN Mekong Basin Development Cooperation” and the “Mekong River Commission”.
Among them, the Greater Mekong Subregion cooperation is the most important mechanism, and the Asian Development Bank is an important promoter of this regional cooperation. The Asian Development Bank (ADB) was conceived in the 1960s. It is a financial institution that aims to promote the development of Asian economy and society, by giving assistance through loans, technical support, grants, and investment. There are currently 67 member states in ADB, including 48 Asia-Pacific countries. ADB headquartered in Manila, the Philippines.
According to the ADB, in the past years 1995 to 2005, nearly 2 billion US dollars of funds were put into the Mekong River development plans. 50%
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of the funds were from the ADB, and the other 50% came from the countries of Mekong River, subscription or investment of other countries and private enterprises.1
In addition to giving financial assistance, the Asian Development Bank also serves as the secretariat and coordinator of the GMS Cooperation. Member countries of the ADB get the appropriate proportion of voting rights in accordance with the proportion of capital. The presidency has been belonging to Japanese because Japan has been the largest shareholder.
3.1.2 Investment and construction situation injected by China
Since the 1990s, the countries in the Mekong Subregion, except Thailand, have been developing countries with starting economy. The national income was very low and there were insufficient funds to carry out domestic infrastructure. China is a member of the GMS and has a good economic basis to continuously provide financial assistance in infrastructure cooperation.
About highway: “Kun-Man Road” is a very important traffic arteries in the Mekong River region, known as the North-South economic corridor and China’s first international highway, connecting China’s Kunming, Yunnan with Bangkok, Thailand. It is about 1,800 km, Laos section of which is facing the stagnation due to funding and technical problems. Chinese Premier Wen Jiabao proposed that China, Thailand, Laos and the Asian Development Bank respectively pay for one-third of the Laos section. China provided 249 million RMB for the construction, including 50 million free assistance and 199 million interest-free loans.
There is also the east line of the “Kun-He highway (Kunming to Hekou)”, which is mainly about upgrade of road. Some parts of the road were gradually
1 廖采吟(2005)，中國與東協合作之研究－以湄公河次區域合作為例。國立中山大學政治學研究
所碩士論文。
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upgraded to highways, leading to the better quality of operation. The west line is the Sino-Burmese Highway, which is responsible for connecting China with Myanmar and even with India in South Asia. The west line includes
“Kun-Yang Highway (Kunming to Yangon)” and “Teng Mi Highway (Yunnan Tengchong to Myitkyina, the major city in northern Myanmar)”. The former is about completion of high-grade highway in China. The latter is funded by China. Traffic convenience made Kunming could connect India, by Tengchong, Myanmar Myitkyina and India Ledo. The route is about 1,200 km and the part of India Ledo to Myanmar Myitkyina will be built by India.
Waterway: The Mekong River navigation. In April 2000, China, Laos, Myanmar and Thailand signed the “Lancang-Mekong River Merchant Shipping Agreement” and in June 2001 held Merchant Vessel Navigation Ceremony in Jinghong, Yunnan Province, China. But the formal navigation was delayed due to the lack of funds from Myanmar and Laos. China has provided funds and technical assistance to improve this channel with the consent of the other three countries. 5 million US dollars were put to improve the waterway.
Hydroelectricity: In August 1998, China and Myanmar signed a contract in Yangon to build the Paunglaung Power Station. China participated in the construction by giving a loan and providing mechanical and electrical equipment, engineering design and technical guidance to make the project smooth. Along Yunnan Lancang River, China has built several dams and hydropower stations to strengthen the overall development of the western region.
Agriculture: Yunnan Province is a large agricultural province in southwest China, having a considerable advantage in agricultural technology. Yunnan applied its technology to Thailand, Vietnam, Myanmar and other countries, making the local agricultural production increase significantly. Due to the advantages of agriculture in Yunnan Province, China and ASEAN signed a memorandum of agricultural cooperation in November 2002 to enhance mutual competitiveness. The content is that China would provide technical and
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personnel training courses to the ASEAN in agriculture, fishery and water plant cultivation, agricultural biotechnology, agricultural industry, agricultural production, livestock and other fields. With the cooperation, China and ASEAN could build more friendly and close relations and raise the mutual economic strength through the development of agricultural economy.
In addition, the climate in ASEAN countries is suitable for the production of tropical fruits, which are the main parts of China’s imported tropical fruit.
Since 2000, Thailand, Vietnam and the Philippines have become the three major sources of Chinese imported fruit, accounting for 90% of China’s total fruit imports from ASEAN, and accounting for 60% of China’s total fruit imports. The tropical fruit is the main item ASEAN exported to China. In 2002, 95% tropical fruits China imported are from the ASEAN countries, with the value about 200 million US dollars.2
Transport Agreement: In order to make the flow of goods more efficient, in 2002, six countries of GMS completed the “Greater Mekong Subregion Cross-border Transport Agreement” which is important in transport cooperation.
The transport agreement is to plan a convenient transport for the goods and personnel, including exemptions from the original customs of cargo security and hygiene inspection, the one-stop customs inspection, personnel cross-border movement, standard for cross-boundary transport vehicle, conversion of commercial traffic rights, standardization of roads and signs, and so on.
Trade: Some factors contributed to regional trade cooperation. For example, transport cooperation brought about lower transport costs, the reward must be expected by investors when investing local infrastructure, and after the financial crisis in Southeast Asia, ASEAN countries pursued economic recovery, global trade liberalization and the foreign investment. The cooperation in the Mekong Subregional trade facilitation focused on the elimination of non-tariff barriers, with the aim of establishing a subregion as an
2 劉李峰(2004 年 6 月)，中國-東盟水果貿易現狀及展望，中國農村經濟，pp.61-64。
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attractive investment environment and ensuring constant gains from the operation of infrastructure.
Since China’s participation in the Greater Mekong Subregion cooperation, there has been a significant growth trend in the regional trade volume.
In 2004, China’s trade with the five countries of the Mekong Subregion amounted to US $ 24.8 billion. By 2010, trade volume increased to 90 billion, up to 3.6 times. By 2014, trade volume was about 163.3 billion, 6.5 times than a decade ago. Yunnan Province is the main body of China’s participation in the Mekong subregion cooperation, and frequently interacted with the Mekong subregion countries. Yunnan was not only engaged in trade activities, but also earned a lot of foreign exchange. Yunnan is a province of western development, linking to the South Asian and Southeast Asian countries, and holding very important position in the development strategy of China’s western region. With the multifaceted cooperation in the Mekong subregion, Yunnan Province has also become China’s logistics center toward Southeast Asia and South Asia and the important node of China-ASEAN free trade zone.
Table 3.1 Trade volume among China and Mekong Subregion countries
Unit: 100 million US dollars CountryYear
Vietnam Laos Cambodia Myanmar ThailandTotal
2007 151.15 2.49 9.33 20.57 346.38
529.92
2010 300.9 10.5 14.4 44.4 529.5
899.7
2014 835.3 36 37.57 90.5 633.6