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    Southeast Asia
     Sep 30, 2006
Inland China's route to prosperity
By David Fullbrook

BANGKOK - The "Gun Bridge" shut last year, replaced by a parallel stronger and wider span across the Shweli River on the old Burma Road between Myanmar and Yunnan. A few kilometers north, most lanes at the modern 12-lane immigration checkpoint lie unused, so light is the traffic humming along the road to Ruili in Yunnan, which is not noticeably busier despite homes, markets and offices multiplying over the past few years.

Locals are excited about the trains expected to begin services

between Ruili and Kunming, provincial capital of Yunnan, by 2008. Early last year, transport mandarins unveiled plans to spend
billions of dollars over a decade on a national highway network that will put Ruili, among other places, on the map.

This seems more than adequate for trade as it now stands. Aside from equipment and weapons occasionally passing through for delivery to the Myanmar military, exports are mostly cheap motorcycles and household goods exchanged for imports of fish, gems and jade bound for cities across southern China, plus the heroin heading for the markets of eastern China's mega-cities and North America. Traffic jams exist in television soap operas, not on the roads around Ruili.

As yet there do not appear to be any proposals to make Ruili, home to perhaps 20,000 people, and its surrounding fields a new Shenzhen, so why the national highway, railway, checkpoint and new bridge? Clearly, there are expectations for a substantial surge in trade and traffic. This is not, however, going to come from the paddies and hills around this picturesque corner of Yunnan.

A few hours south of Ruili in Myanmar, Lashio is a busy market town and the end of the line for the rickety railway along which geriatric trains crawl from Mandalay. Beijing and Yangon agree a railway should connect Lashio and Ruili, completing plans first sketched out more than a century ago only for World War II to come along and put the kibosh on the project.

Meanwhile, Chinese engineers and laborers are laying surfaced roads from Tengchong to the splendid bridge built by the Chinese over the Irrawaddy River at Myitkyina, which is linked to Mandalay by a railway also desperately in need of refurbishment, and Loije, near Ruili, to the Irrawaddy port at Bhamo. Chinese planners want to dredge the Irrawaddy to allow large vessels to sail between Bhamo, Mandalay and Yangon year-around. Chinese money and trade could see many more cargo boats cruising on the broad but shallow Irrawaddy, recalling busy days under the British Empire.

Barring a chill in relations, pipelines will as early as 2010 transport oil and gas from substantial fields off Myanmar's coast to Yunnan. PetroChina's vice chairman signed a memorandum with Myanmar's energy minister for 6.5 trillion cubic feet of gas shipped via an 800-kilometer pipeline to Kunming in December, reported Mizzima News last January. An oil pipeline from Sittwe to Kunming was approved by China's National Development and Reform Commission, reported the China Daily in April.

Roads, railways and pipelines along the Sittwe-Kunming corridor promise to allow much more trade to pass through in a shorter time and at a lower cost. The Andaman Sea ports are, for much of central China, as close as, if not closer than, those on China's own coast. Moreover, shipping through Myanmar's Andaman Sea ports should mean lower bills and shorten journeys to all points west by lopping off the 2,900km journey from Guangzhou or Shenzhen through the Strait of Malacca.

Later, tankers from the Middle East should be discharging their cargoes into the pipelines' Andaman Sea taps, saving the cost and time of shipping deliveries through the Malacca Strait to China's ports and then by pipe or train to inland provinces such as Yunnan, Guizhou, Sichuan and Chongqing.

However, the expected boom in traffic will only come to pass when Yangon and Beijing end their haggling over transit fees. Nor will transport be as smooth as it should if they cannot agree to split the bills for upgrading roads and railways between Yunnan and the Andaman Sea ports at Sittwe, base for the offshore oil and gas projects, Kyaukphyu, a deepwater port allegedly financed in part by Chinese money via Hong Kong, and Yangon, where Shanghai Jinqiao Export Processing Zone Development Co, partly state-owned, is investing in a special trade zone at the port.

For the Chinese Communist Party (CCP), pushing these routes makes political sense. Opening reliable and rapid bulk-trade routes through Myanmar to the Andaman Sea ports would cut costs and time, making slow-growth inland provinces with their large, eager workforces more attractive to investors, mostly private, with their job-creating money and know-how.

Since shedding the caring aspect of socialism and dumping communist economics in favor of partially free markets, the party's legitimacy has come to rest on providing jobs, higher incomes and better lifestyles. If it fails to spread the good life shown on television dramas about east-coast cities into the real lives of hard-up rural folk, the party could have a problem. Increasing riots in recent years are a clear sign that Beijing has to tackle inequality and abusive local officials.

Prospects for these trade routes only started to take shape when Beijing withdrew its support for the Communist Party of Myanmar in favor of the military junta in the mid-1980s. When the world turned against Myanmar after thousands of demonstrators were shot in 1988, and then against China a year later for the same reason, each rallied to the other.

Progress has been slow, partly because only in the past few years has the Myanmar army secured control of land running between the Chinese border and Mandalay, through a mixture of dodgy ceasefire deals, bribes, and offensives to co-opt, weaken and push back Shan and Karen rebels.

Fearing that the growing gulf in wealth, opportunities and comfort between the coastal and inland provinces could spark revolt, of which there is a rich history in these provinces, the CCP has been pushing policies - such as "Go West"- to encourage investors to put their money and know-how into creating jobs in these distant lands.

Though not a failure - Intel, for example, opened a factory in Chengdu and property magnate Vincent Lo's Shui On Group is redeveloping Chongqing in Hong Kong's image - it is hardly a roaring success. Higher energy, commodities and materials costs, plus slow and expensive transport to the coastal ports, leave many investors cold. However, that appears to be changing.

Moreover, revitalized trade routes do not end with Myanmar. Academics from Bangladesh, China, India and Myanmar have been discussing plans for roads and even railways to bring together their economies and markets. However, sour relations between India and Bangladesh and a shaky detente between India and China have not encouraged officials and politicians to embrace the plans.

Meanwhile, a new route linking Kunming with Bangkok will open next year when work finishes on the road through northwestern Laos. An all-weather route is almost complete between Yunnan and Cambodia's Sihanoukville port thanks to the Asian Development Bank, China, Japan and other aid donors stumping up cash for roads and bridges in Laos and Cambodia. Trade has been picking up, with Chinese shopkeepers, market traders and investors now spreading south from northern Laos.

With a sizable Chinese community growing in Cambodia, it seems only a matter of time before goods start flowing down from Yunnan and Guizhou through Laos to the Chinese wholesalers and retailers in Cambodia. Prospects may also be rising for more firms to get in on exporting the bits and bobs of daily life via Cambodian ports to Southeast Asia's islands, avoiding congested and expensive ports geared for large loads and huge ships in Guangdong.

Shorter routes and faster trips for imports and exports appear to be moving closer to reality thanks to good political ties and construction crews laboring on roads and rails. For factory owners in Guangdong struggling to balance their books in the face of labor shortages and rising wages, redoing their central China arithmetic might show profits are to be had. Inland China's time may have come. On hand to take the credit will, of course, be the CCP.

(Copyright 2006 Asia Times Online Ltd. All rights reserved. Please contact us about sales, syndication and republishing .)

Myanmar: Missing the wood for the trees (Jun 9, '06)

Myanmar gets a friend, China gets its forests (Oct 20, '05)

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