Page 2 of 2 New-age Chinatown has Laos on edge
By Brian McCartan
to build the Don Chan hotel in Vientiane for the 10th Association of Southeast
Asian Nations summit in 2004 all returned home after the project was completed.
China began taking a more active role in Laos in the late 1990s, seizing the
opportunity presented by bailing out the Lao economy in the wake of the 1997-98
Asian financial crisis. Chinese investment and aid to Laos has since rocketed,
facilitated through a series of bilateral agreements covering economic and
technical cooperation, investment, banking and infrastructure development.
These agreements have been complemented by Chinese export subsidies and
interest-free loans.
In November 2000, Jiang Zemin made the first visit by a Chinese
head of state to Laos, symbolically underscoring the two sides' strengthening
ties. In pursuit of new trade routes and energy and commodity sources for its
growing industrial and population base in its southern provinces, China is
looking to resource-rich Laos to meet that surging demand. The Lao Committee
for Planning and Investment approved $1.1 billion in direct Chinese investment
by August 2007, making China the second-largest investor in the country after
Thailand. Last year, China actually invested US$876 million, compared with $3
million in outlays in 1996.
China has also recently approved almost $500 million in grants and interest
free loans, mostly to help stabilize the Lao currency in the wake of the
1997-98 financial crisis. Chinese Premier Wen Jiabao said during an official
visit in March this year that his government was willing to support even more
investment by Chinese enterprises in Laos. Bilateral trade between Laos and
China reached $249 million in 2007. Most analysts believe the real figure is
much higher once informal trade and smuggling are taken into account.
Patronage shift
Laos' growing economic ties with China mark a shift from its previous reliance
on Vietnam. Although pronouncements of continuing strong fraternal relations
are made by Hanoi and Vientiane, many younger Lao leaders now moving into the
middle and higher ranks of the Lao People's Revolutionary Party (LPRP) are
believed not to share the same feelings of allegiance to Vietnam held by older
cadres. They grew up after the end of the Indochina War and do not feel as
indebted to Vietnam for its assistance during the revolutionary period that
culminated in the 1975 communist takeover in Laos.
Laos is a case study of China's soft power strategy in the region. In
Vientiane, China built the $7 million National Cultural Hall, completely
financed the 13 kilometer Central Avenue leading to the central Patouxay, or
Victory Arch, monument in 2003 and renovated the park around the same monument
in 2004. Now projects have become more commercially oriented and provide
indication of what is in store for the That Luang marsh area.
On August 1, 2007, the country's first modern shopping mall was opened in
Vientiane's western Sikhottabong district. At the opening ceremony, Ding Guo
Jiang, president of the San Jiang Company, the $6 million project's main
investor, was quoted by the Vientiane Times saying, "The new Chinese market is
now the largest market for Chinese products in Southeast Asia and a gathering
point for the city's Chinese merchants."
The project is overtly aimed at a Chinese market and investment by Chinese
businesses. Of the 300-plus spaces in the shopping mall, Ding Guo Jiang noted
that 200 had already been filled by Chinese businesses while 100 were operated
by local Laos. An estimated 80% of the goods in the market are imported from
China.
The shopping mall is part of a larger project known as the Lao-Chinese
Friendship Center by the Lao Ministry of Industry and Commerce, which it says
is "part of the cooperation framework on trade and investment between Lao and
Chinese governments". The 174,000 square meter project was granted a 50-year
operating concession and is expected to cost around $18 million to complete.
According to Ding Guo Jiang, who is also the managing director of the entire
project, the new trade center will encompass a hotel, guesthouse, public park,
restaurants and a market.
The Lao-Chinese Friendship Center is the third trade center established between
the Lao and Chinese governments. The other two, the Boten Border Trade Center
and the Nong Duang Chinese market in Vientiane, have also been controversial.
For instance, the trade center at Boten in Laos' northern Luang Nam Tha
province consists mainly of Chinese businesses selling Chinese goods to an
almost entirely Chinese clientele. The business owners, shopkeepers and hotel
staff are all ethnic Chinese.
Meanwhile, the original Lao residents of Boten have all been moved out to a
shanty town farther down the Chinese funded and built road from the border.
Residents of Luang Nam Tha and non-governmental organization (NGO) workers in
the country quietly accuse the government of selling off Boten to the Chinese,
with some local Laos bitterly contending that it is already part of China.
There is a similar undercurrent of dissatisfaction about the New City
Development Project among Vientiane's population, including among the new,
growing and increasingly assertive middle classes. While they were seemingly
only mildly concerned about Chinese inroads made into northern Laos, this new
project has brought the specter of Chinese domination to their doorstep. Rumors
of official corruption and a behind-the-scenes deal to allow 50,000 Chinese to
move into the capital are fueling resentment at growing Chinese influence and a
government which appears to be abetting the process.
Beijing agreed to cancel much of Laos' $1.7 billion debt owed in 2003,
according to Chinese media reports. That has led to speculation that the
satellite city development project could be repayment in kind for Beijing's
generous bailout. Since the Asian financial crisis, China has provided millions
of dollars in loans and financed the building, of among other things, the newly
opened route from Boten on the Chinese border to Huay Xai on the Thai border.
Chinese loans were also provided to help start up the Lao Telecom Company and
Lao Asia Telecom, establish e-government projects and purchase two MA 60
turboprop airliners for Lao Aviation.
Some analysts contend that not everyone inside the ruling communist party is
happy about the deal either. The government's highly secretive nature makes
this almost impossible to verify, but it seems likely that those in the
leadership who did not share in the spoils of China's largesse could be unhappy
with the deal. According to one source close to the government, the deal upset
many party cadres because they were out of the loop of the decision-making
process and only found out about the new satellite city after it was publicly
announced.
The average Lao, of course, has almost no outlet for protest. But the simmering
discontent was large enough for the government to make its rare public
explanation for its actions in both February and March. The issue remains
sensitive, however, and many in Vientiane, both Lao and foreign workers, were
reluctant to discuss the controversial development.
NGO workers have been told by officials not to refer to the project as "the
Chinese city". Government spokesman Yong is more open about the development.
"It is a real estate and industrial development project given to a Chinese
concessionaire, nothing more." For Yong the issue is one of recognizing the
reality of China's growing economic might. "It is basic. Some people are not
ready to live with the new situation. We now have new players."
Brian McCartan is a Chiang Mai-based freelance journalist. He may be
reached at brianpm@comcast.net
(Copyright 2008 Asia Times Online (Holdings) Ltd. All rights reserved. Please
contact us about
sales, syndication and
republishing.)
Head
Office: Unit B, 16/F, Li Dong Building, No. 9 Li Yuen Street East,
Central, Hong Kong Thailand Bureau:
11/13 Petchkasem Road,
Hua Hin, Prachuab Kirikhan, Thailand 77110
