ASIA HAND The limits of Chinese expansionism
By Shawn W Crispin
BOTEN, Laos - On a November evening in this northern Lao border town, a crowd
gathered around a traffic accident between two Chinese drivers. As tempers
flared, Chinese casino guards moved tentatively to keep the peace. But the
absence of any uniformed Lao police officers underscored the authority gap in a
growing number of areas in the country where Vientiane has effectively ceded
sovereignty to Beijing.
Chinese investors have built and run a sprawling casino complex at Boten, one
of two special economic zones dedicated to gambling where China maintains
administrative autonomy. At Boten, front desk hotel staff speak only Chinese,
the yuan is the required currency of settlement and Chinese prostitutes peddle
their services on business cards printed in Mandarin rather than Lao. At the
other, outside the town of Huay Xai, Chinese cars travel without license
The special concessions are quid pro quo for the official aid, grants and
non-interest loans Beijing has given in recent years to Laos to finance badly
needed and trade facilitating infrastructure. The assistance has been widely
referred to as China's "soft power", a diplomatic gambit aimed at changing
perceptions about China in a Southeast Asian region that has often viewed its
giant northern neighbor more as a strategic threat than economic opportunity.
Buoyed by rising economic clout and driven by a 2001 policy initiative known as zou
chu qu, translated literally "to go out", China's fast-evolving model
of capital expansionism is starting to raise questions about the sustainability
of that outward drive. With its national coffers overflowing from decades of
trade surpluses, China's foreign investments are expected to grow exponentially
in the years ahead, particularly into contiguous, resource-rich Southeast Asia.
But Chinese foreign investments now come with big strings attached, including
allowances to import unskilled Chinese labor for Chinese-funded projects in
countries often desperate to create jobs for their own. Nowhere is that more
apparent than in Southeast Asia's less developed states, where China's generous
financial aid has influenced government policies in Beijing's favor. It is
significant that China has made its deepest investment inroads in states
governed by similarly authoritarian regimes, namely Cambodia, Laos, Myanmar and
Strong and unaccountable governments have allowed for state-sponsored land
grabs and forced village relocations to pave the way for many Chinese
investments, especially in extractive industries and plantation agriculture. An
entire village was forcibly moved to a barren relocation site to make way for
the Chinese special economic zone outside of Huay Xai. That's leading some in
the region to associate Chinese investment with corrupt government practices,
rising perceptions that are motivating the first nationalist stirrings against
To be sure, China's economic rise has had an unmistakably positive impact on
Southeast Asia's small transitional economies. New and improved roads and other
infrastructure have opened important new gateways for trade and commerce.
That's included Chinese financial assistance to build the Lao segment of the
Great Asian Highway, which if completed on schedule in 2012 will connect
Beijing to Singapore and transform Laos from land-locked to land-linked status.
Chinese-financed roads into previously remote areas along the Mekong River in
the country's impoverished northern regions have allowed Lao authorities to
extend the electricity grid to villages visited by this writer that until just
months ago lacked a consistent source of power. The electricity will be
supplied by hydropower dams recently built along three northern Lao rivers with
the assistance of Chinese financial credits.
As Southeast Asia's smallest and least-populated state, Laos is most vulnerable
to China's growing economic might and Beijing's presence and influence is
expected to grow, according to Martin Stuart-Fox, a renowned Laos expert.
Indeed, Laos is fast emerging as a greenfield model for the form Chinese
capital expansionism may take across the region and beyond as Beijing revs up
its investment drive.
In a 2008 academic paper, Stuart-Fox argued that China expects three things in
return for its aid, loans and grants to Laos, namely: backing for Chinese
policy from everything to Taiwan to Tibet; access for Chinese companies to
exploit Lao resources; and lines of communication though Laos to Thailand - all
of which Laos has loyally provided.
More recently, however, its become clear that China expects more for its
generosity, including exclusive economic enclaves and long term leases for
projects - including a to-be-built new Chinatown in downtown Vientiane - that
some analysts believe will pave the way for bigger waves of Chinese migration
into Laos. As of 2007, the Lao government estimated there were 30,000 Chinese
residents living in Laos, a human statistic Stuart-Fox described as a "gross
underestimate" in his research. Nonetheless it represented a tripling of the
1997 estimated figure.
Journalist and author Bertil Lintner argues in a forthcoming book that China's
economic boom and rapid infrastructure development have spawned a new outward
wave of Chinese migration, one of potential historic proportions. His research
shows how outward Chinese investment often acts as a front for state-backed
outward migration to relieve population and resource pressures at home.
(Because less than 7% of China's land is arable, food security for its 1.3
billion is a major policy concern.)
The outward migration of capital and labor, however, is being complicated by a
new sense of Chinese exceptionalism, a phenomena both Lintner and Stuart-Fox
note in their studies and one clearly on display in China's special economic
zones in Laos.
Stuart-Fox writes that Chinese newcomers have "little in common with the older
Sino-Lao community" which integrated more readily in their newfound homes and
that "most have little sensitivity towards Lao culture". He characterized the
new generation of Chinese migrants in Laos as "brashly nationalistic".
Lintner has identified a similar nationalistic strain in his research of
Chinese expansionism in the South Pacific, where Chinese communities have
recently come to dominate local commerce on several islands and faced violent
backlashes as a result. He notes violent reactions against certain Chinese
investments into Myanmar, where Chinese traders have come to dominate trade in
towns as large as Mandalay.
A recent unexplained explosion at a Chinese-funded hydropower power project in
the ethnic Kachin area designed to supply power to southern China is one
example. Around 10,000 inhabitants of the area where the dam was built were
forcibly evicted, Lintner notes.
In northern Laos, China's expansion is especially visible in the mountainous
areas south of Boten, where once forested areas have been cleared for
monoculture rubber plantations managed by Chinese companies. Those companies
frequently receive tax waivers and subsidies from Beijing as part of a wider
policy to combat opium cultivation and better integrate remote Lao and Myanmar
border areas into wider regional markets, according to the Transnational
Institute (TNI), a Netherlands-based international network of researchers and
In a November briefing paper, TNI wrote that while "initially informal
smallholder arrangements were the dominant form of [rubber] cultivation in
Laos, the top down coercive model is gaining prevalence" and that "the poorest
of the poor ... benefit least from these investments. The study also noted that
many Lao agrarians "were losing access to land and forest" and "were being
forcibly relocated to lowland areas that offered few viable options for
survival" to make way for Chinese plantations.
TNI concluded that "new forms of conflict are arising from Chinese large-scale
investments" in both Laos and Myanmar and that "related land dispossession has
wide implications on drug production and trade, as well as border stability."
It claimed that China's approach "is perceived by the local communities and
international development agencies as for profit only, and they question the
sustainability of the Chinese approach. The image of the Chinese government and
people in these regions has consequently suffered."
There are questions about how far China has gone to manage its investment
image. Sompawn Khantisouk, the owner of an ecotourism resort in northern Laos,
was abducted in 2007 by men believed to be local police officers and still has
not been accounted for. Sompawn's disappearance coincided with his efforts to
mobilize local villagers against Chinese-sponsored rubber plantations in areas
used for ecotourism. Sompawn's resort had won several awards for its
contribution to sustainable ecotourism, once a top government policy priority.
Nationalistic bloggers in Vietnam have campaigned against a government
concession given to a Chinese company to mine bauxite in the country's
picturesque Central Highland's region. The company has imported thousands of
Chinese laborers to work the mine, according to reports. Four of the five
political bloggers currently imprisoned in Vietnam are being held for
criticizing Hanoi's perceived accommodative polices towards China rather than
calls for more democracy.
In an apparent move to forestall similar criticism in Laos, China has worked
hand-in-hand with the Ministry of Communication and Transport to establish a
new Lao National Internet Center, which will come on-line in 2011. The center's
Lao staff have undergone extensive training in China, including members of a
newly created "security emergency response" team, according to a source
familiar with the situation. Beijing has also supplied the technological
equipment that will be used to monitor and block web sites, the source said.
Currently, Laos does not censor the Internet.
Because of the lack of free media in the Southeast Asian countries where China
is most heavily invested, it's difficult to ascertain whether the still faint
voices of dissent are marginal or representative of a genuine nationalist
groundswell of anti-China sentiment. But if China is indeed involved in the
suppression of these voices, as many suspect, then Beijing too must realize the
risks and flaws in its fast-growing capital expansionism.
Shawn W Crispin is Asia Times Online's Southeast Asia Editor.