China Ascendant – Part I

CHIANG MAI: The Chinese are coming. If the plan holds, the small and sleepy capital of Laos, Vientiane, might look like Manhattan on the Mekong. More than architectural statement, the construction of the new Chinatown in Laos will mark the newest evidence of China’s rising influence in Indochina, once the playpen of Vietnam.

An artist’s impression in state-owned media shows the shape of new development that will turn marshland into a modern city, populated by an estimated 50,000 migrants from China. The Associated Press reports that a Chinese company leased the land.

China’s profile and influence in Laos have grown steadily over the past few years at the expense of the landlocked country’s longstanding friendship with Vietnam. Similar development has taken place in Cambodia, another close ally of China’s longtime rival in the region, Vietnam. China, which Cambodian Prime Minister Hun Sen referred to as “the root of everything that was evil in Cambodia” in a 1988 essay, has emerged as a major donor to Cambodia and, unlike aid from the West, Chinese assistance comes with no strings attached for promoting democracy or good governance. China is also a major investor in Cambodia, mainly in the garment industry, but also in agriculture, mining, hotels and tourism.

This development has not gone unnoticed in Vietnam. In the case of Laos, to alleviate fears of a shift in foreign allegiances, the official media have over the past year protested a bit too much about the traditional friendship with Hanoi, repeatedly mentioning the 1977 Treaty of Friendship and Cooperation between the two communist-ruled countries. Symbolically, a stylistic painting showing Lao and Vietnamese soldiers and civilians linking arms under national flags won first prize in a Vientiane art competition 19 September 2007, the 20th anniversary of the treaty’s signing. On Lao television, Lao and Vietnamese dignitaries meet and proclaim the “everlasting friendship” between the two countries.

But Laos’ allegiances have changed and that’s reflected in the history of three apartment blocks on the road to Vientiane’s Wattay Airport. Built in the early 1970s to accommodate operatives of the US Central Intelligence Agency and other American advisers, the buildings were taken over by Soviet technicians when the communist Pathet Lao took over in 1975. Today, the Mekong Hotel and Apartments cater to a mainly Chinese clientele, with one floor housing the Beijing Restaurant.

The number of Chinese working in Laos has increased in recent years. According to official statistics, about 30,000 Chinese now live in Laos, but the real figure could be 10 times greater. Thousands of Chinese work on the Asian Development Bank–funded Route 3 that runs from Boten, on the border with the southern Chinese province of Yunnan, through Luang Nam Tha in Laos, down to the Mekong River at the Houei Xay ferry crossing opposite Chiang Khong in Thailand, where a bridge is planned as well. When finished, the highway – and Laos – will be China’s main overland connection with Southeast Asia.

At the same time, China has become a major investor in Laos with 236 projects worth around US$876 million, a considerable increase from US$3 million worth of investment in 1996. The total Chinese direct investment approved by Laos’ Committee for Planning and Investment up to August 2007 amounts to US$1.1 billion, second only to Thailand’s projects worth US$1.3 billion. About a third of the Chinese investment is in hydropower, and the Laos government has granted Chinese companies concessions to mine gold, copper, iron, potassium and bauxite. Vast tracts of land have been farmed out to Chinese interests for rubber plantations.

China’s assistance to Laos since the late 1990s has reached nearly US$500 million in grants, interest-free loans and special loans. China has built a huge Culture Hall in Vientiane, ostensibly in traditional Lao style. In November 2004, China beautified the park around the Vientiane landmark Patouxay, the capital’s Arch of Triumph, and now constructs a stadium for the Southeast Asian Games, which Laos will host in 2009.

According to a June 2007 report in the English-language Vientiane Times, special loans from China helped establish the Lao Telecom Company and Lao Asia Telecom, and also funded a cement factory, the purchase of two MA 60 aircraft for Lao Airlines, as well as several government internet projects. The Chinese ambassador in Vientiane participates in donors’ meetings and plays an active role in the social life of Lao-based diplomats. Soon he’ll be joined by thousands, perhaps tens of thousands, of Chinese citizens in Vientiane’s new Chinatown, which, for reasons of sensitivity, is called a “New City Development Project.”

In Cambodia – where China once supported the dreaded Khmer Rouge regime both when it was in power and later as a resistance force against the regime that Vietnam installed in Phnom Penh in January 1979 – the political situation began to change when Hun Sen ousted his then coalition partner, royalist leader Prince Norodom Ranariddh, in a June 1997 coup. Cambodia’s Western donors were not amused: The US and Germany suspended non-humanitarian aid until a free and fair election was held. Japan, Cambodia’s largest donor, said it would halt new projects.

But China came to Hun Sen’s rescue. Longtime Cambodia watcher Julio Jeldres notes that China was the first country to recognize the regime after the coup; in December that year, Beijing delivered 116 military cargo trucks and 70 jeeps valued at US$2.8 million. In February 1999, Hun Sen paid an official visit to China and obtained US$200 million in interest-free loans and US$18.3 million in foreign-assistance guarantees. The number of Chinese settlers in Cambodia is unknown, but estimated to be in the thousands.

The “new” Chinese, who for various reasons have settled in countries such as Cambodia and Laos, are more assertive than older Chinese communities in the region. According to Andrew Forbes, a Thailand-based China expert who spent more than 20 years studying China’s relations with Southeast Asia: “They’ve grown up in a country which is stronger and far more unified than before. There’s a new sense of being Chinese: the new migrants are patriotic and loyal to the motherland.”

This sense of national pride provokes tensions between new-generation migrants and older settlers, who fear the newcomers’ outward display of nationalism could rekindle longstanding suspicions towards ethnic Chinese communities in their adopted countries.

There have been incidents of anti-Chinese hostility that bear out those concerns. For example, in May 1999, 300 “new” Chinese massed outside the US embassy in the Cambodian capital Phnom Penh to protest the bombing of the Chinese embassy in Belgrade. A smaller gathering of ethnic Chinese Cambodians, in the country for generations, held a counterdemonstration, heckling the protesters: “You’re not our brothers,” one yelled, referring to the suffering of Cambodia’s Chinese during the 1975-79 Khmer Rouge regime. “Your people killed my people during Pol Pot’s time.”

But the Vietnamese have greater reason to fear China’s rising economic, political and demographic clout in the region. Vietnam, once a leading force in Indochina, is becoming isolated from traditional allies. It still retains some influence in Laos, and trade between the two countries is not insignificant. But once Vientiane’s new Chinatown is built, that may change and the people of Laos have to adjust to their country’s becoming an extension of Yunnan.

Bertil Lintner is a Swedish journalist based in Thailand, and the author of several works on Asia, including “Blood Brothers: The Criminal Underworld of Asia” and “Great Leader, Dear Leader: Demystifying North Korea under the Kim Clan.” This article is part of a larger research project conducted under the auspices of the John D. and Catherine T. MacArthur Foundation.

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