Burma, Cambodia & Laos: Juggling trade and diplomacy

Heavy Chinese investment in its southern neighbours has been a boon as well as a diplomatic challenge for Burma, Cambodia, Laos and Viet Nam.

Even as these governments welcome Chinese investments in everything from dams to bauxite mines and rubber plantations, they have also made an effort to roll out the red carpet for other investors.

Laos, for instance, has made a move towards strategic diversification. Earlier this year, it scrapped a plan to let Chinese investors convert farmland and wetlands outside Vientiane into a new city.

The Chinese investors were said to have baulked at the cost of compensation and relocation, but there were other factors at play. Kham Ouane Boupha, the Laotian minister for land management, was quoted as saying the marshland had been designated a protected area.

As senior officials began a two-day meeting yesterday (October 7) in Vientiane to discuss land policies, it was clear that while China was the country's largest foreign investor - having put in US$340 million in the first half of this year alone - other players, such as Viet Nam and Thailand, had entered the field.

Likewise, in Cambodia, a huge investment in water infrastructure has drawn interest not just from China but also from India, Kuwait, Qatar and South Korea.

Governments need to decide whether they want to broker stronger alliances with Japan, Europe and the United States, noted a Laos-based analyst specialising in natural resources who asked not to be named. He pointed out that America's Lower Mekong Initiative - announced last year and aimed at Laos, Cambodia and Viet Nam - was clearly meant to counterbalance China.

Burma balances China's influence against that of India, which also has ventures there. Moreover, Burman nationalism provides a natural damper. Nevertheless, the regime is limited by its fraught relations with many Western powers.

Says historian Thant Myint U: "Western sanctions have been China's best friend. Though intended to promote democratic change, the net effect of the embargoes and boycotts has been far greater Chinese economic domination."

China is the country's largest investor, pumping in US$8 billion this fiscal year, according to official Burma data released in August. Still, Myanmar has no problem welcoming Thai, Japanese, Indian, Malaysian and Korean investment. Since 1988, Thailand has invested US$9.6 billion there.