By Andy Scott
Senior officials from several Mekong countries agreed yesterday to build a bridge across the Mekong River, linking by road, the southwest province of Yunnan, China with Bangkok, Thailand.
The bridge, which, according to the Asian Development Bank, will be financed by the governments of the People’s Republic of China and Thailand, is scheduled for completion in 2011 and will cross the Mekong River at Chiang Khong, in northern Thailand, and Houayxay, in Laos. It is the final link in a north-south road system extending through the Mekong region that has been under development for more than a decade.
“When this vital bridge is completed, it will be possible for the first time to travel by land directly from Yunnan, People’s Republic of China, through Lao PDR to Thailand, opening up tremendous potential for increased trade, tourism, and further integration of the Mekong region,” said ADB Vice President C. Lawrence Greenwood, Jr.
In 1937, facing Japanese blockades and pressure from Northern and Eastern China, Chinese forces looked south for overland routes to bring in supplies. Built by Chinese laborers, the Burma Road as it would come be known linked Kunming in China’s Yunnan Province with a rail-head at Lashio, Burma. It provided a crucial link to SE Asia throughout World War II allowing equipment and war materials to flow to Chinese forces in southern and central China.
Today, China is again looking south for supply routes, though the materials being transported are no longer guns and ammunition. China’s Go West campaign, aimed at developing the western regions of China, has sparked massive highway construction in Yunnan Province meant to reestablish and improve trade links with China’s southern neighbors Myanmar, Laos, India and Vietnam.
According to Xinhua, trade between China and the Association of Southeast Asian Nations has boomed in the past 15 years, growing more than 20 percent a year, reaching US$160 billion last year. The two sides are each other’s fourth-largest trading partners. When completed, the China-ASEAN FTA will be the world’s largest, encompassing around 1.7 billion consumers and with total trade estimated at US$1.2 trillion.
Much of that trade is dependent on a modern highway system throughout the region. Chinese construction crews can be found in Laos, Cambodia and Myanmar working on road projects and the governments of Bangladesh and Myanmar have agreed to construct a highway from Kunming to Bangladesh’s southeast city Chittagong, through Mandalay in Myanmar.
Roads leading from Kunming to Rangoon and Bangkok are already either being constructed or repaired to handle large trucks. The approximately 1,800km long Kunming-Bangkok road, which runs from Kunming to Bangkok via Laos and is nearing completion, could witness an annual goods flow worth some US$100 billion if the China-ASEAN Free Trade Area is established.
In November of 2002, China and ASEAN signed an agreement for a framework for economic cooperation that aimed at establishing a China-ASEAN Free Trade Agreement (FTA) by 2010 for the six most developed ASEAN economies, and 2015 for the less developed countries. Chinese Commerce Minister Bo Xilai has said that “the average tariff rate on products originating from ASEAN will be lowered to 6.6 percent by 2007 and 2.4 percent by 2009.”
However, China’s push to reduce tariffs and increase trade in the region is having little benefit for the poorest Asian countries the UN Development Program recently reported. This is because their low-tech economies don’t produce the sophisticated machinery and products that China needs the UNDP states. USA Today has reported that more than three-quarters of China’s Asian trade is with the region’s wealthiest countries such as Japan, Singapore and South Korea. China’s trade with the poorest Asian countries is also unbalanced. In 2004, it ran trade surpluses of US$1.8 billion with Bangladesh, US$422 million with Cambodia and US$731 million with Myanmar.
Perhaps as a way of offsetting the impact of these large trade imbalances, China is donating large amounts of money and resources to its poorer neighbors to the south. Cambodian Prime Minister Hun Sen has praised the Chinese government for its funding of the rehabilitation project for Cambodian National Road No. 7. “It will not only promote the exchange of personnel, goods and traffic but also the development of tourism as well as help to attract more domestic and international investment.” The project, which was estimated to cost RMB500 million, is being undertaken by the Shanghai Construction (Group) General Co., which expected to complete the project in 2008.
But China is not only concentrating on road links – rail links are also playing an important role in future planning. Much like the time and investment placed in the Qinghai-Tibet railway, China is looking at rail links with Myanmar and Thailand. A railway to connect Kunming to Lashio is being considered and China also is exploring options for a railway south from Jinghong in Yunnan Province through Laos to Thailand’s deep-sea port at Laem Chabang, near Bangkok.
While there were serious doubts about the feasibility of the Qinghai-Tibet line when it was proposed and under construction, rail lines through Laos and northern Myanmar would pose equal if not bigger complications. Currently the railroad from Mandalay to Lashio is in very poor condition; some of the track has not been repaired since World War II and would need serious improvements to handle large freight. Laos presents even more of a problem as it currently has no railway of any sort in the country and any line that would extend from Jinghong would have to wind its way through some very mountainous regions.
Whether the rail links to Southeast Asia ever become feasible in the eyes of the Chinese authorities will most likely be related to the success of the road systems currently under construction. In 1939, Chinese laborers built the Burma Road with their hands, stone by stone, creating a vital transportation link to the south. Today that link, and others like it are being developed again. How effective and efficient these “Burma Roads” are when the China-ASEAN FTA becomes permanent will determine the future of this massive trade corridor.
Previous Article « White-collar salaries rising faster in China, India than in West
Next Article Foreign investment funds scrambling for slice of China’s property pie »
Dezan Shira & Associates´ brochure offers a comprehensive overview of the services provided by the firm. With its team of lawyers, tax experts, auditors and...
As a legitimate tool for reasonable tax planning and cost saving, tax incentives play an important role. Companies also use tax incentives as a useful...
A firm understanding of China’s laws and regulations related to human resources and payroll management is absolutely necessary for foreign businesses in...
Over the last few months, China has been quickly expanding the pilot program on electronic special value-added tax (VAT) fapiao (hereafter special VAT...
An Introduction to Doing Business in Hong Kong 2021 is designed to introduce the fundamentals of investing in Hong Kong. Compiled by the professionals at Dezan...
Since the formulation of the GBA Initiative in 2017, business communities have placed high expectation on the coordinated development among GBA cities, as the...
Dezan Shira & Associates helps
businesses establish, maintain,
and grow their operations.
This will be the Fulda Gap for ASEAN. However, unlike NATO, ASEAN will put no defences in place. ASEAN members should prepare themselves to submit to the SCO.
You shouldn’t look at things so negatively. Why not say that ASEAN without linking to a gigantic economic locomotive would be much neglected by the mainstream advancement than attached to one?
Comments are closed.
Stay Ahead of the curve in Emerging Asia. Our subscription service offers regular regulatory updates,
including the most recent legal, tax and accounting changes that affect your business.