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China’s Influence Mounts in Laos

The new Chinese ambassador to Laos, H.E. Pan Guangxue, has stressed the long years of friendliness and co-operation between the two countries and emphasized China’s role in helping Laos achieve further development. In truth, Laos has little choice but to accept what China has to offer. The land-locked country is one of the poorest in Asia and overseas aid and development funds remain its government’s principal source of funds. Chinese help in providing electricity to villages otherwise forced to live without is gratefully accepted, as is the trickle of inwards migration of Chinese to the capital Vientiane and the gradual increase in Chinese investment in the country.

Until 1989, Laos maintained cordial ties with the Soviet Union that meant Soviet support for its government and training for its administrators and bureaucrats. The reforms of Mikhail Gorbachev led to the ending of that financial support and the Communist Pathet Lao government was forced to look elsewhere for support. In practice, this meant Vietnam, since Vietnamese had taken leading roles in the Indochinese Communist Party and considered themselves to be the older brothers of the Communist revolution. Vietnamese trained Lao technicians, scholars and officials, instilling in them the Vietnamese world view and, as those people returned to their work, the Vietnamese influence in Laos naturally increased. Now, any visitor to Laos can see evidence of Lao-Vietnamese co-operation everywhere. Numerous examples of infrastructure development (e.g. airport, customs procedures, bridges) proceed thanks to assistance from the eastern neighbour and Vietnamese people are present throughout the country. Officially, the relationship is perfectly harmonious but, unofficially, some Lao people rather resent the power and influence of their ‘big brothers,’ while being powerless to do much about it. The rise of China, therefore, offers and opportunity to play the two against each other, with a view to it benefiting the Lao nation.

The relationship between China and Vietnam has been problematic throughout history. China colonized northern Vietnam for one thousand years, during which time the people of Dai Viet, as that state was known, adopted numerous Chinese institutions for their own use. The colonizers were eventually expelled when the Battles on the Bach Dang River led to the defeat of Mongol and Chinese troops. However, this has not been the end of military confrontation, since as recently as 1979 Chinese forces invaded northern Vietnam in a war that led to perhaps twenty thousand dead on either side. The wounds caused by that conflict have yet fully to heal. Yet in the twenty first century, it is money that talks loudest and the Chinese use it to obtain what they want: influence internationally and access to resources.

Laos may be poor but it does have some mineral and hydropower resources, if they can be tapped. There is also a small tourism market which has potential for expansion. However, difficult terrain, poor infrastructure and very low population density all make it more difficult for Lao organisations to take advantage of those resources. Consequently, as they are doing across Africa, Chinese corporations are following their national interests by building the infrastructure personally and helping to swell the domestic market, thereby making further investment more attractive.

In Burma [Myanmar], Chinese interests are such that northern centres such as Mandalay are routinely referred to as Chinese towns. This has not yet happened in Laos but it seems very likely to do so in the future. This has long-term implications for Lao economy and society for governments around the world are put under pressure to adjust regulations to suit powerful investors. What will be the future of workplace democracy or health and safety standards in an economy dominated by Chinese firms? Chinese firms are not necessarily worse than the firms from anywhere else but they are not likely to be very liberal either. The integration of China into regional forums, especially with respect to ASEAN, will continue to be an important issue for Southeast Asian countries to manage.

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