The Chinese presence in Laos

Résumé du document

Since we analyzed in class the FDI inflows in China, I wanted to study the investments of China in the rest of the world, and I chose to focus on Laos. In 2011, China's trade with Southeast Asia reached nearly $370 billion. China projects its trade with the region to be about $500 billion by 2015. So Southeast Asia is an important market for China and that's why I chose to study this area, and particularly one country in this area: Laos. This country is interesting to study as it is a really poor country and as China is investing a lot in it. It used to be an isolated and enclosed country. It was and is still sometimes considered as a buffer state but its aim is to switch from this status to one of decisive crossroad. Its position in the Chinese trade in Southeast Asia is thus interesting and worth analyzing.

The presence of Chinese people in Laos dates back to before the absorption of Laos in French Indochina in the end of the 19th century. During the colonization period, since the Lao economy was growing, more and more Chinese migrated to Laos. Sovereignty was granted to the country in 1953. Then a war between the Pathet Lao (allies of the communist Viet Minh) and the US-backed Royal Lao Army followed. The US withdraw in 1973 and the population was divided between Pathet and non-Pathet Lao, but only during two years since after that the Communist took over and created the Lao People's Democratic Republic. This political turmoil led to a massive exodus of the Chinese migrants back to Yunnan. Then, in 1978, the diplomatic relations between China and Laos deteriorated because of Laos close relationship with Vietnam, China's enemy at the time – Vietnam had invaded Cambodia to remove the Khmers Rouge, whose regime was supported by China, from power.

Extraits

[...] Along the newly built road going from Bangkok to Kunming via Boten, the threats to the environment are also striking. Forests have been razed to the ground so China could use the wood. To exploit a zone, China gets a contract with the Lao authorities, and then deals directly with the villagers, who are really poor and thus ready to accept unfair transactions. In the absence of a real rule of law, the government failed in its attempt to deal with the issue. [...]

[...] Before, China's primary goal was to use Laos as a neutral military zone. Now, China seeks to expand its economical influence in the country, and to reach the whole peninsula at the same time. The accession of Laos to the Association of Southeast Asian Nations (ASEAN) also facilitated trade with China. Since Laos opened up its trade, the GDP growth rate has increased and poverty fallen. Since the end of the 1980s, development has accelerated. And the huge Chinese market located just the other side of the northern border has for sure something to do with this. [...]

[...] Beyond the economical drawbacks We saw that the growing importance of China in Laos, if it allows Lao development to accelerate, can have drawbacks since Laos domestic market is not able to compete with China capacity to produce big quantities of cheap manufacturing goods. But the drawbacks of the Chinese presence in Laos actually go beyond those economic mechanisms that we can find every time two unequal economies trade. We can speak of a Chinese stranglehold on Laos. I chose the example of the border-city of Boten, literally absorbed by China, as a starting point. [...]

[...] Its position in the Chinese trade in Southeast Asia is thus interesting and worth analyzing. The Chinese influence in Laos The presence of Chinese people in Laos dates back to before the absorption of Laos in French Indochina in the end of the 19th century. During the colonization period, since the Lao economy was growing, more and more Chinese migrated to Laos. Sovereignty was granted to the country in 1953. Then a war between the Pathet Lao (allies of the communist Viet Minh) and the US-backed Royal Lao Army followed. [...]

[...] In the shadow of China: trade and growth in Lao PDR. Stockholm School of Economics. Working Paper 4. March 2009. http://swopec.hhs.se/hacerc/papers/hacerc2009-004.pdf Walker Andrew. The Legend of the Golden Boat Curzon Press. [...]