China in Laos: Counting the cost of progress
By Daniel Allen
BEIJING - At Kunming's long-distance bus station, a sleeper bus crammed with
Chinese laborers edges toward the exit, en-route to the Laotian capital of
Vientiane. Despite the prospect of an uncomfortable 40-hour journey ahead, this
group of wiry, chain-smoking men is buoyed by the expectation of a reasonable
salary and a chance to take China's economic miracle southward. "Laos is poor
and dirty," says one. "But we have many friends there already. We can make
money and help make Laos more like China."
The resource-rich Golden Triangle area of northern Laos, Thailand and Myanmar
is no stranger to Chinese influence. Just as the Chin Haw - Han and Hui Chinese
from Yunnan province - first arrived in Laos in the 19th century looking to get
fat off the land, so a new wave of migrants from Yunnan and further afield is
now
making a beeline for the same region, looking to take advantage of
opportunities thrown up by modern China's long and powerful economic arm.
China's role in the development of northern Laos has become increasingly marked
in recent years. A cooperation agreement signed in 1997 signaled a break from
the hostility of the 1980s, when Laos allied with China's then adversary
Vietnam. By 2007, China was responsible for nearly 40% of investment projects
in Laos, and, according to the Laotian government, Chinese direct investment
totaled over US$1.1 billion by the end of August that year.
Indeed, through official aid, state investment and a growing number of private
ventures, China now dominates a large part of the Laotian economy. From mining
and hydropower to rubber, retail and hospitality, the Chinese generally have a
controlling interest in almost every economic sector. Trade between Laos and
China was valued at about $250 million in 2007, and is expected to reach $1
billion over the next few years.
Last year, the government of Yunnan completed a blueprint - widely known as the
"Northern Plan" - to develop the industrial sectors of northern Laos from now
until 2020. This was handed over to the Laotian government in January, and is
expected to be ratified at the Laotian 9th Party Congress in 2010. Setting
specific targets for the "backbone industries" of power, agriculture and
forestry, tourism and mining, the Northern Plan "intends to develop a highly
focused and executable roadmap for industrialization".
While growing Chinese influence undoubtedly benefits some, as evidenced by the
row of luxury SUVs sitting at the China-Laos border, many Laotians, expats and
international observers are deeply concerned about its social and environmental
impact. Many of these concerns center on the newly completed Kunming-Bangkok
Route 3 highway, part of which runs through northern Laos (built with Chinese
and Thai money), and the rash of new towns, settlements and business ventures
this road is now spawning.
Sitting on the Chinese border next to Route 3, the Laotian town of Boten was
designated a special economic zone in 2002. Renamed "Boten Golden City", the 21
square kilometers on which the town sits is now effectively part of China,
having been leased for 30 years by a Chinese company, with an option to extend
this lease by another 60 years. Vaunted as the "most internationally modernized
city in Laos", plans for Boten include a golf course, a convention center,
residential real-estate projects and even an international airport.
Dominating the landscape of Boten is the incongruous and unsightly 271-room
Royal Jinlun hotel and casino complex, which rears above a sprawling concrete
plaza of Chinese restaurants, cell-phone outlets, duty free shops and stalls
selling cheap Chinese products. The casino is a collection of gaming operators
that rent rooms in the back of the hotel and cater to a growing number of
international visitors - it's illegal for Laotians to gamble, but Chinese can
simply walk across the border without a visa.
While Boten has created some jobs for local people, these are largely menial.
The town works on Beijing time, accepts only Chinese currency and speaks only
Mandarin Chinese. Electricity and telephone lines run from China, and electric
sockets adhere to Chinese standards. The growing numbers of prostitutes that
patrol the streets are all Chinese, as are the beer and the cigarettes.
Apart from the less-than-desirable appearance of Boten Golden City - most
foreign visitors traveling into Laos from China describe the place as an
eyesore (or worse) - it has also generated a host of grievances from local
people. To make way for the special economic zone, inhabitants of the old town
of Boten had to be relocated 20 kilometers down the road, where many have
complained of a lack of services and poorer-quality land. Others have objected
to land grabs adjacent to the new highway by well-connected traders and
businessmen.
An increase in Chinese-owned Lao-based concessions (another Chinese-financed
casino is going up in Huay Xai), the growing influx of Chinese immigrants and
the developing regional road network have also combined to drive up the trade
in Laotian biodiversity, much of which is now endangered.
Passing through Boten, many travelers will spot cramped cages containing
monkeys, black bears and other rare species blatantly displayed beside the
road, ready for purchase and cross-border transport into China. "This is surely
not the image that the Laotian government wants foreigners to see first when
they cross the border," said one shocked American tourist.
With its booming economy, China is now the world's largest and fastest-growing
market for wildlife. Rising incomes in China are stimulating demand for a wide
range of Laotian species, both for consumption and use in traditional Chinese
medicine.
This has pushed prices to the level where many animals have become "too
expensive to eat" for local villagers; instead, dead and living wildlife is
hawked to traders for eventual resale on the Chinese market. In China, the
remains of a rare Laotian tiger may sell for more than $70,000.
"The escalating illegal wildlife trade in Southeast Asia is driven by
increasing affluence, and therefore especially by demand from China," said Dr
Richard Thomas of Traffic, a wildlife trade monitoring network. "Boten in
particular may be a hotspot for smuggled wildlife as it is the main trade
crossing between Laos and China, and endangered species have frequently been
observed there."
Beyond Boten, the defaunation of Laos is particularly bad along Route 3, with
the new highway driving widespread deforestation and wildlife poaching. Vast
tracts of forest along the road have been logged for timber and converted for
teak or rubber plantations, while hillsides have been burned for sticky rice
cultivation. Most of the money for these activities comes from Chinese business
owners who not only provide finance, but also sell snares and traps and place
orders for fresh wildlife, guaranteeing a market for local hunters and
smugglers.
Although the first rubber plantations in northern Laos were planted as recently
as 1994, Chinese investment has accelerated coverage dramatically. China is
projected to consume 30% of the world's rubber production by 2020, and is
relying on plantations outside its borders to make up the shortfall from
domestic production, which could be over 7 million tons.
In northern Laos, Chinese companies generally establish large-scale plantations
through massive investments. These companies sign contracts directly with the
Laotian government first, arranging the on-the-ground set up with local
villagers later on, and then employing them on subsistence-level salaries.
This process for allocating land for rubber plantations remains open to serious
abuse. Reports from some government staff and Laotian villagers show that
Chinese companies are in effect allowed to allocate themselves land by putting
local government officials on the company payroll. Stories of manipulation,
exaggeration of benefits and forced coercion of villages to give up land are
rife. Although the Laotian government announced a ban on granting land
concessions in 2007, this has generally proved ineffective, as it is either
ignored by local officials or bypassed via gaping loopholes.
A recent report in the journal Science has warned of the "devastating effect"
that increasing the coverage of rubber plantations in Laos and other Southeast
Asian countries could have, citing significant reductions in carbon biomass,
desiccation of water sources, increased risk of erosion and landslides, and
consequent loss and degradation of habitat. As the Yunnan government's Northern
Plan calls for an increase in Laotian rubber plantation coverage to 150,000
hectares by 2020, not to mention more than 100,000 hectares for biofuel
plantations and a step up in mining projects, the prospects for the area's
rapidly dwindling biodiversity look poor at best.
A voracious appetite for Laotian natural resources, coupled with the
availability of cheap Chinese products and the willingness of the Chinese
government to provide aid without asking questions, will undoubtedly see China
play an even greater role in Laos over the coming decades. With Chinese
companies continuing to step up investment and an increasing flow of
southward-bound Chinese migrants, the need for a comprehensive and watertight
system of regulation is both clear and crucial.
The Laotian government is already taking some steps to prevent Laotian people
from being exploited and to protect biodiversity. "The highest level of
government does take illegal wildlife trade seriously," explains Bouphanh
Phanhthavong of the Ministry of Agriculture and Forestry. "The national poverty
reduction plan clearly states that environment protection is one of three
pillars to reducing poverty. The other two are economic growth and
socio-cultural development. If the natural resource base is depleted or
destroyed, local people's livelihoods will also suffer and ultimately cause
more poverty."
Despite the apparent desire of the Laotian government to promote sustainable
development, however, it's obvious that some Chinese companies and individuals
are going to require a large measure of control from Beijing.
The Chinese government's "Guidelines for Environmental Conduct Overseas" are
expected to be issued soon by the Ministry of Environmental Protection and
other offices responsible for the management of overseas investment, aid and
loans. These should help to improve the environmental impact of China's
financial policies and regulate Chinese companies' environmental conduct
overseas.
Daniel Allen is a freelance writer and photographer currently living in
Beijing. He regularly travels to Laos and other south-east Asian countries.
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