Chinese might, influence, and presence in Southeast Asia: A Japanese perspective

05/28/2007
Hidetoshi Taga: Flow of Chinese more visible than flow of yen

By Hidetoshi Taga
Special to The Asahi Shimbun (Japan)

"Japanese investment and aid are usually invisible to ordinary people and flow directly into state coffers, banks and factories' vaults. The Chinese yuan, in contrast, is brought by Chinese to people in the region along with merchandise."

One day in March, I was in a Thai restaurant in Yangon (Rangoon), having a dinner with one of my Myanmar's friends. The restaurant was stylishly decorated, with great pains taken to create a good ambience.

Couples, friends and families were enjoying quiet conversations and flavorful dishes.

All of a sudden, a group of seven or eight men came into the restaurant, chattering noisily. In the calm atmosphere of the place, their conversations sounded like a shouting match. Every one of them was carrying a small black bag hanging from the neck, wearing a polo shirt, cotton pants and sandals.

They moved some chairs into aisles to arrange seats in a way convenient for their group and ordered in a Chinese dialect. Paying little attention to the waiter, who was in a fluster, they never said a single word of English or Myanmarese. They were Chinese jewelers.

As it happened, a large jewelry exhibition and sale event was being held at a mammoth hotel and commercial complex in Yangon, built with Chinese capital at a site that used to be a Chinese cemetery.

The event was very successful, attracting a huge number of people. It looked as if all the vehicles in the city were parked there.

The Chinese gem dealers in the Thai restaurant gobbled down their dinner quickly and left immediately.

In East Asia, the cross-border flow of people has been increasing rapidly in recent years, especially out of China. One major driver of the swelling migration of people in the region is the Greater Mekong Subregion (GMS) development program, promoted by the Asian Development Bank (ADB). One key project under the program is aimed at rapidly building a network of roads connecting Myanmar (Burma), Laos, Thailand, Cambodia, Vietnam, Yunnan province and the Guangxi Zhuang Autonomous Region in China.

China has signed free trade agreements with the other countries involved in the GMS program after an aggressive diplomatic campaign. Income gaps between China's booming coastal areas and the less developed inland region are not showing any signs of narrowing, so there are strong incentives for Chinese living inland to move out of their villages and towns in search of better economic fortunes.

All these factors are generating a massive and constant flow of people from inland China into neighboring countries.

The original plan for the road network under the GMS program envisioned 15 border-crossing points. In areas immediately inside the Chinese border with other GMS countries, Beijing is building Chinese commercial parks and hotels.

The historically famous Myanmar Road, which was built by Britain to link Kunming, the capital of Yunnan province, with Lashio, a trade center in Myanmar, crosses the border at a check point between Muse in Myanmar and Ruili in China.

Every morning, a long line of Chinese forms on the Ruili side of the point. In Muse, Chinese laborers are constructing buildings using materials imported from China. The town is awash in Chinese signboards, and transactions and payments are done in yuan, the Chinese currency. Both Muse and Ruili were notorious for gambling, prostitution, drug dealing and black-market trading in jewelry. But they could morph into more ordinary towns and stop changing their faces completely at night.

Similar sights are seen in Kengtung, Myanmar. A new road running from Kunming to Kengtung via Jinghong is almost complete. Tachilek, Myanmar, and Mae Sai, Thailand, have long been known as trade centers in the Golden Triangle. Kengtung has been serving as a transfer point for trading goods between China and the region. Changing landscape

Walking down a street in Kengtung makes you feel as if you were in a local Chinese town. The rapid development of Mae Sai in northern Thailand over the past several years has dramatically changed the landscape around a small bridge on the border.

Myanmar's government has relocated the nation's capital to Nay Pyi Taw, and rumor has it that the next target cities for the government's developmental drive are Mandalay and Maymyo. The Chinese presence is also growing at a dizzying pace in these two cities. Thanks to its advantageous geographical position, Kengtung is ready to become the major commercial hub in the region.

Just east to Mae Sai is the border-crossing point between Chiang Khong, a Thai border town on the Mekong River, and Houayxay in Laos. This is the place that is probably at the forefront of the Chinese inroads into the region. A 10-minute drive in a three-wheeled shared cab from the Mekong River into Laos brings you to a Chinese market. Tremendous amounts of home electric appliances, clothes and groceries are sold at the market.

Most of the Chinese merchants I talked to said they were from Hunan, home to such Chinese political luminaries as Mao Tse-tung, Liu Xiaoqi and Hu Yaobang. Probably because the market was opened only recently, prices are some 10 percent lower here than in Mae Sai. The Lao market in Houayxay, which cannot compete with the Chinese market, is now specializing in fresh vegetables, meats and fishes.

Near Chiang Khong, there is a one-stop-over river port for ships that travel the route linking Myanmar, Thailand, and southern China. Large lorries arrive at the port one after another, and cargoes are loaded onto ships bearing the Chinese flag. The stevedores working at this port are mainly ethnic minorities in Myanmar.

There are two rivaling frameworks for the GMS program: the North-South Economic Corridor and the East-West Economic Corridor.

The north-south corridor represents a route from China to the Gulf of Siam. It starts at Kunming and runs through the Golden Triangle, reaching Bangkok. The east-west corridor starts at Mawlamyine in Myanmar at the western end and runs through Thailand and Laos to reach Hue and Da Nang in central Vietnam at the eastern end. This is a good route for distribution with ports at both the eastern and western ends.

The north-south corridor is more convenient for transport to and from inland without trans-shipment. Use of the east-west corridor and the ports at both ends saves much time for the transport of a huge amount of goods from wide areas stretching to both the north and south from the corridor. Kentung and Chiang Mai will grow into major commercial hubs in northern parts of this region. Cities located at intersections of the two corridors, such as Tak, Khon Kaen, Mukdahan and Sawannakhet, will attract investment. Currently, leading cities like Yangon, Phnom Penh, Ho Chi Minh City and Hanoi are left behind.

Needless to say, China is providing a lot of support to the development of the north-south corridor. The other countries involved, which don't want to allow China's unilateral domination, have decided to use Japan as a counterbalance to China, entrusting Tokyo with the task of supporting the east-west corridor. This also serves Japan's interests. Invisible presence

The ways Japan and China are making inroads into the region are very different. Japanese investment and aid are usually invisible to ordinary people and flow directly into state coffers, banks and factories' vaults. The Chinese yuan, in contrast, is brought by Chinese to people in the region along with merchandise. For ordinary people in the region, settlements in yen or the creation of a yen bloc are more or less abstract concepts, and they probably find it hard to emotionally connect to these ideas. But the yuan is something quite familiar to them, and it is much easier for them to understand the use of the Chinese currency as an international currency like the dollar.

The Chinese currency is gradually penetrating the region as Chinese products and people are increasing their presence.

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The author is a professor of international relations at the Waseda University School of Social Sciences.