“Although we live in different parts of the river, our friendship will only be enhanced by the river.”
Brad Murg
China's track record with regional cooperation, historically, has been "patchy" to say the least. The dismal outcomes of the 1990s era Tumen River Basin project in China's northeast regularly gallop to my mind when the phrase "regional cooperation" is uttered. Then there is the famous "Spaghetti Bowl" of overlapping, competing, and less than effective collection of regional organizations in Central Asia - the Shanghai Cooperation Organization, the Eurasian Economic Union, etc.
But these days, it's all "One Belt, One Road" all the time and the public relations push from the Ministry of Foreign Affairs seems to get stronger every day. The BBC had a particularly fawning report on the program I caught on TV this afternoon. Moreover, as the US continues its "not-quite-isolationist-but-nothing-resembling-an-actual-policy" policy towards the region, China is clearly taking advantage of the current regional leadership gap.
Earlier this year, President Xi Jinping pointed out that the region should unite "like flying geese"―a phrase with a lengthy historical pedigree. Initially utilized by the Japanese economist, Kaname Akamatsu, in the 1930s (and not so happily associated with the bad old days of the Greater East Asia Co-Prosperity Sphere), it gained wider utilization in the 1960s with Japan, of course, serving the role of "lead goose." Today, China obviously sees itself leading the flock.
We'll be spending quite a bit of time here at MEconBlog discussing One Belt, One Road - but for now, let's just begin with some broad observations and some recent developments. First off, it's a global strategy and one that clearly has learned from the occasionally hyped but generally impotent "Harmonious World" approach developed during the Hu Jintao era. The lesson that "top down" cooperation - the inevitable, perpetual ministerial, vice-ministerial, and head of state meetings - can lead nowhere has clearly been taken on board. Feasible projects with realistic time frames and clear funding mechanisms are the order of the day (e.g., the 45 projects established with the inauguration of the Lancang-Mekong Cooperation Mechanism, note: the secretariat opened in March at MOFA in Beijing, exciting!).
Second, the Greater Mekong region is the path of least resistance for One Belt, One Road - avoiding the political instability, territorial issues, and security questions that bedevil other regions of interest to Beijing. The Mekong region is a place to score some quick gains and put points on the board while dealing with the reality that increased gains from lowering tariffs are no longer an option - that low hanging fruit has already been picked. The Boten-Vientiane railway in Lao will, in all likelihood, be up and running within 5 years and has been incorporated into the Lao PDR government's 8th Five Year Plan (a riveting document), as the country's leadership promotes the idea of shifting from being "land-locked" to "land-linked." Meanwhile, the Mohan-Boten Economic Cooperation Zone appears to be taking off with the first wave of investment, generally originating from Yunnan. There are, of course, issues - lack of transparency with Chinese investment and Beijing's over-emphasis on the resource sector being the two most obvious and which, historically, have generated a backlash in countries that received PRC FDI.
It's also important to note the role of Yunnan province here. Historically, when observers think about China's role in Southeast Asia, two provinces are always assumed to be leading the way: Guangdong (and the Hong Kong SAR) and Fujian. Not this time. It's all about Yunnan - note the enormous South and Southeast Asia Commodity and Export Fair in Kunming last month (4,000 firms in attendance). Historically, Yunnan has had "issues."
In 1999, the Chinese government under President Jiang Zemin launched the Great Western Development Plan (西部大开发) which led to billions of dollars of investment in China's ten western provinces ("western" also being a useful synonym for "remarkably poor relative to the rest of the country") - Yunnan being one of these. Since then, there have certainly been marked improvements - although still on the bottom rungs of the provincial league table in terms of the size of provincial GDP (a dismal #23), the province remains a top performer in annual growth rates (8.5% in 2016 - well, as it should, lots of catch up gains to be made there). Beijing and, especially, the Yunnan provincial leadership and Yunnan based state owned enterprises - which have played a very active role pushing the center for even greater economic and security cooperation south of the border - grasp well the economic complementarities between the province and the Mekong region and is keen to utilize these to boost the development of both Yunnan and perpetually under-performing Guangxi province. Yunnan capital increasingly dominates Chinese investment in Lao and Myanmar, particularly in the agricultural and hydroelectric sectors. So, shift focus a bit - start looking north, rather than northeast when conceptualizing China's role.
Finally, the aforementioned Lancang-Mekong Cooperation Mechanism (LMCM) joins the already existing Greater Mekong Subregion (GMS) Economic Cooperation Program, the ASEAN Mekong Basin Development Cooperation (AMBDC) and the Mekong River Commission (MRC). Whether it will serve to complement or compete with these entities remains an open question, but for now it's worth noting the words of Cambodia's ambassador to China earlier this year on the LMCM: "Compared with other cooperation mechanisms, the Lancang-Mekong Cooperation is more practical, more effective and more in line with people's aspirations." We'll be looking at the LMCM in more detail later this week.
At present though, with One Belt, One Road and the LMCM, China has shifted towards a much deeper and more effective institutional and policy structure for integrating with the Greater Mekong Region. The era of irrelevant "strategic partnerships" and fumbling "Tumen River Initiatives" is clearly at an end.