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3. Socio-Economic Setting

The whole population of Yunnan is about 39 million. It is hard to accurately assess how many of these people live within the Mekong basin. The most heavily populated part of the province is to the east of Kunming, where it adjoins Guanxi and Guizhou. The Mekong basin is much more sparsely populated owing to its steep terrain. Twelve million is probably a fair estimate. To put this figure in regional perspective, it is about three times the population of Laos, and twice the population of Cambodia lying within the basin. It is probably about the same as the basin population of Thailand, and roughly comparable to numbers of Vietnamese who live in the delta.

There is very little urbanisation in the Yunnan section of the Mekong basin, with Jinghong being the largest town. Similarly, there is relatively little industrial development, although important industries are based around Kunming, which is outside the geographical scope of the basin. Wood processing plants, pulp mills, and cement factories are some of the most important industries. Among the most important agricultural products at present are rice, corn, wheat, rape seed and tea with tropical crops such as sugar cane, rubber and fruits produced in the south3.

The whole of western Yunnan is highly prone to earthquakes. In 1995 a major quake, centred in Lijiang Prefecture caused major damage, killed many people and caused tremors felt as far away as Chiang Rai in northern Thailand. Landslides are also common in this precipitous and often heavily eroded terrain. In June 1996, for instance, a landslide reportedly killed more than 200 miners in the south of the province. (Sydney Morning Herald, 3 June). Roads are also frequently blocked by minor slides, causing serious disruption to transport.4

The larger proportion of Yunnan are Yunnanese Chinese (sometimes called Haw, or Hong). During World War 2, Chinese from many other parts of the country arrived as refugees (see below). Over the past twenty years or so, migration of Han Chinese into the province has escalated. Since 1943 (Lattimore 1944), the population has increased from about 11 million to approximately 35 million. Although there are no unambiguous records, migrants must have contributed significantly to the latter figure. Although the influx of Han has greatly increased the proportion of Chinese, the province remains ethnically diverse; there are so-called ‘Autonomous Regions’ in the province where Tai (the generic ethnic category which includes the Thai, the Shan, the Lao and others), Hani/Akha, Lisu and Lahu are numerous. All of these people are to be found in some of the other Mekong riparian nations. There is a significant Muslim population in the province, particularly to the west of Dali. These people are said to be descendants of central Asian horsemen, recruited as soldiers by Kublai Khan when he sought to consolidate his authority over this remote province.

4. Geopolitical Setting: Yunnan the Pivot of Southeast Asia?

In recent years, with the opening of China, some of the seaboard regions such as Guangdong and Fujian have grown spectacularly, becoming the focus for trade and investment. They have flourished because significant manufacturing is located there, because they are entrepots through which import and export goods flow, and because they are adjacent to external economic powerhouses - Hong Kong and Taiwan respectively. Yunnan’s position is parallel in important respects: it adjoins three foreign countries - Burma, Vietnam and Laos and has a hinterland which includes some of the most productive areas of China, particularly Sichuan. But it faces an external political, economic and cultural situation which is infinitely more large, complex and diffuse than the southeastern provinces.

Is it then possible that Yunnan could become a vital link between China and Southeast Asia? Historian Owen Lattimore, writing in 1944, thought the answer was an affirmative. From where he was positioned in time it seemed that Yunnan was destined, to use the title of his paper, to become ‘the pivot of Southeast Asia’ (Lattimore 1944). Lattimore noted that the Chinese had, prior to hostilities with the Japanese, been energetically extending communications to the borders - particularly by building a railway to the Burmese frontier - with the intention of expanding trade. Previously, during the colonial era, the French had constructed a railway from the Yunnanese capital, Kunming down the Red River valley to Haiphong in Vietnam. He also observed at first hand the vigour of Yunnan, which had become the site for the relocation of much of China’s strategic industry after the Japanese had conquered large parts of the east and the north of the country. These industries - which included munitions and such vital manufactures as ball bearings - were at that time heavily supported by the allies. Ironically, during the Cold War many such industries were located in the region because Chinese planners considered that they were beyond the reach of the guns and aircraft of the US Seventh Fleet.5

Lattimore’s predictions regarding the regional ascendancy of Yunnan have, however, not come true. In 1944 he could not have foreseen the rise of Maoism in China, which effectively locked the country up for thirty years, nor could he have foreseen the Indo-China war, nor the boom which propelled the ‘tigers’ of Southeast Asia to global economic significance.6

One aspect of Lattimore’s scenario which is of interest is his implicit assumption that economic, rather than strategic considerations would be pre-eminent in shaping the future of the region after World War 2. Although this prediction has come to pass, even if belatedly, strategic considerations can never be completely forgotten in such a pivotal area as Yunnan. Of primary concern here is the fact that Beijing is actively courting the military rulers of Burma (the State Law and Order Restoration Council [SLORC]) in Rangoon, with a view to enhancing its own strategic position. Specifically, the trade-off involves diplomatic recognition and supply of armaments to SLORC in return for access to the Indian Ocean through southwestern Burma. This has concerned the Indians, who have already had conflict with the Chinese on India’s northern frontier. They fear Chinese influence on their eastern frontier as well, and the possibility of interference with their maritime affairs. At the same time, members of ASEAN are concerned that the Rangoon/Beijing nexus which is developing through Upper Burma and Yunnan, will adversely affect the balance of power in the region. Burma has expressed a strong wish to join ASEAN. This desire may encourage the Burmese to hold the Chinese a little further away - although their dependence may already be too great for them to do so.

This is not to say that Lattimore may not be right in the longer term. The much greater interest that the government of Yunnan is showing in trading with Southeast Asia may be the first stirrings of a will to extend economic power to the south - to the so-called Mekong sub-region. One expression of this has been in the trade fairs which the provincial authorities have organised, in conjunction with the governments of several adjacent provinces annually since 1993. The first of these had the theme: ‘Through Southeast Asia to the World’, leaving no doubts as to where they thought the fortunes of their province lay (Chapman and Hinton 1994). Local press reports at the time suggested that the trade to the south would elevate the region to levels of prosperity paralleling that of Fujian and Guangdong.7

From the Thai side, there has been equal enthusiasm, at least from northern business associations, particularly the Chiang Rai Chamber of Commerce. The Chamber has on several occasions organised parties of businessmen for fact finding and orientation tours to southern Yunnan, meeting local officials, viewing infrastructural developments, particularly roads, and visiting some of the sites where opportunities, for instance, for tourist developments are being promoted. These expeditions have been well publicised, and members have been recruited by large advertisements in The Nation - one of Bangkok’s two major English language dailies. Executives of the Chamber have appeared on the national TV, promoting the idea of an ‘Economic Quadrangle’.

The corners of this Economic Quadrangle comprise Thailand, Burma, Laos and Yunnan. The concept is modelled on international trade arrangements which have been promoted elsewhere in Southeast Asia. The best known of this is probably the ‘Triangle’ comprising Singapore, West Malaysia and Indonesia, where the three countries lie close together in the Straits of Johore. The concept is meant to focus the mind, particularly of investors, on economic opportunities which could flow from closer economic cooperation in the region. It is also meant to provide a framework for actual cooperation through regional organisations which would work to overcome problems of infrastructural development, discrepancies in migration policy and incompatibilities in customs and excise arrangements while at the same time promoting the cause of promoting common resources. In the case of the Quadrangle, these are primarily the waters of the Mekong River and its major tributaries.

The achievement of these objectives was always a tall order and at the time of writing, the Economic Quadrangle still seems a long way from realisation. It is true that the concept has won the backing of the Asian Development Bank (ADB), which has made attempts to broker improved cooperation between the four countries concerned. In pursuit of this objective, the ADB has run various conferences and workshops in several regional capitals. It has agreed to fund several important infrastructural projects. However, the differences between the Quadrangle’s powers seem at least as great as when the concept was first proposed in about 1990. The differences between the Lao and the Thai have if anything become accentuated; the SLORC in Burma has continued on its oppressive operations and is more determined than ever to keep the Thai at arms length - while the Chinese have continued on their own self-determined course.

In more immediate terms, one of the most important obstacles to greater regional integration is the continuing underdevelopment of roads. On the whole, these remain useable only in the dry season despite elaborate plans which in some cases resulted in construction contracts being signed. The much touted road linking the northern Thai city of Chiang Rai with Yunnan through the northern Burmese town of Mandalay was brought to a halt when tensions between the Thai Government and the SLORC saw the closure of the Thai frontier by the Burmese and the cessation of all but minor cross border trade. Although the border has recently reopened, several Thai contractors are said to have cut their losses and withdrawn from road construction. No doubt others will be cautious before investing plant and capital on building roads in Burma.

At the same time the political situation has not stabilised, particularly in regards to the issue of narcotics, despite the much publicised surrender of prominent narcotics warlord, Khun Sa, to the SLORC. In fact, the situation has, arguably, deteriorated. Khun Sa’s departure has left a vacuum which competing interests are struggling to fill. These include the ethnic Wa, formerly supporters of the former Burmese Communist Party, elements of the Shan independence movement that Khun Sa claimed to represent, and various strongmen with connections in Yunnan. local SLORC officials are notoriously corrupt, and often actively involved in the narcotics business. Finally, the SLORC has had increasingly regular contact with elements of the Lao government. There is little doubt that narcotics issues have been discussed.

None of these developments have been conducive to peaceful road building, although there have been reports of sectors of the road passing through northern Laos having been completed by Vietnamese contractors, particularly the route linking Botan in Yunnan with Ban Houayxai on the Mekong. It remains uncertain how much of the road has been completed, and about the extent to which the new sections will be able to carry sustained heavy traffic. There is also the difficulty that there is no bridge across the Mekong linking Ban Houayxai with Chiang Khong on the Thai side of the river. Northern Thai business interests have been vigorously lobbying for such a bridge, but so far without success.

Roads within Yunnan linking the southwestern borders with the capital, Kunming, are reasonable, although prone to damage by the frequent earthquakes and landslides. The Thai roads are good. It is the three or four hundred kilometres in between, across Lao and Burmese territory - difficult terrain both topographically and politically - which are the sticking point for regional trade flows. The physical distance is small enough, and the business opportunities large enough, to be truly tantalising to interests like the business organisations of northern Thailand.8

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