Category Archives: Trade

Yunnan border zone slated to cost 200 billion yuan

New infrastructure projects, like the Kunming-Singapore Railway, will be passing through southern Yunnan on their way to Southeast Asia.

New infrastructure projects, like the Kunming-Singapore Railway, will be passing through southern Yunnan on their way to Southeast Asia.

Investment and development money continues to pour into southern Yunnan’s Xishuangbanna. Weeks after the largest resort in the province opened near the city of Jinghong, prefectural officials unveiled plans for a new economic zone with an eye-popping price tag.

The Mengla Economic Zone, according to plans approved this summer by the Yunnan Development and Reform Commission, will span 4,500 square kilometers, centered around Mengla County (勐腊县). Initial estimates place the cost of the multi-purpose undertaking at 200 billion yuan (US$31.4 billion). The zone spans 240 as-yet unclear projects reportedly focusing on the sectors of agriculture, education, logistics, processing, tourism and transportation.

The latter of the these is perhaps most important to national planners. Connecting cities in Yunnan to Southeast Asia by rail has long been a goal of the Bridgehead Strategy, which looks to integrate the province’s economy more closely to those of its international neighbors. Mengla County borders Laos and is one key component in plans to build a web of railway lines by 2020 which will further connect Southeast Asia with Kunming.

Progress, however, has been slow on multiple fronts. The Kunming-Singapore Railway — the main trunk line of the planned network — was once expected to open in 2015. However, due to ongoing financial disagreements between China, Laos and Thailand, completion projections have been pushed back at least five years.

In that time, a branch railway along the recently opened Kunming-Hekou line will be extended 500 kilometers south to the border town of Mohan (磨憨) in Mengla County. When finished, the railway will pass from Yuxi through Pu’er, Jinghong and Mohan before linking up with a 44.5 billion yuan (US$7 billion) Chinese-built high-speed line running to Laos’ capital, Vientiane.

The newly announced Mengla Economic Zone appears to be a very expensive kick-starter of sorts. Its launch is not only aimed at furthering Chin’s Bridgehead Strategy, but also seems designed to convince Laos — which is wagering half its annual GDP on the railway project — that Chinese intentions are serious and longstanding.

Regardless of the effects on Laos, the economic zone is another enormous financial shot in the arm for largely rural Xishuangbanna. Less than one month ago, real estate conglomerate Wanda opened a 15 billion yuan (US$2.36 billion) resort and development area of its own in the prefecture. The goal for such a sizable investment, in the words of company chairman Wang Jianlin (王健林), is to “…revolutionize Yunnan’s tourism industry“. One way or another, it looks as if sleepy Xishuangbanna is in for drastic changes in the coming years.

The preceding article was written by Patrick Scally and originally posted on GoKunming. It is republished here, in its entirety, with full permission from the author. 

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Filed under China, Economic development, GMS, Laos, Myanmar/Burma, SLIDER, Trade, Yunnan Province

All aboard: Kunming-Vientiane Railway inches forward

china train head

Although a bit trite with repetition, no saying better encapsulates the major obstacle facing Laos than “geography is destiny”. The only landlocked country in Southeast Asia, Laos is wedged between the vast rivers and expansive mountain ranges that demarcate its natural borders with China, Vietnam, Cambodia, Myanmar and Thailand. Because of its lack of access to maritime trade routes, the small country has historically relied heavily on domestic subsistence agriculture with little opportunity for much international commerce.

The legacy of its geography in combination with the destruction wrought by the United States during the Vietnam War has today resulted in a nation with some of the world’s highest poverty and unemployment rates. With the help of the Chinese and Thai governments, Laos hopes to change this narrative of international isolation in the years to come.

Since 2010, plans have been under consideration to construct a high-speed railway between Kunming and Vientiane, Laos’ capital. However, political and financial setbacks have pushed the starting date of the project back by five years. This year, the three governments all sound confident that construction of the seven billion dollar project will begin.

Many analysts now view the construction of the Kunming-Vientiane railway within the context of China’s larger ambitions to revamp trade routes throughout Southeast Asia. China’s president Xi Jinping has openly stated his eagerness to establish silk road-esque connections with China’s neighbors, placing Kunming at the epicenter of overland transactions. The country has already invested 40 billion dollars to facilitate railway links, which it hopes will eventually drive new economic plans throughout South Asia.

Already, long-term proposals have been hashed out to eventually link Kunming with Singapore. The first phase in the series of projects is currently under construction, with China building a 737-kilometer connection between the Thai city of Nong Khai — just across the Mekong River from Vientiane — and Map Ta Phut — one of the largest deep water ports in Thailand.

The planned Kunming-Vientiane rail then, would add on to existing railroad infrastructure, facilitating a larger Kunming-Bangkok route by — according to recent estimates — no later than 2020. A link to Malaysia would from there be relatively simple. If all goes as projected, passengers may, within the next decade, be able to hop onto a high speed rail from Kunming all the way to Singapore.

Past financial qualms that have plagued the realization of the Vientiane-Kunming proposal continue to worry politicians in both China and Laos. Although a fairly small investment for China, the seven billion dollar price tag corresponds to over 60 percent of Laos’ US$11.24 billion gross domestic product, making it a hefty and risky endeavor. Currently, the two countries have agreed on a 40-60 split of the initial financing, with Laos contributing US$840 million and China US$1.26 billion. The remaining five billion will later be chipped in by Chinese venture capital firms, who would then hold substantial stakes in the railway once it is up and running.

Although worries over the pragmatic utilization of the railway have previously stymied Laos’ cooperation with Chinese entrepreneurs, increasingly Lao politicians believe the connection to Yunnan’s capital is paramount for their country’s economic growth. In an interview with Japanese magazine Nikkei, Laos’ deputy prime minister, Somsavat Lengsavad, explained that Laos, being a landlocked country, can only rely on roads, so the transport cost is very high. “In our policy of turning Laos from a landlocked to a land-linked country, we believe the railroad will help us reach our objective. [The railway] will boost the Lao economy because many investors are now looking for a production base here. They say that if the country had a railway, it would help them reduce their transportation costs. So it would make us more attractive to investors.”

Recently, the country has proven itself one in an appealing group of potential manufacturing centers in Southeast Asia as overseas companies flee China. Over the past few years, Laos has ridden a growing wave of economic growth, with annual GDP often topping eight percent. Such financial development has been attributed primarily to the construction of massive 1,000-megawatt hydroelectric dam complexes, growing highway infrastructure and multibillion-dollar investors betting on long term prosperity in the region.

Politicians, including Lengsavad, remain sanguine that the fiscal expansion will only be further boosted by a direct link to Yunnan. Already, companies including Samsung and Yahoo have left China to venture into smaller, burgeoning financial systems. Laos hopes the Vientiane-Kunming connection will enable it to hop onto the train of foreign investment out of China.

Skeptics, including Lao politicians, point out that the real construction cost of the Kunming-Vientiane route may soon render the project another white-elephant. Without a doubt, both financially and topographically, much stands in the way of the railway’s establishment. An astounding 154 bridges, 76 tunnels and 31 train stations will be necessary for the Lao leg of the track. The monumental proposals stands in stark contrast to Laos’ nearly complete lack of experience with railway construction. The land-locked country currently boasts only of a 3,5-kilometer train link, spanning the Thai-Lao Friendship Bridge.

To make matters more complicated, the Annamite mountain range, which the railway will eventually need to cross, is infamous as a minefield littered with unexploded American ordnance dropped during the Vietnam War. These factors combined are likely to result in a final cost for the track much greater than the projected seven billion dollar price tag. Laos thus finds itself stuck between a rock and a hard place — on one hand it desperately needs infrastructure for greater commerce, while on the other, current proposals may leave the country in an even more precarious financial situation than it currently faces.

This article was written by Richard Diehl Martinez and first posted here on GoKunming.

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Filed under ASEAN, China, Current Events, Foreign policy, GMS, Laos, Mekong River, Regional Relations, SLIDER, Thailand, Trade, Yunnan Province

The US Rebalance in Vietnam & The Philippines

In Southeast Asia, the United States has rebalanced its attention to a vital region while seeking to avoid alarming China. The Obama Administration’s comprehensive efforthas engaged a diverse array of countries, strengthening ties with both unlikely partners and longtime allies. Coupled with a brief study of American interests in the region, an examination of the strategy applied to two countries – Vietnam and the Philippines –reveals little cause for the Chinese concern that America is pursuing a policy of containment.

VIETNAM

In Vietnam, the U.S. has succeeded in creating a partnership with a nation that was a bitter foe just forty years ago. Perceiving China’s recent policies as a disturbing sign of greater assertiveness to come, Vietnam has felt it necessary to hedge against its neighbor by pursuing a closer relationship with the United States.

The driving force behind this reconciliation has been China’s provocations in the South China Sea, which have infuriated the Vietnamese government and its people and caused them to view China as a potentially destabilizing force in the region. The May 2014 placement of a Chinese oil rig within Vietnam’s Exclusive Economic Zone (EEZ) marked a highpoint in the tensions, sparking deadly anti-Chinese protests in Vietnam and naval incidents in the area of the drilling.

Vietnamese and Chinese vessels clash near the disputed oil rig. Photo: Getty Images

Vietnamese and Chinese vessels clash near the disputed oil rig. Photo: Getty Images

Chinese diplomacy has not eased Vietnamese concerns. Rhetoric regarding the South China Sea has been inflexible: in 2010, officials labeled the region one of China’s “core interests,” joining only Taiwan and Tibet. At a meeting concerning the South China Sea the same year, in which all disputant states were present, Chinese Foreign Minister Yang Jiechi reportedly stared at Singapore’s Foreign Minister while pointedly stating, “China is a big country and other countries are small countries, and that’s just a fact.” In the eyes of Vietnam and its fellow Southeast Asian States, this threatening tone has confirmed fears inspired by China’s aggressive policy in the region.

While some American observers have gone so far as to call for a full treaty alliance with Hanoi, several barriers will keep a degree of separation the two countries. The first is Vietnam’s policy of the “three nos”: no military alliances, no foreign military bases on Vietnamese territory, and no dependence on any countries for help in combating other countries. The last point is particularly important in the context of Vietnam’s history: when China invaded in 1979, the Soviet Union – having signed a defense treaty with Hanoi just a year before – declined to come to its aid. This history provides Vietnam with a powerful warning against reliance on powerful but distant allies.

Another analogy that suggests restraint is the ongoing conflict in Ukraine. Looking to Moscow once more, Vietnam sees a disturbing example of how a major power will react to its small neighbor aligning with a rival. Of course, the comparison is imperfect, but the degree of similarity between the two cases is striking nonetheless.

The greatest constraint upon Vietnamese diplomacy is its economy’s dependence upon trade with China. China is Vietnam’s largest trade partner, and the source of many of the inputs critical to its burgeoning manufacturing industry. While some worry that tensions could lead to a trade war, economic concerns have thus far won out, and the Vietnamese government has been careful to avoid pushing China too far.

The Rebalance

Even with these constraints, Vietnam has welcomed American efforts to deepen ties on diplomatic, economic, and military fronts. The rebalancing is directed toward all of Asia, but extra attention has been directed toward Vietnam – a prominent victim of China’s actions in the South China Sea, and a country with an especially dynamic and promising economy.

America has promoted Trans-Pacific Partnership (TPP) as the main pillar of its economic rebalancing to Asia. The United States, Vietnam, and 11 other Asian-Pacific nations are currently negotiating the deal,which seeks to reduce both tariff and non-tariff trade barriers while maintaining high standards for intellectual property, the environment, and labor rights. American officials have said they would welcome China, but it is widely acknowledged that the deal’s standards are too stringent for China to adhere to. Vietnam also faces challenges to joining, especially with its reluctance to reform state-owned enterprises and labor rights. Its presence in the negotiations is a testament to the determination of both America and Vietnam to deepen their economic ties.

TPP

Current members negotiating the TPP. Image: The New York Times

 

Diplomatically, the bulk of American efforts are directed toward the region rather than individual states. With regard to the South China Sea disputes, the United States has recognized that no single Southeast Asian state can hope to receive bilateral negotiations with China on equal footing. As a result, it has worked quietly to promote a closer unification of the Association of Southeast Asian Nations (ASEAN), which wields significant influence but, like all regional organizations, is held back by the disagreements of its member states.

Even with the region-wide focus of diplomacy, however, a rapid exchange of interstate visits has reflected Vietnam’s importance. American congressional delegations and Administration officials have met with the Vietnamese with increasing regularity, and Gen. Martin Dempsey’s 2011 trip marked the first visit by a Chairman of the Joint Chiefs of Staff since 1971.Nguyen Phu Trong, the General Secretary of Vietnam’s Communist Party and the country’s supreme leader, will make his first visit to the United States this June.

America’s military policy constitutes the most visible aspect of its rebalancing strategy, and naturally draws the bulk of Beijing’s complaints. In Vietnam, the U.S. has coupled emphasis on exchanges and cooperation with direct (although minor) military aid. Military-to-military ties have grown greatly in the past decade, particularly with the introduction of an annual Naval Engagement Activity (NEA), which pairs each navy in noncombat exercises. In 2014, the Secretary of the Navy also invited Vietnam to join the biannual, U.S.-led RIMPAC exercises, the largest naval exercise in the world.

While noncombat exercises are a mild form of cooperation, American promises of military aid to Vietnam reflect a much stronger commitment to rebalancing. In December of 2013, Secretary of State John Kerry announced $18 million in aid to Vietnam to “boost maritime security.” A portion of the money was earmarked for the purchase of five unarmed patrol boats for the Vietnamese Coast Guard – a minor increase, but symbolically significant. Additionally, Japan – the linchpin of American security in the Pacific and another country locked in a territorial dispute with China – provided Vietnam with an additional six boats, worth $5 million. And in 2014, the U.S. eased its ban on providing Vietnam with lethal arms, opening the door to a number ofsystems for its coastal defense.

Military Spending Infographic

THE PHILIPPINES

In the Philippines, the U.S. is working to further deepen its relationship with a treaty ally and longtime partner. After a brutal war with the United States that left it an American colony, the Philippines maintained a better relationship with its conqueror than most countries, and upon gaining independence sought American protection throughout the Cold War. While Filipinos resentment of U.S. military bases led to an American exit in the 1990s and a slight chill in relations, the Philippines remains one of America’s closest allies in the region.

Philippine-American Timeline Infographic

As with Vietnam, the Philippines’ desire to draw even closer to America is explained by Chinese tactics in the South China Sea. The Sino-Philippine conflict has actually been significantly more contentious. Because it shares no border with China, is less economically dependent, and has signed a mutual defense treaty with America, the Philippine government has been less constrained by geopolitics than its Vietnamese counterpart. (It should be noted, however, that the U.S. has declined to clarify whether this defense treaty applies to Philippine claims in the South China Sea.)

These circumstances have enabled the Philippine government to apply for international arbitration of its disputes in the South China Sea, a step that Vietnam considered too divisive. China has objected, stating that it will “neither accept nor participate” in the arbitration, and maintained its political stance of indisputable sovereignty throughout the South China Sea. It is highly unlikely that the suit will achieve any result.

In spite of greater economic insularity than Vietnam, the Philippines has still fallen victim to what isperhaps China’s greatest asset: economic coercion. China has employed this strategy often, taking advantage of its large domestic market and the control the state retains over the economy. In June of 2012, it reacted to a confrontation with the Philippine Navy by cutting off Filipino banana imports. Justifying the policy as a health regulation, China succeeded in choking an important industry and driving Manila to adopt a conciliatory tone.

The Rebalance

Economically, the United States and the Philippines are already quite close. America is the Philippines’ second-largest trade partner (after Japan) and its biggest investor. Still, the Obama Administration has worked to further enhance the relationship. While the Philippines does not currently take part in the TPP negotiations, it has expressed interest, and high-level officials from each country have met to discuss what its participation would look like. In 2011, the fiftieth anniversary of the bilateral defense treaty, the two countries signed a five-year Partnership For Growth (PFG) agreement, designating the Philippines as a priority area for American development assistance. That same year, the Millennium Challenge Corporation (a government agency) signed a five-year, $434 million compact to combat poverty and encourage growth in the Philippines.

Trade Growth Infographic

While historical closeness, cultural similarity, and the depth of Philippine-American exchange have already created close ties, American diplomats have sought to further reinforce the relationship. The two countries recently began holding a Bilateral Strategic Dialogue to institutionalize the regular exchange of ideas. And in 2011, Secretary of State Clinton visited the Philippines to release a joint Philippine-American declaration,reaffirming that the alliance had “never been stronger.”

The military aspect of rebalancing has consisted of naval aid, closer cooperation and training, and – most importantly – a strengthened defense treaty. Having always depended on its American counterpart, the Philippine Navy is one of the weakest in the region. Its flagship is a 45-year-old cutter, donated by the U.S. Coast Guard in 2011. The U.S. has offered an additional ship, communications equipment, and training, but recognizes that no amount of aid will enable the Philippines to unilaterally defend against Chinese naval incursions.

The true cornerstone of the military rebalance is a ten-year enhanced defense pact negotiated in 2014. The agreement creates no permanent bases, an option that then-Secretary of Defense Chuck Hagel dismissed as a “return to an outdated Cold War mentality.”Instead, it invites rotational deployments of American ships and advisers, which will significantly escalate military presence in the region. It also opens the door to greater commitments of military aid to the Philippines.

The symbolic value of a return to the Philippines, just over twenty years after public protest forced the closing of American bases at Subic Bay and Clark Air Force Base, is indicative of the region’s tense atmosphere. Some anti-American sentiment remains, stalling the agreement in a legal challenge that is now before the Philippine Supreme Court. Still, Philippine officials are confident that the case will be thrown out when a decision is reached.

Assessing American Intentions Throughout Southeast Asia

In spite of American efforts to paint the rebalance in nonthreatening terms, Beijing has frequently voiced its concern that the strategy aims to encircle and contain China. These complaints have especially been directed at the military components of these partnerships with Vietnam and the Philippines. China – at least publicly – eyes these moves suspiciously, and assumes that realist, hegemonic motives dominate American intentions.

For many reasons, however, this theory does not hold water. Even if China were to be excluded from the equation, a shift in attention to Asia would remain eminently logical. The War on Terror absorbed American resources in the Middle East for a decade after 9/11, but never promised long-term benefits to the national interest. Nor does any other region offer the dynamism and promise of Asia, which officials and scholars predict will be at the center of international affairs for decades to come

While China’s era of incredible growth is finally slowing, the rest of Asia is only beginning to take off. Asia holds more than half of the world’s population and is projected to account for half of its economy by 2050. Southeast Asia in particular holds much of this untapped potential, and four of the ten ASEAN states already rank among the world’s 20 most competitive economies.

With this unparalleled importance in mind, it becomes clear that the rebalance is simply an alignment of American resources and commitments with its interests – and that if anything, criticisms should question if the policy has gone far enough. With a globally integrated economy and worldwide commitments and interests, the United States does not see itself as having the option to neglect such a crucial region.

The rebalancing strategy has also emphasized the importance of improved relations with China. While public statements have often put America and China at odds, particularly over territorial disputes, diplomatic and military coordination have improved considerably. The annual, Strategic and Economic Dialogue receives a great deal of attention, and institutionalizes the frank exchange of positions between the two countries. Communication has been at the heart of American efforts to ease Chinese suspicions. For example, the Administration even privately briefed China on its plans before embarking on President Obama’s 2014 trip to Asia, in which he announced the enhanced defense treaty with the Philippines.

In responding to fears of containment, it is also important to note that a struggling China would be a disaster for America’s economy and interests. As Gen. Martin Dempsey, the Chairman of the Joint Chiefs of Staff put it in 2014,“I worry more about a China that falters economically than I do about them building another aircraft carrier.” The American and Chinese economies are deeply intertwined, and economic turmoil could also provoke political instability in China and East Asia– the last thing the United States would like to see.

Chinese ships expanding land in the South China Sea. Image: Center for Strategic and International Studies

Chinese ships expanding land in the South China Sea. Image: Center for Strategic and International Studies

Beijing may blame America for regional sentiment turning against it, but it would be better served by turning the mirror on itself. China’s policy in the South China Sea has done much more damage to its stature in Southeast Asia than American actions conceivably could. With aggressive expansion, including incursions into both Vietnamese and Philippine Exclusive Economic Zones, China has flouted both regional and international norms and laws. Its inflexible and even threatening rhetoric and diplomacy have only compounded the problem.

Only this behavior can explain why a country like Vietnam has sought greater friendship with the United States, or why ASEAN has pursued greater unity in dealing with other countries. China may well regret its policies in the South China Sea: in pursuit of territorial gains, it has sacrificed regional influence and reputation, thus containing itself.

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Filed under China, Current Events, Foreign policy, Governance, Philippines, Regional Relations, SLIDER, South China Seas, Trade, Vietnam

In China’s hinterlands, a new life for Myanmar’s Rohingya

President of Myanmar Thein Sein. Photo: Wikemedia Commons

President of Myanmar Thein Sein. Photo: Wikemedia Commons

On February 12, 2015 Myanmar President Thein Sein, prompted by protests led by Buddhist monks in Yangon, reversed a decision made ten days earlier to give voting rights to the country’s Rohingya population. The reversal, while surprising to some, was only the latest in a series of events to befall the Muslim minority who call western Myanmar’s Rakhine state home.

The Rohingya of Myanmar (also known as Burma) have lost more than voting rights in the past. Regarded as one of the world’s most oppressed peoples, the Rohingya are a distinct ethnic group that speak a dialect of Bengali and are thought to be descended from Arab and Persian traders.

Persecuted at Home

Under the military junta that ruled Myanmar for most of the latter half of the 20th century and the current, nominally civilian government, Myanmar’s Rohingya have suffered chronic poverty, food insecurity, harassment and forced labor, among other human rights abuses. Following Burma’s 1982 Citizenship Law, hundreds of thousands of Rohingya were denied citizenship and are still referred to as ‘aliens’ and ‘foreigners’ by government officials. They are neither allowed to travel outside their hometown nor marry without official approval.

Poor relations between the Muslim Rohingya and their neighbors have only made things worse. Tensions between Rakhine state’s Muslim population and the majority Rakhine ethnicity, who are Buddhist, boiled over in 2012, leading to anti-Muslim riots that spread throughout the country. In Rakhine state alone, over 200 people were killed and whole villages were burned to the ground. Conditions have not improved for Myanmar’s Rohingya population since then. The current boat crisis of thousands of Bengali and Rohingya refugees stranded off the coasts of Thailand, Malaysia and Indonesia is a consequence of awful conditions at home.

The Rohingya, however are certainly not the only group struggling in Myanmar. Despite what appears to be a nascent democracy, a civil war between the government and an array of armed ethnic groups along the country’s periphery has flickered continuously since the 1950s. The reasons for the conflicts are many, though issues of ethnic autonomy and control of precious resources like jade and timber loom large.

The conflict’s latest iteration began in February 2015 and is still ongoing. A flare up of tensions between the Myanmar Army and Myanmar National Democratic Alliance Army (MNDAA) in Kokang, Shan State, has killed hundreds and forced tens of thousands of civilians to flee across the border into China.

Many Rohingya have also left Burma in the past decades. Tens of thousands of them reside in ill-equipped refugee camps on the Myanmar-Bangladesh border, though others have escaped to new lives abroad. Their final destinations vary, but the majority resides in Saudi Arabia, Malaysia, Thailand and Pakistan. Of these Rohingya living overseas, who may number over one million, most work low-wage jobs in the construction and service industries. There are some, however, that have chosen a different path in a land closer to home.

Abdullah's storefront in Jinghong

Abdullah’s storefront in Jinghong

Eight hundred kilometers east of Rakhine state in Jinghong, China, Abedullah owns a small jewelry shop. It’s three o’clock in the afternoon he hasn’t sold a thing.

Abedullah, like almost one million of his compatriots in Rakhine state, is a Rohingya, but he has not lived there in thirteen years. Instead, he’s settled in Jinghong, the capital of Yunnan Province’s Xishuangbanna Dai Autonomous Prefecture, along with almost 600 other Rohingya. All of them sell jade.

According to Abedullah, who only agreed to give his first name, Rohingya merchants first came to Jinghong almost forty years ago. Following the end of the bloody Bangladesh Independence War in 1973, hundreds of thousands of refugees fled into neighboring Burma. Marginalized by the Burmese and eventually disavowed by the Bangladeshi government, tens of thousands of Rohingya fled overseas. A handful made it to southwest China’s Yunnan province.

Stories of Jinghong’s first Rohingya are hard to find and by all accounts, the number of émigrés remained small until the 1990s. It was then that the Chinese economy began to truly open up to the international market. As trade increased and more Chinese became wealthy, the country’s jewelry consumption level grew as well, skyrocketing over 4000% in a decade.

While all gemstones have grown in popularity in recent decades, none hold the place in Chinese culture that jade does. Regarded as a stone of mystical qualities since antiquity, jade is the king of gemstones in China and it is in Myanmar that the world’s highest quality jade is found.

As a result, jade shops are ubiquitous in dozens of towns along the China-Myanmar border. Jinghong is one of the largest. Straddling the Mekong River, this once sleepy town has grown into a city of six hundred-thousand and now hosts millions of tourists each year. Many of these tourists come looking to buy Burmese jade. As travelers have flocked to Jinghong in greater numbers in recent years, Rohingya merchants with connections to the Burmese jade trade have followed to keep up with demand.

A New Life

One of the recent arrivals is Xiao Fei, a 21 year-old who prefers his new Chinese nickname to his given name. Xiao Fei, like many other Rohingya in Jinghong, came at the behest of his family; his grandfather first arrived in the city almost thirty years ago. After saving enough money for a passport, Xiao Fei was able to leave his home in Yangon and help his grandfather set up the family’s second shop.

Xiao Fei had to save up for his passport because getting such a document is often impossible for many Rohingya in Myanmar. Since they are officially considered to be foreigners by the Burmese government, Rohingya can only obtain passports after paying expensive bribes to the right people. That is why, as Xiao Fei explains, “Only rich Rohingya can make it to China.”

Once in Jinghong, new arrivals find an environment altogether strange and inviting. The forest of newly-built apartment complexes and hotels certainly dwarfs anything found in Rakhine state, however the hundreds of established Rohingya businessmen form a tight community that provides everything from religious services to a lunchtime delivery service of halal Burmese cuisine.

It is the mosque that is the heart of the community, says Waynai, a trader living in Jinghong for six years. The Jinghong Mosque, located not far from the banks of the Mekong was first established decades ago by the city’s existing community of Hui, a distinct ethnic group of more than ten million people that practice Islam and speak Mandarin Chinese.

When the Rohingya began to move to Jinghong in greater numbers in the late 1990s, they became a part of the congregation, eventually joined by a small population of Uighurs from China’s northwest. Together, these three groups of Muslims manage the congregation. Despite disparate geographic and cultural backgrounds, the mosque is thriving with a healthy number of members, daily prayers held in Arabic and discussion groups where participants speak in Standard Mandarin.

The Jinghong Mosque

The Jinghong Mosque

However both Waynai and Abedullah agree more with the mosque’s Uighur members on theological questions. When asked whether or not he had any non-Rohingya friends from the congregation, Abedullah answers, “Yes, but not the Hui. They’re fake … they don’t have Allah in their hearts.” Instead, it is the Uighur community that he feels closer too. “[The Rohingya] are similar to the Uighurs because neither of us are free … we both have to struggle to survive.”

This struggle is why Ba Hlaing, a 31 year-old jade dealer, came to Jinghong eight years ago. At the time, his family lived comfortably in a suburb of Yangon but as he came of age, conditions for young Rohingya grew more difficult. “I would’ve liked to stay with my family, but there wasn’t anything to do, no money to make.”

“It’s because of [the government] that we’re so backwards now,” he says in a whirlwind of English, Mandarin and Jinghong dialect, slapping the table after each word.

Just then a Han Chinese couple enters Ba Hlaing’s shop. He greets them using his best Mandarin, standing, “Welcome to Ba Hlaing’s Jewelry! We have the finest jade from Myanmar! Would you like to look at a bracelet?”

After five minutes of browsing, the wife still has not decided on a piece and the husband, fidgeting, suggests heading back to their hotel. The couple leaves and Ba Hlaing sits down to light a cigarette. “That’s how it goes,” he sighs. Just like Abedullah, business is slow for Ba Hlaing, even during tourism’s high season.

Ba Hlaing believes the drop in jade sales is a consequence of Chinese President Xi Jinping’s much-publicized crackdown on corruption. Once-popular ostentatious displays of wealth, like jade pieces worth tens of thousands of dollars are now frowned upon and officials that might frequent jade shops like Ba Hlaing’s are staying away.

Burmese jadeite

Burmese jadeite. Photo: Wikimedia Commons

The jade, however, keeps flowing from Myanmar. Most of it is mined in a strip of remote jungle in Kachin State, in the country’s northeast.  Conditions in Myanmar’s jade mines are notoriously dangerous and the towns that spring up around them are known as much for their drugs and guns as they are for their jade. However bad mining conditions are though, the money can be worth it for those who can make it. Official figures from Myanmar’s government put jade exports at $1.4 billion between 2011 and 2014. Analysts from Harvard University’s Ash Center disagree, estimating jade sales – both official and off the books – at $8 billion for 2011 alone.

Once the raw jade has been extracted, it is sent to processing centers. The majority are located within Myanmar, in urban centers like Mandalay and Yangon, where the jade is polished and crafted into a final product. The next step is to get it into China, where the market is.

Most traders interviewed for this article admitted that the majority of the jade they sold was actually smuggled into Yunnan. A few well-placed bribes on both sides of the border can get shipments of jade, transported in trucks, into China reliably. Once the jade is in Yunnan, it usually makes its way to Ruili, a major border crossing between China and Myanmar.

According to Ba Hlaing, many Rohingya traders in Jinghong have a contact in Ruili, usually family, that buys the jade. Others, however, are directly connected to processing centers, most often in Yangon. For more valuable pieces, with sale prices upwards of $50,000, many traders will use air transport to ensure their safe arrival. While import taxes must be paid in these cases, the extra cost is often worth the peace of mind.

 A Tough Decision

Peace of mind, however, is getting harder to come by. With a slowdown in business and mounting issues back in Myanmar, many members of Jinghong’s Rohingya community are facing a tough decision whether or not to return home.

Ba Hlaing, for one, is planning on going back to Myanmar. Sales have decreased for the past two years and he fears that a protracted crackdown on corruption in China will keep jade sales low and prevent his shop in Jinghong from making a profit.

Despite the dire situation for the Rohingya in Myanmar, Ba Hlaing is choosing to remain positive. “I think things will get better for us,” he says guardedly. “We have [this year’s parliamentary] election and the world paying attention to us so democracy is a good thing.”

Abedullah, on the other hand, does not share Ba Hlaing’s optimism. He does not want to return to Myanmar and sees little hope for democracy delivering the Rohingya from oppression.

“Things are a mess in Myanmar right now, everything is a mess,” he says. “The economy is bad and the government and [the armed ethnic groups] are still fighting.”

When asked his thoughts on the country’s armed conflicts, Abedullah pauses before exhaling heavily. “You know, we want to go to war too. At least [the armed ethnic groups] have guns. We don’t have anything,” he laments. “The government even took the knives from our houses … But then they still call us terrorists.”

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Filed under China, ethnic policy, Myanmar/Burma, SLIDER, Trade, Yunnan Province

China’s Maritime Silk Road is all about Africa

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Rice bound for Africa is loaded onto a cargo ship in Bangkok, Thailand

A recently signed agreement between China and Thailand sheds light on the dynamics of the Maritime Silk Road.

Amid all the fanfare and media buzz about China’s re-envisioning of its two Silk Road projects, the New Silk Road and the Maritime Silk Road, admittedly little is known about the details, the mechanics, and the functions of the new routes.  For example, this interactive graphic published by Xinhua suggests the Maritime Silk Road’s prime focus is to facilitate trade between Asia and Europe when in actuality the focus of the Maritime Silk Road is to support and facilitate booming trade growth between Asia and Africa.  To put this into perspective, from 2011 to 2013, trade between China and the EU showed no increase, keeping steady at around USD 530bn.  This was outpaced by trade growth between China and Africa which expanded at an average of 10% per year over the same period of time and is projected to increase 15-20% per year over the next five years.  In 2013 total trade between China and Africa reached USD 210bn – five years ago China’s total trade with Africa was less than half of what it is now. Continue reading

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Filed under ASEAN, China, Current Events, Foreign policy, GMS, Regional Relations, SLIDER, Thailand, Trade, Yunnan Province

Growth slowing in Yunnan and Kunming, economy still deemed healthy

Quarterly provincial financial reports used to be cause for celebration across China — a way to tout the wonders of Socialism with Chinese characteristics. The days of double-digit growth have seemingly passed, but much of the country still lays claim to some economic indicators that would make other nations jealous.

Among these places is Yunnan, which this year is on track to post strong, yet simultaneously disappointing, year-on-year (YoY) gross domestic product growth. So far in 2014, the province’s economy is valued at 821 billion yuan, which puts it on track to increase by roughly eight percent over the first three quarters of 2013.

While expansion of this magnitude may sound encouraging, eight percent is a significant drop from the 12.1 percent gain Yunnan enjoyed in 2013. Similar reports have come from all corners of China. “None of the 31 provinces and municipalities are matching growth goals set at the start of the year” by Beijing, according to financial projections made by news outlet Bloomberg.

Such numbers can be a bit esoteric when it comes to how they actually affect the average person. Despite the overall decline in economic performance in Yunnan so far this year, many residents of the province are actually seeing their incomes grow at robust rates.

Through the first three quarters of 2014, the average income of urban residents in the Spring City has grown 9.6 percent YoY. A report released earlier this week by the National Bureau of Statistics (NBS) shows the median yearly income for urban residents of Kunming now stands at 21,754 yuan. Those who live in rural areas under jurisdiction of the Spring City earn significantly less — 7,480 yuan annually — but still saw their incomes grow by 11.2 percent over the same period last year.

At the same time incomes are growing, so too are commodities prices, a combination often signaling a healthy economy. The consumer price index (CPI) — a metric cataloguing price fluctuations in the cost of 84 food-related retail goods kept by KNBS — rose 2.8 percent YoY, led most notably by serious increases in the prices of all types of meat.

Huang Bin (黄斌), lead analyst at NBS, characterized the increase in CPI as steady and moderate when compared to rising incomes, perhaps indicating Kunming’s economy, at least, has yet to succumb to the economic deflation Bloomberg reports is hitting other parts of the country. “From an analysis of the data, the incomes of rural residents grew faster than urban residents [in Kunming]. In terms of promoting the growth of consumption, this is good news.” Huang said.

This article was posted by in on the GoKunming website on 

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Filed under Economic development, Governance, SLIDER, Trade, Yunnan Province