Thriving on China's Belt and Road, Laos border town ditches kip for yuan
asia.nikkei.com
asia.nikkei.com
> [..] the yuan is now its main currency of trade.
1. They lost their own currency.
> [..] it is also increasingly populated by many from across the border hoping to benefit [..]
2. The 'investment' into the local area is actually being used to employ imported Chinese workers.
> Jua, a 24-year-old truck driver, feels he has been "kept alive" by China. He is paid in yuan every month by a Chinese cargo owner.
3. Local businesses are being purchased or replaced with Chinese owners.
When they fail to pay back some loans [0], they will be forced to hand over large strategic areas, such as their mining lands [1] on a 99 year lease. Over the next 10 years we will likely see the erosion of Laos sovereignty.
[0] https://www.voanews.com/a/laos-faces-debt-crisis-after-borro...
[1] https://en.wikipedia.org/wiki/File:Laos_Product_Exports_(201...
This handwringing on stuff like this is fairly transparent.
That said, the idea of a 99 year lease seems particularly troubling. It's essentially the time frame where everybody whom agreed to the arrangement will be long dead, and generations of people would have been raised not knowing the land was in fact leased. I suspect kicking people out of somewhere they have been for almost 100 years is not easy.
Worse still is that the land acquired via the 99 year lease will be highly profitable land, with all profits and resources used for China's benefit. This further entraps the local Laos economy, where mining appears to make up major portion of their exports. Not only will they still be saddled with debt, they will now be less capable of repaying it.
“In the wake of China's defeat in the First Sino-Japanese War (1894–1895), the British took advantage of the other European powers' scramble to carve up the country and forced the treaty on the weakened Chinese government.
Between 6 March and 8 April 1898, the German government forced the Qing Empire into a 99-year lease of the Kiautschou Bay concession for a coaling station around Jiaozhou Bay on the southern coast of the Shandong Peninsula, to support a German global naval presence in direct opposition to the British network of global naval bases. This initiated a series of similar lease treaties with other European powers. On 27 March 1898, the Convention for the Lease of the Liaotung Peninsula was signed between the Russian Empire and the Qing Empire, granting Russia a 25-year lease of Port Arthur and Dalian, to support Russia's Chinese Eastern Railway interests in Manchuria. Consequently on 28 March 1898, Britain, anxious of the Russian presence in China, pressured the Qing Empire into leasing of Weihaiwei, which had been captured by the Empire of Japan in the Battle of Weihaiwei, the last major battle of the First Sino–Japanese War, for as long as the Russians occupying Port Arthur, to make checks and balances of Russia. During the negotiation, the British stated that they would further request for leasing of land if any foreign concession took place in Southern China.
On 10 April 1898, the French, who also desired Chinese territory, forced the Qing Empire into a 99-year lease of Kwang-Chou-Wan to France to support France in southern China and Indochina. In order to maintain the balance of powers, Britain ordered Claude Maxwell MacDonald to pressure Qing Empire into allowing the expansion of Hong Kong for 200 miles (320 km). As a result, the Convention for the Extension of Hong Kong Territory was signed on 9 June 1898 in Beijing (Peking). The contract was signed to give the British full jurisdiction of the newly acquired land that was necessary to ensure proper military defence of the colony around the island. Some of the earliest proposals for the land's usage in 1894 included cemetery space, an exercise ground for British troops as well as land for development. From the British perspective concerns over security and territorial defence provided the major impetus for the agreement.”
Over a century ago, but more forced upon them than this is upon Laos.
I wonder where they could have got that idea from [1]
[1] https://en.wikipedia.org/wiki/Convention_for_the_Extension_o...
It was done during the time of the British empire and was recognized for being bad. The entire idea back then _was_ to permanently capture Hong Kong - which is why it is troubling to see China do exactly the same today. It's not a model that should be followed and is not a justification for doing it in modern times.
This is an actual significant difference between China and the West: China is much more willing to invest in countries with less capable governments and relatively weaker rule of law because the Chinese state is underwriting the loans and has much more weight to throw around.
There's a reason why US companies are much more reluctant to invest in developing nations.
The rewards being looked at may be different: the goal of private (non-government) American businesses may be to make money, the goal of Chinese entities may be something else.
Countries go back to the IMF over and over asking for forgiveness and extension of loans which are provided at far below market rates, and as long as you aren’t doing stupid shit like converting your economy to run on Bitcoin or using those loans to cut taxes ahead of an election, you will probably be able to continue doing that.
Western loans also don’t tend to require you to use western subcontractors who will fly in unskilled laborers from their own countries to do the work instead of using the unemployed and large local working population.
Isn't what you quoted contradicted this? Jua is not a Chinese name.
In this case the Chinese workers build skyscrapers that Laos cannot economically make use of using Chinese materials and Chinese workers, and a truck driver in Laos benefited from this as they need more business in the local area. The profits from his work got to the Chinese business owner.
One day, these people will wake up and realise that they're second class citizens in someone else's country.
Perhaps instead of criticizing China you should criticize the west for not besting China? Why isn't europe doing this, afterall they are the final destination of the belt road and they get a ton of stuff from China and can benefit to trade with the rest of asia? IMF and worldbank also hold a ton of debt on developing countries. I mean, I like to think I am the last person to support the CCP but bullshit is bullshit!
The livelihoods of people changed for the better.
I disagree. It is sometimes better to do nothing if the alternative causes more problems than it solves. Laos' time would have come naturally given stable government and consistent investment. They are now on a fast-track to failure.
> Perhaps instead of criticizing China you should criticize the west for not besting China?
As I said before, if a better solution cannot be proposed, it is better to do nothing, rather than an action that will most certainly end in failure. Without a stable government in Laos, all investment will likely be misused. It is up for the Laos people to decide when they are ready.
China is also trying to become a world leader, it therefore opens itself up to criticism. There is a lot of responsibility if you want to wear large shoes.
> Why isn't europe doing this, afterall they are the final destination of the belt road and they get a ton of stuff from China and can benefit to trade with the rest of asia?
Europe isn't accepting charity from China, if anything it is the other way around. China receives favourable trading terms because they are a developing Country. The belt and road is not being built by China as a charity project, it is directly for their own economic gain.
> IMF and worldbank also hold a ton of debt on developing countries.
They do, but this is something that is currently a work-in-progress. Debt forgiveness is now more common and there is increasing regulation regarding issuing of loans to debt-trap companies.
> I mean, I like to think I am the last person to support the CCP but bullshit is bullshit!
I have no idea of your background, but you do appear (at least in this case) be supporting to actions of the CCP to debt-trap Laos.
> It is up for the Laos people to decide when they are ready.
No it is not. Laos is a socialist/marxist state and their legitimate government has decided they are ready. Period. Outsiders have no right to tell Laotians to endure poverty and suffering and wait for capitalism, that is cruelty! They have the right to fight poverty by any means they desire.
> China is also trying to become a world leader, it therefore opens itself up to criticism. There is a lot of responsibility if you want to wear large shoes.
For sure, from uyghurs, south china sea to zero covid, I criticize the CCP and dislike them. But in this situation your criticism (if you are a westener in a democracy) is hypocritical is it not? The CCP is doing it wrong so they should do nothing and let them suffer like us? If you enjou capitalism then you should compete against china and do better or it just sounds like you are yet another westerner trying to shape other countries to a "superior" western way (some call it neo-colonialism).
> Europe isn't accepting charity from China...
That was not my suggestion and what you said about China's intentions is right. My point was Europe can sell to and buy from China, India and more with the belt road, they can profit by trading with like 50-65% of the world over one trade route. Of course, unless asia and africa is beneath europe to trade with ( which isn't the case because they already do trade).
> Debt forgiveness is now more common and there is increasing regulation regarding issuing of loans to debt-trap companies.
When the west was indebting other countries via imf/worldbank it wasn't a problem? And China isn't capable of debt forgiveness/re-structuring like the benevolent west?
> but you do appear (at least in this case) be supporting to actions of the CCP to debt-trap Laos.
Yes, that is correct. I support Laos' right of self-determination and respect their sovreignity and believe China is acting like any good capitalist in this case. The west should have been a better capitalist. But this isn't new. If you look at the colonization of the americas, europe chose to import slaves instead of employ their own people and eradicated governemnts and empires because their way was superior and they can't stand to respect the ways if the natives or allow them to self-determine and choose how to live and govern themselves, this pattern repeated in africa and after the division of former colonies and cold-war era invasions (circling back on how laos became the most bombed country because america invaded vietnam to contain China (pentagon papers)), subversions and proxy wars to contain the inferior communists and now that pattern continues with the rise of China.
My fear is China will beat the arrogant west at its own game -- capitalism! And as an American at least, I would much rather have America as the leading and influential super power. What I see and hear is how disconnected much of the west is from poor countries and how their suffering and poverty is nowhere near grasped by the plurality of the west.
Then is your problem that America isn't doing the debt trapping? Am I understanding that correctly?
As a an European I very much dislike the thought of this being a necessary evil, as it will most likely result in more suffering in the long run. But maybe that's where I'm wrong?
Sri Lanka is the obvious one. But even Pakistan has lost access to vast swathes of its territory which are policed by the Chinese, and has little to show for it. The infrastructure being built’s only purpose is to make transport of Chinese goods easier.
Western countries shouldn’t be beating China at this game because it’s a fucked up game that is very obviously designed to play the decision makers’ interests against the interests of the nation and its people.
Straight from the Russia playbook.
Laos' only short/medium term potential on her own is digging rocks or low end labour. But with PRC assistance, Laos can also become trail transit hub linking region and become energy exporter (battery of IndoChina) by having the privilege/permission as first downstream Mekong country that can harness left over hydropower, using infra PRC built. And obviously serving as PRC proxy or ceding sovereignty of control over said power network to allow PRC to influnece region via electricity and water. For landlocked Laos, that's about as, in PRC parlance, "win-win" as it gets.
1. This is old news. Northern Laos has long been fighting against disuse of the local kip. There are three major towns in the north; the border itself (Boten); Udomxai ("Muang Sai") and Luang Namtha. AFAIK all of them had large banners hung to the effect "use local currency" for many years. This effort would include both USD and Vietnamese Dong as well as Chinese Yuan Renminbi.
2. The border town area is called Mohan on the Chinese side, and Boten on the Laos side. Some of the images shown appear to be the Chinese side.
3. The initial Chinese push was for a road down to Chian Saen in Thailand. This road was built allegedly against promises from Thailand to pay for or at least allow the bridge at the end of the road to cross the Mekong. Thailand apparently rescinded and declined the bridge after the road was built. Chinese logistic influence on far northern Thailand was thereby eclipsed. Note further this area of Thailand is a stronghold of Nationalist Chinese support.
4. Much cargo travels directly from Yunnan to Thailand via boat, not so much via road and Laos. Similarly, much Thai fruit comes north to China via the same route. The boat trip can be taken by individuals. I've done it a few times and can vouch that it used to be spectacular, but widespread deforestation for rubber plantations has drastically reduced the biodiversity along the river over the last 20 years.
5. The major Chinese gambling destination was not Laos, it was Kengtung in Burma's Shan State (accessed from Menghai rather than Mengla). This was long ago closed off (10+ years), although a limited amount of covert border crossing probably continues.
(Source: Previously lived in the area, transited many times.)
The last time I visited Cambodia, 1000 local currency was $1, but if you used a $2 note it was worth 25 cents. So toktok drivers would try pay you in $2 so they can offload them, but would refuse to take them as they had no value to them.
Also, while the history of Chinese nationalist armies taking refuge in northern Thailand is rather fascinating [1], we're talking about only ~4,000 people and their descendants here and they're politically insignificant these days. Of course, Thailand itself has a complicated relationship with China.
In that context, the China-Laos railway is mind blowing. It sounds like it comes at a very steep cost to Laos. Never the less, it’s an exciting development and I look forward to riding it north to Kunming once travel into China is less restricted by the zero COVID policy.
https://www.nytimes.com/2018/12/24/world/americas/ecuador-ch...
Correa turned away from the US. So, probably? He then canceled some of the debt which destroyed direct foreign investment and took the country into a major recession.
> Decent infrastructure
The Coca Codo Sinclair Dam project is an absolute failure. It's not running at capacity and didn't lower the price of electricity. Lowering the price of electricity would have helped pull many out of poverty.
The roads in Ecuador are absolutely abysmal. No interstate system, very slow to move through the country by car or bus. The smaller cities in the south receive much less support than Quito and Guayaquil.
The healthcare system isn't funded.
> growing exports
They are experiencing the Dutch Disease. They export bananas and oil but most of the rich countries have better economies with less natural resources. They are too focused on commodities at the expense of other sectors.
> one of the most stable economies in Latin America
But only because of the dollarization of the economy. That prevented Correa from doing further damage by printing money and turning the country into Venezuela.
> They took the risk and seem to be on a good development path.
Most people I talk to say that times were better under Correa when public spending was much higher. Obviously it was unsustainable. The protests this year that shutdown Quito and Cuenca ended with the agreement that the government would spend $1 to $2 billion on oil subsidies. The demand for unsustainable public spending from the public is high.
https://tradingeconomics.com/ecuador/government-spending
https://www.statista.com/statistics/531556/national-debt-of-...
"U.S. aircraft dropped more ordnance on Laos than on all countries during World War II, leaving Laos with about 78 million pieces of unexploded ordnance (UXO) by the end of the war."
https://en.wikipedia.org/wiki/Laotian_Civil_War
https://www.history.com/news/laos-most-bombed-country-vietna...
Air America is a movie on CIA activity in Laos:
Except the Marshall Plan didn't take ownership of the assets constructed:
* https://en.wikipedia.org/wiki/Hambantota_International_Port#...
Of course, one major reason for the kip's weakness is that Laos is now heavily indebted to China and unlikely to be able to repay its loans. The local economy has taken a major hit from China being closed, with lots of abandoned construction sites and shut-down hotels in the capital Vientiane.
China has been long fighting to expand its sphere of influence into SE Asia.
Vietnam pissed off China when it invaded Cambodia to dispose the Khmer Rouge which led to the Sino-Vietnam war of 1979.
The Laos government is very cozy with the Vietnamese government so no doubt the Belt and Road initiative is concerning to Vietnam in terms of its influence on Laos.
Fun fact: northeastern Thailand (Isaan) is ethnically and culturally Lao, and to this day has far more Lao speakers than Laos itself. The current rump state of Laos on the east bank of the Mekong was carved off by the French as a colony.