Lancang-Mekong Cooperation brings China, neighbours closer

By Dickson Yeo

An old Chinese idiom is that “water is the source of wealth”, indeed the first prerogative of the Lancang-Mekong Cooperation (LMC) summit is that the vast resources of the Mekong Delta region which are invigorated by its close proximity to all the mainland South East Asian states and access to vital riverine logistics, should be deployed for the benefit of all six members. 

Cambodian fishermen take their motorized boats for fishing during fish harvesting season in the middle of Mekong river near Phnom Penh, Cambodia, Monday, Jan. 23, 2017. [Photo: AP/Heng Sinith]

The Mekong Delta countries share a cooperative vision of mutual prosperity and the LMC is intent on harnessing the vast resources of the Mekong through China’s Belt and Road initiative, in order to deliver on these promises. The most direct source of financial prosperity would be the incorporation of the Mekong Delta states into China’s industrial economy via the international chain of production, and in the last two decades, this has come to pass. Vietnam, Myanmar, Cambodia, Laos and most certainly Thailand, provide crucial industrial manufacturing commodities and services and feed Southern China’s booming demand. The proximity of all these states with China’s Yunnan province, gels with the Beibu Gulf Economic Zone and the Pearl River-Xijiang Corridor projects, building an international pathway which extends in the Mekong and outwards to the industrial markets in North East Asia, Europe and North America. This is synonymous with historical patterns of production, especially during the Southern Song Dynasty, when Chinese manufacturing prowess along with the trading expertise of the Khmer Empire, channelled finished products, services and culture to the rest of Asia via the Mekong Delta route.

The ability to manage water resources via governance measures and engineering capability, led to unparalleled urban growth and prosperity during the height of Indo-China’s various city-state empires. But the decline of water management through political turmoil and governance failures, also doomed these states in following centuries. Till today, the Mekong States still retain the historical memory of their cultural apex and water management remains a crucial part of governance traditions in these countries. The LMC is designed to supplement and boost the individual efforts of the Mekong States by emphasizing political security, sustainable economic development and a social culture of collective decision making and culture. Underpinning that is a vast institutional commitment to financial overtures in order to facilitate these regional initiatives; essentially water governance cannot be removed from economic growth and infrastructure development. To this end, China has contributed more than USD 1 billion through the LMC and set up another USD 10 billion in special lending mechanisms to the Mekong States through a China-ASEAN infrastructure loan facility. Through institutions like the China Development Bank (CDB), Beijing will provide preferential loans and regional cooperation funding for these shared projects. And this is in-line with the AIIB (Asian Infrastructure Investment Bank) and the Silk Road Fund prerogatives of securing the LMC to spearhead the Belt and Road projects in Asia.

The traditional structure of Mandala-states, where governance and rule of law between multiple parties overlap jurisdictions, and the flow of commerce and logistics is woven into a dense web, means that development of the region is a complex issue where non-traditional security issues frequently arise. Criminal activity and illegal migration have become core security threats to all the Mekong states and extend into China. In the last decade Beijing has established numerous joint law enforcement and security cooperation mechanisms in the Mekong Delta River Basin, as of November 2015 more than 40 rounds of joint patrols by law enforcement authorities have ensued. In the age of national sovereignty and absolute state authority, the ability to respect non-interference becomes a complex issue which has to be resolved by mutual agreement by multiple sides. For instance, cross border smuggling of narcotics and illegal arms, impinges on the customs and logistics authority of multiple states, the minute water-borne traffic enters the Mekong Delta region. It is with the intention of resolving these complex difficulties that the Lancang-Mekong River Comprehensive Law Enforcement and Security Co-operation Center was established. 

The core of China’s Belt and Road overtures through the LMC is about strengthening the indigenous capacities of the Mekong states. In over a decade of extensive investment led by Chinese and foreign multi-national corporates, all of the Mekong states are poised for rapid economic take-off. But the process has exposed inherent weaknesses in capacity, governance, infrastructure and environmental management processes. Continued economic stimulus through infrastructure expansion, via the China-Laos-Thailand railway and the series of high speed rail links facilitated by Chinese state-driven investment, is designed to clear away the immediate obstacles to growth in the region. The process of streamlining logistics and customs services in the LMC, thereby turbo-charging the domestic growth engines in these countries, is designed to keep the momentum for change in the region. Connectivity through the LMC is the key to China’s continued interest, in Vietnam aside from Laos, Beijing will provide USD 250 million in loans assistance to urban rail projects to assist Hanoi in managing its urban boom. With an additional USD 300 million for a series of urban highway projects. The high speed rail connectivity option, with the ultimate goal of linking the Mekong Delta states to Yunnan and extending services to Malaysia and Singapore, is still on the books. 

Sustainable development, through the judicious management of the riverine wealth of the Mekong Delta and a rapid rollout of investment through targeted beneficiaries, is Beijing’s ultimate roadmap for the LMC. And it would serve as a showcase for China’s ambitious Belt and Road initiative while paving the way for similar multilateral regional development institutions in Central Asia, Africa and the Middle East.

(Dickson Yeo is a PhD candidate at Lee Kuan Yew School of Public Policy)