ASIA NEWS NETWORK
WE KNOW ASIA BETTER
China beckons - inside Laos
Publication Date : 23-09-2013
An influx of Chinese investment into Laos has raised hopes for an economic boom in the country
As dusk falls on sleepy Houay Xai, Somphet, 24, makes her way to the new school at the top of a hill, along with around 60 others ranging from eight to 28 years old.
Like many young Laotians attending the small, newly-opened schools in provinces bordering China, they are there to learn Chinese. In many cases, they are taught by Chinese teachers paid for by the Chinese government.
"If I can speak Chinese, I can get a good marketing job with a Chinese company," says Somphet, who goes by one name. From the classroom above the Mekong River, she can see the lights of Thailand across the dark water.
At the same school is Somneuk, 28, who is studying Chinese though she already has a job at a local bank. But speaking Chinese will help; many of the bank's customers are Chinese.
In recent years, China has become the biggest foreign investor in Laos, and growing numbers of Chinese have moved in, drawn by natural resources, from minerals to hydro power. The Chinese have long leases on gold and copper mines, as well as rubber, cassava, sugar cane, eucalyptus and banana plantations.
The Chinese influx has raised hopes of an economic boom for a country with a population of less than seven million, which decades of war left chronically underdeveloped. But it is also controversial as Chinese investors extract natural resources and introduce sweeping changes to landscapes and livelihoods.
In just a few short years, the Chinese stamp is visible everywhere. Houay Xai, a town in the province of Bokeo, has a Chinese-Lao hospital open to all, but staffed mainly by Chinese.
Nearby is a market run by Chinese people. Nobody knows quite how many Chinese now live in Laos, but the figure is thought by some to be in the hundreds of thousands.
Up until the mid-2000s, Thailand and Vietnam were the top foreign investors here.
But in 2006-2007, China displaced Thailand as Laos' No. 1 source of foreign direct investment, according to Dr Ian Storey, a senior fellow at Singapore's Institute of Southeast Asian Studies (Iseas).
Trade with China also surged. In 2009, according to official Chinese data, trade with Laos reached US$744 million, a 77 per cent jump from the previous year.
In Vientiane, at the capital's oldest Chinese school, Liaw Tow, which recently celebrated its 76th anniversary, student enrolment is growing at 10 per cent a year.
"After studying here some students go on to study in China," said the school's Laotian principal, Somphet Vannavong. This year, she said, 40 students went on to China.
The school has over 2,000 students, starting from as young as two years old. Lao and English are also taught, but the main draw is Chinese.
Several of the Chinese teachers are here on two-year stints paid for by a Chinese government programme to promote the language overseas.
"The parents are happy that their kids have the option of learning Chinese; students who go on to qualify in China, come back and can get higher salaries," said Somphet.
Five years ago, China's Soochow University established its first overseas branch in Vientiane. Today, the university has over 2,000 students and plans a new campus on a 100-hectare site on the outskirts of the city. At its current classrooms in town, students spend a year or two in Vientiane, then continue their studies at the main university in Suzhou, China.
Chansai Nanthanong, a 26-year-old Laotian who has worked as a tour guide for eight years and was at the university's office to inquire about courses, told The Sunday Times his work offered limited options. He wanted to learn Chinese, go to China to obtain a technical degree, and come back to Laos to pick up a good job with a Chinese company.
At the office, he met 16-year-old Soumina Koothakaisorn, who was already enrolled to learn Chinese. "My Dad wants me to study medicine in China," she said.
A Laotian Manhattan
China's presence looms in the capital, in the shape of ambitious urban developments. The Shanghai Wanfeng Group's US$1.6 billion, 365-hectare development, That Luang Marsh, will have hotels, offices, malls and condos, lakes and recreation areas, promising to turn the Laotian capital into a version of Manhattan.
China also built a cultural centre, a stadium, government offices, and luxury villas on the Mekong for the November 2012 Asia-Europe meeting.
A Chinese saleswoman at the office of the planned Vientiane Centre said the company wanted the hundreds of Laotians who cross the border to shop in Thailand every day, to stay and shop in Vientiane instead.
But the rapid development has rubbed some residents the wrong way. The That Luang Marsh project stalled on concern over 400 families who faced relocation. In 2008, the Laotian government took the unusual step of holding a press conference to dispel rumours that the city was designed to house up to 50,000 Chinese people.
Today, the site is still a green field, but trucks cart building material up and down a dusty approach road, hinting at preparations for the project to begin.
Most ambitiously, but also most controversially, Laos wants to build a high speed rail which would connect the Laos-China border in Luang Namtha province, with Vientiane - linking up with another high speed train from Vientiane to Bangkok.
At $7 billion, it will cost almost as much as Laos' gross domestic product of US$8 billion, and will be financed by loans from China. The line will require dozens of bridges and tunnels, and a broad strip of countryside along the route to be cleared of people.
"Locals are saying, why not fix the road system first," a foreign diplomat in Vientiane said.
Many Laotians grumble - but quietly. Laos, ranked by Transparency International as one of the most corrupt countries in the world, is a one-party Communist state which tolerates no dissent. Laotians, and foreigners in Laos, refuse to give their names when talking of anything remotely political. The first reaction of Laotian and foreigner alike when asked about the growing Chinese presence is: "That's a very sensitive subject."
A fine balance
Laos has had normal trade relations with the United States only since 2009, and became a member of the World Trade Organisation this year.
Analysts say Laos is just playing a very astute game leveraging its resources and strategic location between economic powerhouses and connecting Asean to China, all while balancing the influences of its old ally Vietnam.
While Vietnam still has an inside track to Vientiane politically, in the long term, "China can bring more resources to bear on any issue, than Vietnam can", says Storey.
Up the road from Houay Xai, rice fields give way to banana plantations on land rented by Chinese investors from locals.
From the greenery emerges the extravagant Kings Romans casino, the centrepiece of a 103 square kilometre special economic zone leased by a Hong Kong company for 99 years, patrolled by its own security force.
A new "Chinatown" showcases China's history; shops sell clothes, jade, tea sets and tiger bone wine.
Most customers are from China, Myanmar and Thailand. Russian and French tourists also arrive by boat from Thailand, snap up Chinese-made fake designer handbags, and gawk at bottles of Lao whisky containing embalmed snakes and scorpions.
The casino sits smack in the middle of the Golden Triangle, where Laos, Myanmar and Thailand meet. For decades, legal borders in this area have never meant much - and they are still dissolving.