The Thais, the Vietnamese, and the Chinese, are contending for influence in Laos, but the Chinese will come out on top, says Ian Storey in "China and Vietnam's Tug of War Over Laos" (Jamestown Foundation's "China Brief," 5(13), June 2005).
The Thais do a lot of business with the Laotians, but their influence fell off after the 1997-98 East Asian financial crisis. Moreover, " ...Bangkok’s political influence is limited since Laotians perceive Thais to be overbearing and arrogant, and Lao nationalism tends to orient itself against Thailand."
Vietnam is the Laotian's second most important trading partner. Moreover, the Vietnamese leadership has had a long and close relationship with the Laotian leadership. However,
Once senior LPRP leaders pass from the scene, Vietnam’s influence will diminish accordingly. The next generation of LPRP cadres has little direct experience of the revolutionary period that brought the party to power, and the crucial role Vietnam played in its success. The beginnings of a generational shift are already underway, and the Eighth Party Congress scheduled for 2006 may see the retirement of a cohort of elderly leaders. While talk of “pro-China” and “pro-Vietnam” factions within the party is almost certainly overplayed (the LPRP looks to both countries for aid, trade, and investment), it is true to say that fraternal feelings toward Vietnam are much stronger among the older generation than the younger generation.
China is only the Laotians' third largest trading partner, but:
China’s future economic role in Laos will expand for three reasons. Firstly, China’s voracious appetite for Laos’ natural resources. Secondly, Lao goods cannot compete with cheaper Chinese goods in the domestic market. Thirdly, since Laos’ opening up to the outside world, it has relied heavily on economic aid from countries like Japan, Sweden, France, and Australia, as well as multilateral agencies such as the World Bank, IMF, and ADB. Donor fatigue is beginning to set in as the Lao government resists pressure to fundamentally reform the country’s legal, financial and, most sensitively, political systems. The PRC, on the other hand, provides aid to Laos without calling for major reforms that would loosen the LPRP’s control over the political and economic life of the country.
Why does China care?
China’s interests in Laos are threefold. The first is China’s strategic imperative of fostering close relations with all countries along its borders. Beijing’s ultimate aim is to displace the political influence of other countries in Laos, primarily Vietnam but also Thailand. Second, Laos’ geographic position makes it a useful conduit through which Chinese goods from its Southwest provinces can flow into the Thai market. Since 2000, Beijing has paid special attention to the development of Laos’ transportation infrastructure, particularly highways linking China with Thailand. Vientiane itself has been keen to promote itself as a “landlinked” country rather than a landlocked one, though it recognizes that China and Thailand stand to gain the most. Third, the PRC has expressed a strong desire to increase imports of natural resources from Laos, including timber, iron ore, copper, gold, and gemstones.
Thanks to Simon's World for the pointer to the Jamestown Foundation.
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