Making tracks

The meandering and rugged border between Laos and China has been secluded and quiet for centuries. But recently, the sense of calm has given way to the rumble of bulldozers and construction workers, who are putting the finishing touches to an ambitious highway that will eventually connect Singapore to Hong Kong.

Buried in thick jungle and dangerous mountain ranges, the Greater Mekong Sub-region (GMS) - comprising Laos, Vietnam, Cambodia, Myanmar, northern Thailand and China's Yunnan province - has traditionally represented Asia's backwaters, with the only roads being historic routes used by traders and adventurers.

This is set to change. In 1999, China and the Asean nations agreed to build an 1,800km highway from Kunming in Yunnan to Bangkok. The project, scheduled to be completed by the end of this year, would realise motorists' century-old dream of driving from Singapore to Hong Kong, and any mainland city.

Impressive as it is, the Kunming-Bangkok highway is just one of the many transportation links planned between China and its neighbours in the Association of Southeast Asian Nations (Asean). On August 28, the two sides jointly outlined funding details to launch a Pan-Asia railway linking Kunming to Singapore by train. The railway will be 7,000km long and run through seven Asean countries, China News Service reported.

China and Asean will invest more than US$10 billion in the project to upgrade and standardise existing railways and build 550km of new tracks to link them. The project is expected to be completed by 2015, the news agency said.

Beijing has set aside billions of dollars to develop even more transportation links with the Asean nations. In the Guangxi autonomous region alone, more than 100 billion yuan will be spent in the next five years to upgrade and build 2,500km of railways to speed up the flow of goods and people within the GMS region. Earlier this year, Guangxi agreed with Vietnam to build two super-highways which will reduce the travelling time from its capital, Nanning, to Hanoi to less than four hours.

Beijing also plans to spend 3.9 billion yuan to build three deep-water ports in Guangxi - at Fangchenggang , Qinzhou and Beihai . Several new aviation routes between Asean and China will also be opened in the coming years.

Although on paper these awe-inspiring projects are jointly developed by GMS countries and the mainland, in reality China is the driving force, providing a lion's share of money, technology and personnel to build the roads and railways. One third of the Kunming-Bangkok highway that runs through Laos will be funded by Beijing, who will also provide 249 million yuan in no-interest loans to the Laotian government to help it complete the rest. Chinese engineers, equipment and workers are widely employed in building these projects.

'China is a stronger power in the region and it is natural that the GMS countries want us to play a bigger role,' said Cao Yunhua , director of Southeast Asia Studies at Jinan University.

The impact of these projects is evident. Trade between Asean and the mainland has exploded over the past few years. In 1991, the bilateral trade was just over US$7.9 billion. Last year it had jumped to US$130 billion. Most experts forecast the total trade volume between the two could easily surpass US$200 billion by 2015.

The sprawling network of roads and railways has transformed the Asean region. Every day, trucks and ships from the mainland carry electronic appliances, motorbikes, and all kinds of gadgets to the lower reach of the Mekong River and bring back home coal, rubber and metal ores. Most coal used in the booming Pearl River Delta, for instance, comes from Vietnam and Indonesia. The GMS countries are also becoming increasingly important suppliers of tin, zinc, rubber, palm oil and refined oil to the resources-hungry mainland.

Ma Cheng , a businessman in Yunnan, has witnessed the changes. Mr Ma, who imports wooden handicrafts and furniture from Asean countries to the mainland, said traffic between the two sides had picked up quickly.

'We meet more Chinese people in Mandalay [in Myanmar] than before. Many locals have Chinese connections. It's easy for us to do business there,' he said. 'In the past, the roads to Myanmar were difficult and dangerous. Now the roads are much better and safe. I think in a few years time it could be completely different,' he said.

Important as the trade issue is, it is not the only reason behind Beijing's drive to build these expensive transportat links with Asean. The links also give the mainland enormous political leverage in the Asean region, which only a decade ago still eyed its powerful neighbour with suspicion and fear.

China had been the region's predominant power in politics, economy and culture for centuries. But its influence had greatly waned in modern times and its position usurped by other nations.

Now, despite its growing economic importance and a fast improving relationship with Asean, China's standing still lags behind that of the US and Japan in the region. Although trade with Asean nations has undergone unprecedented growth and the two sides have agreed to establish a free-trade zone by 2010, Washington and Tokyo are still much bigger players than Beijing. In 2005, Asean's trade with the mainland accounted for only 9.3 per cent of its total exports and imports. US trade, on the other hand, made up 24.9 per cent of Asean's foreign trade, while Japan accounted for 12.6 per cent, according to official Asean statistics.

'The US is still the most important export destination for many economies in Southeast Asia. It is also the most important source of investment,' Jinan University's Professor Cao said.

In 2004, direct investment from the US to Asean reached US$3.9 billion. This increased to US$8.7 billion a year later. Investment from Japan in 2005 stood at US$3.16 billion. In comparison, Asean countries only received US$569 million direct investment from Beijing in that year.

The US, Japan and Europe are also the main sources of technology, knowledge and education for the region. This trend, Professor Cao said, would continue for some time.

The traditional US military and political presence in the region also remains strong. Despite recent worries in Washington that its position had been undermined by the rise of China, Professor Cao said the mainland still had a long way to go to catch up.

'In Southeast Asia, we are the latecomer. We started to re-engage Asean only in the 1990s. The US, Europe and Japan, on the other hand, have developed long and comprehensive ties with countries in the region for decades or even a hundred years,' he said.

Yet Beijing has its own trump cards. It has shared a long and mostly peaceful history with its Asian neighbours for thousands of years. China and India are the most important sources of cultural influence in the region. At least 30 million people living in the Asean countries are ethnic Chinese. And most importantly, China is the only great power that has physical links with the Asean nations.

China shares long marine and land borders with many Asean countries. In the past, this was mainly a source of conflict for all sides. But Beijing quickly realised the shared borderline could also be its greatest strength in engaging the Asean countries.

'Of all the great powers, we are the only real neighbour of Asean. Japan, the US and Europe have no direct contact with Asean countries. If we have a good transportation system linking us together, our relationship is going to improve very fast,' said Professor Cao.

Beijing has silently set aside its territorial disputes with the Asean countries. It has called for a joint development in the Spratly Islands and has buried the hatchet with Vietnam after fighting several costly and bloody border wars in the 1970s.

Beijing is now focusing its energy and resources on building transportation links with its southern neighbours. The proposed highways, railways and ship and flight routes are aimed at generating greater cross-border business activities and spurring people and cultural flows.

Helping the Asean countries build these key infrastructure projects has also created opportunities for mainland companies, especially those in construction and engineering.

Although China lacks the edge to compete with the US, Japan and Europe in offering advanced technology, mainland companies have proved to be extremely capable in infrastructure building.

'We have developed a huge pool of professional talent, from architects to engineers to workers. We are much less expensive than those from US or Japan. Our workers are used to working in a harsh environment,' said Zhao Mingzhou, an engineer from Yunnan who had just completed a project in Laos and Myanmar.

Over time, experts such as Professor Cao say China's proximity to the Asean nations, the contact between its peoples and shared history and cultural ties will put it back on the region's central stage.