Yunnan, the new gateway
Despite massive debts from existing infrastructure projects, Beijing is determined to invest more than 500 billion yuan (HK$612 billion) to make Yunnan a Southeast Asian gateway.
'Yunnan is our nation's land passage to Southeast Asia and South Asia. Its strategic position is very important,' the State Council said on the government website. 'To improve our country's overseas links, the State Council supports the acceleration of the development of Yunnan as an important bridgehead to its southwest neighbours.' Authorities want to improve the province's transport, logistics, energy, waterways and information infrastructure by 2015, and to complete several links to Southeast Asia by 2020.
The State Council has called for the completion of a railway linking Kunming, Yunnan's capital, Changsha, and Hangzhou as well as a line between Dali in Yunnan and Ruili on the China-Myanmar border. It also wants expressways built, including one between Kunming and Guangzhou.
In addition, it designated the new Kunming Airport as a major aviation hub for western China, with auxiliary airports in cities including Lijiang, Dali and Shangri-La. The new Kunming Airport, with an investment budget of 23 billion yuan, aims to achieve an annual passenger throughput of 38 million and 303,000 flights by 2020, according to the airport's website.
In July, the Ministry of Transport signed a partnership agreement with Yunnan supporting the province's plan to invest 500 billion yuan into 126 projects to transform the province into a transport hub by 2015.
This was two months after Yunnan Highway Investment, an investment arm of the Yunnan government, announced it could not repay 90 billion yuan in bank loans for highway construction projects.
Yunnan and 11 other provinces have incurred 759 billion yuan of debt from building toll roads, the South China Morning Post reported on October 18. Late last month transport authorities admitted the nation's construction projects faced funding shortages.
'The idea of infrastructure investment in southwest China is not a bad one. Southwest China has always lacked infrastructure. That has been a critical obstacle to development. The key is finding a sustainable way of funding it,' Patrick Chovanec, professor of the school of economics and management at Tsinghua University, Beijing, said.
'The question is, what is the appropriate funding and time frame to achieve this? You need a rational time frame for the construction of infrastructure projects and not build them too quickly.'
Chovanec said there was 'tension in public policy in China between building stuff to drive GDP growth and reining in inflation' and infrastructure investments had fuelled inflation.
'China sees Southeast Asia as its backyard, as part of its attempt to claim the status of regional power. This could have something to do with its competition with other powers including the US and Japan, to gain a firmer foothold in Burma and Laos,' Pavin Chachavalpongpun, a researcher at the Institute of Southeast Asian Studies in Singapore, said.
'China is trying to accomplish several goals via infrastructure and energy projects in Yunnan. One goal is to decrease dependence on the Straits of Malacca, where 80 per cent of its oil imports currently pass through,' Paul Donowitz, of Earthrights International, an advocacy group on human rights and environmental issues, said.
'Another motivation is to fuel industries in Yunnan and western China as part of Beijing's 'go west' strategy. The recent suspension of the Myitsone Dam has caused concern in Beijing and among Chinese companies who wonder whether their investments are safe in Burma. However, China is the fastest-growing investor in Burma, and although the authorities are reluctant to become overly dependent on China, the leaders will continue to encourage Chinese investment even as they encourage the ending of Western sanctions and increased investments from other countries.
'The biggest challenge to Chinese investment in Burma is the widespread resentment of the people of Burma to the influence of China ... If the people of Burma do not begin to see benefits from these projects, there will be more resistance, as in the Myitsone case.'
The dam, on the Irawaddy River, was planned to provide 90 per cent of its power output to southern China.
In Shan state, near the border with Yunnan, the Myanmar army was attacking ethnic groups, with the aim of securing a corridor for a gas and oil pipeline, Donowitz claimed.
The pipeline, controlled by CNPC, the largest Chinese state-owned energy firm, runs through northern Myanmar into Yunnan and is scheduled to be completed in 2013. Large infrastructure projects in Myanmar were often located in ethnic minority areas, Sean Turnell, an associate professor at Macquarie University in Australia, said. 'This, coupled with the dislocation of people and environmental destruction, make these projects a lightning rod for anti-Chinese sentiment.'
Myanmar and Laos felt ambivalent about China's growing influence, Pavi said. 'On the one hand, no country can deny China has been rising. But the overwhelming presence of China in these two countries could sometimes backfire. Many bad practices that come with Chinese investment are unwanted. Look at the Myitsone dam project in Myanmar.'
of power produced from the suspended Myitsone Dam project in Myanmar was to have been exported to China