China pledges billions to Mekong River countries in bid to boost influence and repair reputation amid tensions in South China Sea

PUBLISHED : Thursday, 24 March, 2016, 8:01am
UPDATED : Thursday, 24 March, 2016, 8:00am

China pledged yesterday to offer 10 billion yuan (HK$11.94 billion) in preferential loans and US$10 billion in credit to five Mekong River countries for infrastructure and industrial projects, in a move analysts said was aimed at boosting its regional influence amid tensions in the South China Sea.

Projects ranging from railways to industrial parks would be promoted to boost regional cooperation, according to a joint declaration issued after a summit between the leaders of China, Thailand, Myanmar, Cambodia, Laos and Vietnam.

The 10 billion yuan preferential loan was pledged by Premier Li Keqiang at the first Lancang-Mekong Cooperation meeting in Sanya, Hainan province. Half of the US$10 billion credit will be used for industrial production cooperation between China and the other nations.

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China also promised to support poverty alleviation in these countries with US$200 million in aid and to prepare another US$300 million to fund small and medium-sized cooperation projects in the next five years.

The five countries downstream of China on the Mekong River represent a key area in the One Belt, One Road strategy, which aims at supporting China’s growth through infrastructure construction and by exporting its excess industrial capacity.

Li told the leaders of the Southeast Asian neighbours that in the challenging economic situation, better regional cooperation could help the Chinese economy counter downward pressure.

“We will explore building economic zones and industrial parks, investment zones and transport networks and keep improving infrastructure in the region,” he said.

Li called for progress in infrastructure projects, including the two railway lines connecting China’s Yunnan province with Lao’s capital Vientiane and the Thai capital Bangkok. A cooperation blueprint released earlier said the railway linking China and Thailand was part of a Pan-Asia network that would also cover Singapore.

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Li said other parties and outside nations were welcome to participate in the region’s affairs, and called for the nations to boost mutual political trust.

As water distribution is an important issue among the countries, the meeting decided to setup a water resource centre to coordinate hydropower development and jointly deal with Mekong floods and droughts.

China’s dam and hydroelectric project had sparked complaints from downstream states. A week before the meeting, Beijing agreed to discharge water from March 15 to April 10 from a dam in Yunnan at the request from Mekong Delta countries suffering the worst drought in 90 years.

The cooperation drive is intended to help China exert leadership and polish its tainted image, analysts said.

Some of China’s previous development projects in these countries had been criticised for damaging the environment. Beijing’s growing military presence in the disputed South China Sea has greatly worried its rival claimants such as Vietnam.

“By helping these relatively backward countries gain a better livelihood, China could surely build a positive image,” said Xu Liping, a Southeast Asian affairs expert at the Chinese Academy of Social Sciences.

Xu suggested the Chinese projects work on transparency and environmental standards to win the trust of local people.