Making Laos more like China has a high environmental cost

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http://www.atimes.com/atimes/Southeast_Asia/KI19Ae01.html

BEIJING - At Kunming's long-distance bus station, a sleeper bus crammed with Chinese laborers edges toward the exit, en-route to the Laotian capital of Vientiane. Despite the prospect of an uncomfortable 40-hour journey ahead, this group of wiry, chain-smoking men is buoyed by the expectation of a reasonable salary and a chance to take China's economic miracle southward. "Laos is poor and dirty," says one. "But we have many friends there already. We can make money and help make Laos more like China."

The resource-rich Golden Triangle area of northern Laos, Thailand and Myanmar is no stranger to Chinese influence. Just as the Chin Haw - Han and Hui Chinese from Yunnan province - first arrived in Laos in the 19th century looking to get fat off the land, so a new wave of migrants from Yunnan and further afield is now making a beeline for the same region, looking to take advantage of opportunities thrown up by modern China's long and powerful economic arm.

China's role in the development of northern Laos has become increasingly marked in recent years. A cooperation agreement signed in 1997 signaled a break from the hostility of the 1980s, when Laos allied with China's then adversary Vietnam. By 2007, China was responsible for nearly 40% of investment projects in Laos, and, according to the Laotian government, Chinese direct investment totaled over US$1.1 billion by the end of August that year.

Indeed, through official aid, state investment and a growing number of private ventures, China now dominates a large part of the Laotian economy. From mining and hydropower to rubber, retail and hospitality, the Chinese generally have a controlling interest in almost every economic sector. Trade between Laos and China was valued at about $250 million in 2007, and is expected to reach $1 billion over the next few years.

Last year, the government of Yunnan completed a blueprint - widely known as the "Northern Plan" - to develop the industrial sectors of northern Laos from now until 2020. This was handed over to the Laotian government in January, and is expected to be ratified at the Laotian 9th Party Congress in 2010. Setting specific targets for the "backbone industries" of power, agriculture and forestry, tourism and mining, the Northern Plan "intends to develop a highly focused and executable roadmap for industrialization".

While growing Chinese influence undoubtedly benefits some, as evidenced by the row of luxury SUVs sitting at the China-Laos border, many Laotians, expats and international observers are deeply concerned about its social and environmental impact. Many of these concerns center on the newly completed Kunming-Bangkok Route 3 highway, part of which runs through northern Laos (built with Chinese and Thai money), and the rash of new towns, settlements and business ventures this road is now spawning.

Sitting on the Chinese border next to Route 3, the Laotian town of Boten was designated a special economic zone in 2002. Renamed "Boten Golden City", the 21 square kilometers on which the town sits is now effectively part of China, having been leased for 30 years by a Chinese company, with an option to extend this lease by another 60 years. Vaunted as the "most internationally modernized city in Laos", plans for Boten include a golf course, a convention center, residential real-estate projects and even an international airport.

Dominating the landscape of Boten is the incongruous and unsightly 271-room Royal Jinlun hotel and casino complex, which rears above a sprawling concrete plaza of Chinese restaurants, cell-phone outlets, duty free shops and stalls selling cheap Chinese products. The casino is a collection of gaming operators that rent rooms in the back of the hotel and cater to a growing number of international visitors - it's illegal for Laotians to gamble, but Chinese can simply walk across the border without a visa.

While Boten has created some jobs for local people, these are largely menial. The town works on Beijing time, accepts only Chinese currency and speaks only Mandarin Chinese. Electricity and telephone lines run from China, and electric sockets adhere to Chinese standards. The growing numbers of prostitutes that patrol the streets are all Chinese, as are the beer and the cigarettes.

Apart from the less-than-desirable appearance of Boten Golden City - most foreign visitors traveling into Laos from China describe the place as an eyesore (or worse) - it has also generated a host of grievances from local people. To make way for the special economic zone, inhabitants of the old town of Boten had to be relocated 20 kilometers down the road, where many have complained of a lack of services and poorer-quality land. Others have objected to land grabs adjacent to the new highway by well-connected traders and businessmen.

An increase in Chinese-owned Lao-based concessions (another Chinese-financed casino is going up in Huay Xai), the growing influx of Chinese immigrants and the developing regional road network have also combined to drive up the trade in Laotian biodiversity, much of which is now endangered.

Passing through Boten, many travelers will spot cramped cages containing monkeys, black bears and other rare species blatantly displayed beside the road, ready for purchase and cross-border transport into China. "This is surely not the image that the Laotian government wants foreigners to see first when they cross the border," said one shocked American tourist.

With its booming economy, China is now the world's largest and fastest-growing market for wildlife. Rising incomes in China are stimulating demand for a wide range of Laotian species, both for consumption and use in traditional Chinese medicine.

This has pushed prices to the level where many animals have become "too expensive to eat" for local villagers; instead, dead and living wildlife is hawked to traders for eventual resale on the Chinese market. In China, the remains of a rare Laotian tiger may sell for more than $70,000.

"The escalating illegal wildlife trade in Southeast Asia is driven by increasing affluence, and therefore especially by demand from China," said Dr Richard Thomas of Traffic, a wildlife trade monitoring network. "Boten in particular may be a hotspot for smuggled wildlife as it is the main trade crossing between Laos and China, and endangered species have frequently been observed there."

Beyond Boten, the defaunation of Laos is particularly bad along Route 3, with the new highway driving widespread deforestation and wildlife poaching. Vast tracts of forest along the road have been logged for timber and converted for teak or rubber plantations, while hillsides have been burned for sticky rice cultivation. Most of the money for these activities comes from Chinese business owners who not only provide finance, but also sell snares and traps and place orders for fresh wildlife, guaranteeing a market for local hunters and smugglers.

Although the first rubber plantations in northern Laos were planted as recently as 1994, Chinese investment has accelerated coverage dramatically. China is projected to consume 30% of the world's rubber production by 2020, and is relying on plantations outside its borders to make up the shortfall from domestic production, which could be over 7 million tons.

In northern Laos, Chinese companies generally establish In northern Laos, Chinese companies generally establish large-scale plantations through massive investments. These companies sign contracts directly with the Laotian government first, arranging the on-the-ground set up with local villagers later on, and then employing them on subsistence-level salaries.

This process for allocating land for rubber plantations remains open to serious abuse. Reports from some government staff and Laotian villagers show that Chinese companies are in effect allowed to allocate themselves land by putting local government officials on the company payroll. Stories of manipulation, exaggeration of benefits and forced coercion of villages to give up land are rife. Although the Laotian government announced a ban on granting land concessions in 2007, this has generally proved ineffective, as it is either ignored by local officials or bypassed via gaping loopholes.

A recent report in the journal Science has warned of the "devastating effect" that increasing the coverage of rubber plantations in Laos and other Southeast Asian countries could have, citing significant reductions in carbon biomass, desiccation of water sources, increased risk of erosion and landslides, and consequent loss and degradation of habitat. As the Yunnan government's Northern Plan calls for an increase in Laotian rubber plantation coverage to 150,000 hectares by 2020, not to mention more than 100,000 hectares for biofuel plantations and a step up in mining projects, the prospects for the area's rapidly dwindling biodiversity look poor at best.

A voracious appetite for Laotian natural resources, coupled with the availability of cheap Chinese products and the willingness of the Chinese government to provide aid without asking questions, will undoubtedly see China play an even greater role in Laos over the coming decades. With Chinese companies continuing to step up investment and an increasing flow of southward-bound Chinese migrants, the need for a comprehensive and watertight system of regulation is both clear and crucial.