China's Widening Footprint Prompts Trepidation
Los Angeles Times. May 16, 2004

Exports of its goods, and residents, stir fears that world's No. 3 economy could dominate Laos, Thailand, Myanmar and other Asian neighbours.
By Denis D. Gray, Associated Press Writer

LUANG NAM THA, Laos - From daybreak till past nightfall, Xu Ximing is on the move, rushing between his potato farm, rubber plantation, fish ponds and
orange grove. The Chinese migrant's enterprising ways contrast sharply with the languid lifestyle of his Lao neighbours. He hires them to work his fields.
"Rent and labour [are] cheaper than in China," the farmer said before scampering off to inspect a burst irrigation dike and shout at locals to stop trampling through his potato patch.
Xu, 60, moved to Laos with six family members, joining in a swelling stream of Chinese drifting southward into Southeast Asia in search of economic
opportunities, more elbow room and fewer restrictions.
Brick-makers, scrap-metal dealers, ice cream vendors, road-builders and farmers are sinking roots in northern Laos. Some frontier areas of Myanmar
could easily be mistaken for China, with only the yuan currency and Chinese language in use. Deeper in Southeast Asia, illegal migrants filter into
northern Thailand and set up restaurants and health clinics in Cambodia.
Although hardly a mass migration, the inflow is among factors awakening fears that China - now the world's No. 3 economy - may come to dominate the
region, exacting obedience and tributes from its southern neighbours much as Beijing's emperors demanded in centuries past.
"If the present trajectory is maintained, we are looking to the time when China is by a long chalk going to be the most influential country in the region, and it's going to be hard not to do what China says," said Hugh White, director of the Australian Strategic Policy Institute.
But for the midterm, he and others describe a less insidious scenario.
"Fear is always there when you are sitting next to a giant. But this is somewhat being replaced by a kind of hope, a belief that China will not be as foolish to behave like a big elephant in Southeast Asia," said Sheng Lijun of Singapore's Institute of Southeast Asian Studies.
The official line from the region's capitals is that China presents more opportunities than threats. And if Beijing does assume the mantle of Big Brother, he'll prove a benign one.
"China is today a creator of prosperity of the highest order. Political and social linkages are bound to eventually follow suit. It is therefore important to use every opportunity and establish ties," Malaysian Prime Minister Abdullah Ahmad Badawi said.
Optimists like Abdullah note that Southeast Asia is "feeding the dragon" with exports ranging from shrimp to natural gas and paper pulp, ringing up an $8-billion trade surplus with China.
Businesses in Singapore reap profits by helping Chinese firms raise foreign capital and go international. In Cambodia, Beijing provides aid to the military and Chinese-language schools. Chinese tourists are spending in ever-increasing numbers.
Analysts agree that trade and economic issues are intertwined with China's increasingly ambitious political and security aims.
Once reluctant to get involved, Beijing since the late 1990s has come to regard multilateral ties as "instruments of Chinese diplomacy," White said.
Beijing is at the forefront of such landmark efforts as the Free Trade Area to span China and Southeast Asia by 2010 and development of the Mekong River basin. Chinese leaders visiting the region's capitals are accorded pomp and deference.
Jonathan Adelman, a University of Denver China expert, says Beijing's leaders are homing in on Southeast Asia because it's not locked into the
continent's other major power nodes - Japan, India and the Russian Far East.
"It's logical for them to expand not only economically but politically and even culturally and to feel that this is their natural home," he said.
On the economic front, China is inflicting some losses on its southern neighbours, fuelling resentment. China not infrequently wins the competition for foreign investment, and multinational companies are increasingly shifting manufacturing to China. Electronics components once made in Malaysia and Indonesia are being produced in Chinese industrial zones that also churn out a flood of cheap goods displacing homemade equivalents in Southeast Asia.
Lao carpenters grouse that the Chinese craft better and cheaper furniture, one of this impoverished country's few viable exports. In Laos' capital, Vientiane, the Thai-made motorcycles that once filled the streets have all but vanished, replaced by Chinese models selling for about one-third the price.
Sheng and others see a "win-win" era lasting five to 10 years or more during which China promotes a stable security environment in Asia to allow its own
economic growth to roll on. Beijing in turn will dole out economic benefits to Southeast Asians, storing up goodwill that it can call upon if China faces future confrontation with the United States or others.
Peking University's Institute of International Relations recently suggested that China might hark back to the tributary system conceived under the Ming
Dynasty, founded in the 14th century, to ensure a circle of stability around the Middle Kingdom. Under this, China regarded itself as the very heart of
the region from which meticulously calculated tributes were mandated. For example, Thailand, then known as Siam, sent ivory every four years, while
Myanmar shipped precious stones every decade. In return, China's emperors bestowed favours, in principle more generous than they received.
Meanwhile, the push south proceeds, with a network of roads, river ways and air links being forged or planned that will give China - particularly its
southern province of Yunnan - greater and speedier access to Southeast Asia and beyond.
The once sleepy northern Thai town of Chiang Saen has been converted into a buzzing Mekong River port to accommodate the burgeoning trade with China.
Recently, hundreds of workers clambered up the steep riverbank, hauling crates of apples and pears from a Chinese barge. These were rapidly loaded
onto trucks bound for destinations as distant as Singapore.
Up the road, Thais funnelled through a border checkpoint into the town of Tachileik in Myanmar to stock up on everything from dried mushrooms to
panties, toys and fake compact discs, all Chinese-made.
In northern Laos, Xu the entrepreneurial farmer is pleased that a paved road will run past his fields in a few years, allowing him to easily truck potatoes to Thailand and China. The 152-mile corridor will cut through Laos between the Chinese border town of Boten and Huay Sai on the Thai frontier.
But his enthusiasm is anything but unanimous. Many Lao privately express anxiety over China's immense power, their own weaknesses and a population
line-up of 5.3 million countrymen to 1.3 billion Chinese.
In an often-heard remark, they lament: "Laos is empty; China is full – and recently a couple of leaks have sprung up at the bottom end of China."

Gamuda (Malaysia) signs deal to develop hydro project in Laos
By C.S. TAN

CIVIL engineering group Gamuda Bhd has proposed to develop a 400MW
hydro-electric power plant in Laos to produce electricity for sale to
Thailand.

It signed an agreement with the Government of Laos in Vientiane yesterday to
develop the hydro project on a build-operate-transfer basis, it said in a
statement yesterday.

The cost of the hydro project, referred to as Nam Theun 1 (NT1), in central
Laos, is estimated at RM1.5bil.

Gamuda's general manager for business development and corporate finance,
Wong Mun Keong, said the Laos Government would own 20% in the concession
company, while Gamuda and its joint venture partners would own the rest.

The exact stake that Gamuda will hold in the concession company will be
determined after discussions with potential partners. "It will not be more
than 50%. It will be an associated company and not a subsidiary," he told
StarBiz.

This decision to hold less than majority is to avoid putting all its eggs in
one basket. "It's to spread our resources over many projects."

Asked if the construction aspect was a major draw for Gamuda, he said:
"Definitely. We will lead in the construction."

The contract value can't be determined at this time as the plant design has
yet to be finalised. Furthermore, there are other elements in the
development, such as mechanical and engineering works and supply of
turbines.

This project is a creative approach to identify business opportunities
overseas. Until now, all private sector power projects in Malaysia have been
gas-fired or coal-fired power plants; all hydro projects having been
developed by the Government.

It is believed the capital cost of developing hydro projects is too high for
the private sector to bear.

Wong said the Laos project is financially feasible. Being a hydro project,
operating costs will be minimal, and Thailand is expected to take up the
entire output from the power plant.

He pointed to the five existing hydro projects in Laos, all of which have
equity participation by European investors.

Laos, he said, had a lot of mountains and rivers, which would provide many
locations suitable for hydro-power generation.

NT1 will be implemented within a Thai-Laos agreement for Laos to supply
3,300MW of electricity to Thailand. Besides NT1, two other power projects
are in the pipeline. The three projects will be able to supply a total of
2,000MW. There is, therefore, a need for more power plants to provide the
balance of 1,300MW. The 3,300MW of electricity to be bought from Laos will
form less than 5% of Thailand's own generation capacity.

Thailand's demand is growing at a rapid rate of about 1,200MW a year, and
this could increase to 2,000MW a year in five years. At present, it is
importing power from Laos as well as from a power plant in Perlis.

If Gamuda decides to go ahead with NT1 after further feasibility studies, it
will then negotiate the terms of a power purchase agreement with the
Electricity Generating Authority of Thailand.

Construction is then expected to start in the second half of this year and
be completed in four years. Wong said this was a project good for Laos
because, after the concession period, the company would hand over the
infrastructure to the government.