Early regional engagement: Greater Mekong Subregion

The first transborder regional institution to be formed involving Yunnan and its neighbours in southeast Asia was the Greater Mekong Subregion Economic Cooperation programme, initiated under ADB coordination in 1992. It takes its name from the Mekong River, which flows 4,800 km from the Tibetan plateau through Yunnan, Laos, Myanmar, Thailand, Cambodia and into the Mekong Delta at the southern end of Vietnam.³ The environment for the creation of GMS was post-Cold War developments in southeast Asia, and it builds strongly on a narrative of peaceful economic cooperation following decades of ideology and conflict in the region – turning ‘battlefields into marketplaces’.⁴ It can be seen as an early example of the growth in regional mechanisms which would become a global feature of the 1990s, especially in East Asia. The GMS’s ‘soft regionalism’, based on norms and consensus rather than rules (Hensengerth, 2010: 4), gives the institution a flexible format, with only two or more GMS members required to agree a project for it to come under the GMS umbrella.

In the Mekong regions⁵ an earlier organisation to coordinate water resource development had been formed in 1957 and reformed in 1978 and again in 1995 as the Mekong River Commission (MRC; Jacobs, 2002). Neither China nor Myanmar is a member, and this has limited the ability of the commission to deal with the challenges of transborder river management. The PRC has not expressed an interest in joining (Goh, 2007: 38), though membership might initially have been favoured by some in Yunnan (Che and Zhou, 1992). From 2004 the MRC shifted its focus away from environmental issues towards economic cooperation, one result of which was an improved relationship with the PRC (Hensengerth, 2010: 75). However, the MRC has not been able to prevent continued tension between China and downstream riparian states over the increase in dam building on the part of the Mekong in Yunnan. This has been partly motivated by the potential for hydropower to contribute to energy diversification and an increase in the relative contribution of non-fossil fuels to China’s energy mix, thus reducing emissions. But it has also led to well-documented concerns about the impact on the Mekong and the population and agriculture which rely on it (Hirsch, 2011; Osborne, 2010; Bakker, 1999; Chapman and He, 1996; Nguyen, 1999; Pomeranz, 2009).

One reason for mentioning the MRC is to bring out the ambiguity in defining the ‘Mekong region’. Some have asserted that the Mekong River creates a ‘natural economic territory’ in the form of the GMS area, but the region covered by GMS is larger that the Mekong River basin area, and defined by political and administrative boundaries rather than riparian ones. Similarly, the main aims of GMS are economic and developmental, rather than river management, though as with any such organisation there have been different priorities among the member states.

The initial design of GMS was for ADB technical assistance to promote ‘rapid and sustainable growth’ (ADB, 1993) through cooperation in trade and investment, transport infrastructure, communications infrastructure, energy, water resources and tourism, with ADB also emphasising the role of the private sector. These categories were later modified into the key sectors of trade and investment, transport and communications infrastructure, energy, environment, the development of human resources and tourism.⁶ Early ambitious ADB plans for liberalising trade and harmonising monetary systems within the region were soon dropped.

Within China, the area covered by GMS projects was limited to Yunnan, but it was the PRC – not the province – which was the member of GMS, and Chinese delegations to GMS meetings were led by central government officials, an element underplayed in much of the writing on GMS.⁷ Nonetheless, the particular relevance of GMS was strongest in Yunnan. Yang Hongchang (2001) argues that the potential for cooperation in the Mekong region – which he equates with GMS – was a key factor in the development of an outward-looking regional focus by Yunnan elites in the 1990s.

From 1995 GMS cooperation became more institutionalised and Chinese representation more senior (early delegations had been led at a more junior level than in southeast Asian counterparts). In the same year the MRC was reformed and Vietnam joined ASEAN, followed in 1997 by Laos and Myanmar and in 1999 by Cambodia. This gave additional significance to ASEAN in Chinese perceptions of peninsular southeast Asia. At the same time, growth in Chinese dam building on the Mekong brought a new element of tension to the transborder relationships. However, the biggest impact on regional cooperation came from the Asian financial crisis of 1997, and GMS cooperation slowed notably until a new phase began in 2001.

Yunnan and BCIM

Meanwhile, some Yunnan elites were looking further west to the prospects for cooperation with south Asia, inspired by the province’s proximity to and historical interactions with the region (He, 2001), especially eastern India and to a lesser extent Bangladesh. This included Myanmar, which – as noted in Chapter 1 – is often considered as much part of south Asia as southeast Asia.

These ideas found institutional expression after a November 1998 seminar in New Delhi on China-India-Myanmar-Bangladesh regional development, at which Che Zhimin, then deputy director of the Yunnan Provincial Government Economic and Technology Research Centre, Yunnan Government Research Office, suggested holding a further international academic seminar on subregional cooperation between the four countries. Yunnan official accounts report that this suggestion was received positively, and was the foundation for what would become known as the BCIM forum (Yunnan Economic Yearbook, 2002: 256–7⁸).

The absence of Pakistan in this engagement with south Asia facilitates Indian participation but also cuts across the PRC’s traditional alliances, and may suggest something broader about PRC realignment in south Asia. Indeed, these proposals would not have been possible without the improvement in relations between China and India, especially following Jiang Zemin’s visit in 1996, and devolution to provincial level in areas of foreign trade during the 1990s; this increased the scope for provincial activity in external affairs, creating the space for Yunnanese actors to propose a mechanism in which the province would play an important role. At the same time, the global and regional development of new institutions for regional economic cooperation offered another level of legitimation, and BCIM’s subsequent agenda of trade and investment, transport links and tourism reflected the mainstream approaches of such institutions.

The first meeting of BCIM was held in Kunming in August 1999 when the participants were met by the provincial party secretary. Yunnan Vice Governor Shao Qiwei led a delegation of 110 people on a special direct flight from Kunming to the second meeting in New Delhi in December 2000 the first direct flight between the two countries since the signing of a bilateral air services agreement in 1988. Shao also led a much smaller delegation to the third meeting in Dhaka in February 2002. Unlike in GMS, where the central government led, the Chinese delegation was headed by a Yunnan official.

At these first three BCIM meetings the main issues for discussion were trade and investment opportunities and reducing trade barriers, strengthening transport and communications linkages, such as roads between the four countries, and tourism cooperation, with some reference also to non-traditional security issues such as drug smuggling and illegal immigration.⁹ At the first meeting the four representatives signed a ‘Kunming Initiative’, and the third meeting approved a ‘Dhaka Statement’ which, inter alia, marked a change in format and name from the ‘BCIM seminar’ (yantaohui) to the ‘BCIM forum’ (luntan). The practical implications of this appeared to be minimal, but the shift was indicative of a clear desire on the part of the Yunnan side to raise the institution from what they called ‘track two’ to ‘track one’ – in other words to give it official status (the Yunnan account clarifies its understanding of ‘track two’ as minjian or ‘non-official’; the term in Chinese implies emanating from the people rather than the state). Whereas Yunnan’s delegations were led by government officials, the Indian lead organisation was the (non-official) Policy Research Centre, and Bangladesh’s representatives came from its Centre for Policy Dialogue.

The Chinese delegation to the fourth BCIM meeting, in Yangon in March 2003, was again led by Vice Governor Shao Qiwei, and was both more official and more centralised in its make-up, including mid-ranking representatives of the Ministry of Foreign Affairs, the State Council’s Development Research Centre and the Chinese Academy of Social Sciences, as well as Yunnan provincial representatives from the Government Research Office, YASS, the Foreign Affairs Office, the Transport Department, the Roads Bureau and Kunming Transport Group, and an official from the Chinese embassy in Myanmar.

The fifth meeting, in Kunming in December 2004, was the largest and most substantial, with over 100 participants. A ‘Kunming Cooperation Declaration’ was signed, along with agreements on a work plan and the establishment of a BCIM Regional Economic Cooperation Forum coordination office in Kunming. The Chinese delegation was led by Che Zhimin, by now deputy secretary general of the provincial government and the original proponent of the BCIM forum. According to the Yunnan account, the fifth meeting was attended by ‘relatively senior’ officials from the ministries of foreign affairs of each of the four countries – though it seems that the Indian and Bangladeshi officials were from their embassies in Beijing rather than national capitals. This is described as ‘progress [in moving BCIM] from minjian [track two] to guanfang [track one]’ (Yunnan Yearbook, 2005). In a speech to the province’s council of international advisers later that year, Executive Vice Governor Qin Guangrong described BCIM as a ‘half official and half civil (minjian) mechanism’ (Liaison Office of Yunnan Advisory Mission, 2005: 76).

As can be seen from these accounts, the Yunnan side clearly attached importance to BCIM, especially in the early years. For example, in his January 2002 annual work report to the Provincial People’s Congress, Yunnan Provincial Governor Xu Rongkai cited BCIM as one of a number of ways that Yunnan could enhance its openness (Yunnan Yearbook, 2001). And a provincial evaluation of the fifth meeting presented by Xu Rongkai in his January 2005 work report to the Provincial People’s Congress described it as having raised (provincial) cooperation with south Asia to a ‘higher level’ (Yunnan Yearbook, 2006).

This positive vision was reflected in a number of articles on BCIM by Chinese scholars (Wang, 2003; Ren, 2003; Ren and Chen, 2003; Zhang, 2004; Zhang and Peng, 2005; Chen and Zhou, 2006). They highlighted themes including the organisation’s potential to build economic cooperation, as well as help the security of China’s border areas and the development of its western regions. It was suggested that BCIM might become a ‘Kunming Cooperation Organisation’ modelled on the Shanghai Cooperation Organization,¹⁰ and thereby have a strategic role in the PRC’s diplomacy towards southeast and south Asia, with Yunnan playing an important role as a land bridge between China and south Asia in both directions.

However, the outcomes of BCIM cooperation were limited, and Chinese writing on BCIM acknowledged some of the constraints, such as border and territorial disputes and China’s trade surplus with India (Zhang and Peng, 2005). Neither was actual cooperation envisaged as covering the four countries’ whole territories. One scholar, Wang Dehua (2003), suggested that what he called the ‘core region’ of BCIM was Yunnan, Bangladesh, Myanmar and India’s east and northeast regions, incidentally not dissimilar to the (geographical) southeast Asian massif at the heart of the concept of ‘Zomia’ explored by James Scott (2009: 14) and others.

An important factor in BCIM’s limited progress was a more lukewarm view from the Indian side of the Himalayas. This is not universal. It has been argued that the integration of India’s northeast with its neighbours, including southwest China, could improve its economic situation (Bhattacharyay and De, 2005¹¹), and there have even been voices within India suggesting that in developing its northeast regions, India could learn from China (Financial Times, 2010a).

However, as J.K. Ray and Binoda Mishra (2008) argue, part of the challenge is the nature of India’s northeast region, an underdeveloped and peripheral part of the country economically, geographically and socially. India’s northeast is bordered to the west by Bangladesh, to the east by Myanmar and to the north by Bhutan and the PRC, and joined to the rest of India only by a narrow strip of land passing to the north of Bangladesh. Only 2 per cent of its borders are with the rest of India, whereas it shares borders of 2,500 km with Bangladesh, 650 km with Bhutan, 1,450 km with Myanmar and around 1,000 km with the PRC (ibid.: 15; see also Thant, 2011). They attribute a number of ‘fears’ to the (central) Indian government which make it reluctant to take integration further. These result from the ‘lack of trust’ between participants and the unstable and (potentially) ‘hostile’ nature of India’s regional neighbours. Specific reasons cited include lack of stability in Indian relations with China, concerns about Chinese goods flooding Indian markets, fears that the northeast region might become a periphery of southwest China, ‘geo-ethnic contiguity’ affecting the political stability of the northeast, security concerns in relation to China (especially following its defence agreement with Bangladesh), the support from within Myanmar for insurgent groups operating within India, links in Bangladesh to ‘Islamic terrorism’, increasing interaction between Pakistan and Myanmar, and the problems of drugs and infectious disease which are often exacerbated by regional integration. A more recent example of such concerns was an Indian report that a northeastern separatist leader was hiding in the border areas of Yunnan (Hindustan Times, 2011).¹²

By the fifth meeting of BCIM, and in spite of a positive spin on the potential for official upgrading of the forum, Chinese frustration could be felt. In an article penned just after the fifth meeting concluded, Zhang Li and Peng Jing (2005) of Sichuan University took issue with India’s approach to BCIM, complaining that, in spite of its ‘Look East’ policy, India had not taken the same approach to developing its ‘relatively sensitive’ northeast region as the PRC had to its southwest. They criticised India for hosting meetings away from the region in its national capital, whereas China had chosen Kunming, and called on India to take a more positive approach to developing transport links through its northeast, including the reopening of the wartime ‘Stilwell Road’ between Yunnan, Myanmar and India (see end of Chapter 6).

At the sixth meeting of BCIM in New Delhi in March 2006, Indian Secretary (East) Rajiv Sikri ‘clearly spelt out that the Indian government is against structuralizing BCIM’ (Ray and Mishra, 2008: 5), making clear the differences in Chinese and Indian approaches to BCIM. When the meetings continued in Dhaka in 2007 and Myanmar in July 2009, they covered much of the same ground of trade and investment, building transport and communications linkages between the countries and tourism, but with little concrete output and without the earlier fanfare on the Yunnan side.

The fifth meeting thus seems to have marked the height of interest in the BCIM forum on all sides. Progress was ultimately constrained by the wider regional strategic environment, and in particular the continued suspicion between India and China. This does not mean that cooperation between the four countries has not continued, but it has owed more to bilateral diplomatic engagement between central governments than to the regional institution itself.

Yunnanese visions of cooperation with south Asia continued, too, and Yunnan government accounts of BCIM activities are not limited to the those of the forum, but include other instances of cooperation between Yunnan and counterparts in south Asia (Yunnan Yearbook, 2001: 89; Yunnan Yearbook, 2003: 243; Yunnan Economic Yearbook, 2003: 250; Yunnan Yearbook, 2005: 88). These accounts of ‘bilateral relations’ give priority within south Asia to linkages with India, including visits by the Indian president and ambassador, academic exchanges, a visit to south Asia by then Yunnan Vice Governor Shao Qiwei and the establishment of various direct flights to south Asia and increases in bilateral trading volumes between Yunnan and south Asian countries (see Chapter 6).

These activities also spawned another institutional mechanism, called K2K after its two focal cities, Kolkata and Kunming. The first meeting under this framework, not between the two cities as such but between Yunnan and the eastern Indian state of West Bengal, took place in Kolkata in November 2003. According to the Yunnanese account, it again focused on trade and transport links (Yunnan Economic Yearbook, 2004: 227). The Chinese delegation was mainly officials from Yunnan (including at the prefectural level), while the Indian side consisted of researchers and business participants. The second K2K meeting took place in Kunming in December 2004, and the fourth was in Dali, Yunnan, in November 2008 (Yunnan Economic Yearbook, 2005: 221–2).¹³ At this meeting a ‘Dali Initiative’ was signed, which included proposals that the two sides would recommend ‘to their respective Governments’ the establishment of the K2K cooperation mechanism and sister state-province relations, the suggested establishment of a ‘joint task force’ and proposals for further cooperation in trade, tourism and communication. These formulations skated around the fact that although the Yunnan delegations were led by representatives of the provincial party-state, the Indian side continued to view K2K (like BCIM) as a non-official mechanism.

One Chinese media report of this includes reference to a ‘BCIM tourism circle’ and suggests that these proposals included establishing a ‘Yunnan–West Bengal Government Joint Working Group’ (China International Travel Service, 2008). However, the word ‘government’ does not appear in the Dali Initiative, and K2K interactions so far have not included government relations on both sides, though one should note that in the PRC context there are links between K2K representatives and the party-state in its broadest sense, and the Yunnan delegation to the fourth meeting was led by the party secretary of the provincial government’s Development Research Centre.

A fifth K2K meeting took place in January 2010, having been postponed from late 2009 due to bilateral tensions following the Dalai Lama’s visit to the northeast Indian state of Arunachal Pradesh. Indeed, what is clear from this account of BCIM and related mechanisms is that the wider diplomatic and strategic context is an important determining factor in the nature and scope of any regional cooperation across national boundaries, with the relationship between China and India of particular importance in the context of BCIM.

In the case of the PRC’s relationships with ASEAN countries, however, the substantial improvement in these diplomatic dynamics after the Asian financial crisis led to plans to develop a free trade area and a revival of interest in GMS. The more substantial institutional developments have thus been in Yunnan’s relationships with southeast Asia, and it is to this geography we now return.

New dynamics in the region(s) – CAFTA and a revitalised GMS

If the dynamics and context for the successive establishment of GMS in 1992 and BCIM in 1999 differed, they would be markedly different for the third in the Yunnan trilogy of regional institutions introduced at the start of this chapter: the China-ASEAN Free Trade Agreement.

Here the role of provincial actors was minimal, and the decision to propose CAFTA is generally seen as having been strongly driven by the central PRC government, with China’s WTO accession impending and at a time when free trade agreements were increasing (Sheng, 2003; see also the article by Zhou Xiaobing in Chinese Academy of Social Sciences, 2007). Sheng Lijun also identifies some differences within the PRC between ‘Chinese strategists in Beijing’ who were not southeast Asia experts and focused on the geopolitical implications of CAFTA (partly a reference to greater regionalism and multilateralism on the part of the PRC), and Chinese ASEAN experts (based in the country’s south) who were less optimistic and more concerned about the economic difficulties CAFTA might bring.

Even so, the institution ranks alongside – if not above (it is usually listed first among the three) – GMS and BCIM in statements of Yunnan’s aspirations for regional engagement in the first decade of the twenty-first century. Rather than the province having a special role within the PRC’s participation (as in GMS), or even driving the cooperative institution itself (as with BCIM), the case of CAFTA shows provincial elites attempting to appropriate centrally designed policy frameworks in partial response to their own developmental imperatives.

The organising principle for these debates was the province’s geographical location between the major markets of the PRC and southeast Asia – some 2 billion people in total – with the idea of constructing an ‘international transit route’ (see Chapter 4) central to policy suggestions for their implementation.

Subsequent official provincial government statements reflect these themes. In his annual work report to the Provincial People’s Congress on 23 January 2002, Governor Xu Rongkai highlighted the ‘opportunities’ brought to Yunnan by the PRC’s accession to the WTO, and talked of the province becoming more open to the outside world (Yunnan Yearbook, 2002: 9ff). Later that year, at a major symposium, Vice Governor Shao Qiwei developed these ideas further in setting out ‘Yunnan’s willingness to play a positive role in accelerating the construction of CAFTA’ (Yunnan Yearbook, 2003: 16–17). He referred to its advantageous location as the link point (jiehebu) of ‘east Asia, southeast Asia and south Asia’, its shared border with three neighbours and proximity to other southeast Asian countries, and its claims to be the fastest land route between China and ASEAN countries. His policy suggestions focused on developing the international transit route, border trade and export processing zones, Yunnan providing services or training for CAFTA and further development of cooperative mechanisms with neighbouring countries, such as GMS. He suggested that traders might even enjoy cost savings of up to 60 per cent on transport by going through Yunnan.

These debates focused on measures to encourage and facilitate trade, tourism and other transborder economic interactions, such as working on border controls and visa facilitations, RMB settlement for trade, tax and tariff reductions or increasing imports to reduce Yunnan’s trade surplus (Tang et al., 2003; Liu, 2004; Zhang and Zhang, 2004; Li, 2007). But some scholars highlighted challenges, such as in the agricultural sector where farm produce would be exposed to zero tariffs, the potential for other southwest Chinese provinces to take Yunnan’s place as the main route between the PRC and ASEAN, and the limited direct opportunities on offer because of the relative weakness within ASEAN of the three countries which border Yunnan. Another crucial point raised in the debate was the cost advantages of sea routes in Chinese trade with ASEAN when compared to the land routes through Yunnan, and the prospect that CAFTA would further weaken the policy advantages brought to Yunnan by the previous practices of border trade – indeed, this trade was declining in importance, as will be shown in Chapter 7.

During these early years of the 2000s, the emphasis on CAFTA meant that thinking about CAFTA and GMS became increasingly intertwined. The renewed focus on economic interactions between China and southeast Asia which led to Beijing’s suggestion of a free trade agreement also seems to have contributed to a revival of interest in the GMS programme around 2001, once the dust had settled on the Asian financial crisis (Krongkaew, 2004).

This revived interest was symbolised by the first GMS summit of heads of government in 2002, which approved ADB’s new strategic framework for GMS cooperation from 2002 to 2012. The framework set out five ‘strategic thrusts’: to strengthen infrastructure linkages, facilitate cross-border trade and investment, enhance private sector participation and improve competitiveness, develop human resources and skills, and protect the environment and promote the sustainable use of shared natural resources. It set out a vision of ‘a GMS that is more integrated, prosperous, and equitable’ (ADB, 2007: 5; see also ADB, 2005a: 2; ADB, 2005b: x; Summers, 2008), and this period also saw the development of a more ambitious regional agenda on the part of ADB. Subsequent ADB documents show a broadening of the scope of GMS to nine sectors (for example ADB, 2008a), though differently structured in different contexts, to include dealing with some of the negative consequences of enhanced cross-border flows, such as the transmission of infectious diseases (ADB, 2004a: 48–9; ADB, 2004b).¹⁴ Further comment on ADB’s role and work in GMS lies outside the scope of this book, but it is worth noting some criticism of the approach, for example the questioning by Oxfam Australia of the extent to which the development put forward by GMS has been experienced by the region’s rural communities (Oxfam, 2007: 14).¹⁵ Elsewhere, Philip Hirsch (2001: 241) shows how ADB has been a catalyst for regionalisation through its ‘integrative development agenda’, and identifies resistance among Thai civil society to the rescaling of development to the regional level implicit in the ADB ‘ideology of a borderless world’. Vietnamese views of GMS also involve some critique of the direction of its travel, particularly in the implications of hydropower development on the Mekong River.¹⁶

Chinese discourse on GMS does not generally reflect the ADB agenda of promoting a region ‘without borders’, and in substance the ideas behind this run up against strongly established PRC views of the importance of the nation-state and state sovereignty over activities within its own borders. Nonetheless, the tenor of PRC assessments of GMS in the years from 2001 onwards is generally positive, especially at a national level, reflecting the way that Chinese conceptualisations of the GMS region speak to its perceived value in promoting economic development. Examples of this can be seen in a volume of papers given at a conference in Kunming in 2005 and later published by the Chinese Academy of Social Sciences (2007).

At the first GMS Leaders’ Summit in November 2002 the PRC was represented by Premier Zhu Rongji, accompanied by Yunnan Governor Xu Rongkai. PRC commitment to more positive engagement with GMS was spelt out, including national-level financial support in the form of US$30 million in loans and grants for the Laos section of the road between Kunming and Bangkok (see Chapter 6). The PRC government also compiled a ‘country report’ in preparation for the 2002 summit. According to a Yunnan government report, this said that Yunnan was ‘the main [Chinese] province’ in GMS, and China’s ‘land bridge to the countries of southeast Asia’ (Yunnan Economic Yearbook, 2003: 248), emphasising the special status of the province within the GMS area without compromising the position that China at a national scale was the member of the organisation.

The new emphasis on GMS was reflected at the provincial level, too. On 11 December 2002 Governor Xu Rongkai chaired the first full meeting of the Yunnan provincial ‘GMS cooperation coordination small group’. But this also reflected the Chinese tendency to think of CAFTA and GMS together, and the provincial Planning Commission reportedly briefed the small group on Yunnan’s role in CAFTA. It suggested that Yunnan be an early experimental area of CAFTA; that, with CAFTA and GMS, Yunnan had a good opportunity to use its locational advantages; and active participation in both groups offered a key development opportunity (ibid.: 53). Various comments in Yunnan publications responded to the greater central government interest in GMS, with one suggesting that PRC involvement showed the ‘clear enhancement of Yunnan’s strategic status in [PRC] national opening’, and another that, following the construction of three economic corridors (see Chapter 6) as part of the GMS’s new set of 11 flagship projects, Kunming would ‘gradually develop into a regional international city for southeast and south Asia’ (ibid.: 248).

There is indeed a clear growth in provincial engagement within the GMS region during subsequent years, and from 2002 the Yunnan Economic Yearbooks begin to feature annual reports on GMS activity, with a particular focus on the attendance by Yunnan’s leaders at GMS meetings and on specific projects involving Yunnan and other countries, or sometimes subnational regions of those countries, within the GMS region. The overall picture is one of Yunnan building linkages within the region rather than of regional integration, let alone a nascent borderless region. This is not to suggest that the GMS institution becomes irrelevant for Yunnan, though while Yunnan’s accounts of its cooperation are structured to reflect the GMS priority sectors, they implicitly downplay the importance of the ADB-led GMS institutional arrangements by including activities which do not fall within the GMS framework. For example, from around 2004 the importance of mining and resource extraction activities to Yunnan becomes clear from the yearbook accounts, and this is one area that does not fall within GMS priorities.

In Yunnan the emphasis has consistently been placed on the ‘GMS area’, the geographical territory covered by cooperation programmes under GMS – an emphasis which has privileged Yunnan as a key player, at least until Guangxi’s involvement from 2005. However, the central government taking more of an interest in the GMS programme was potentially double-edged from a provincial perspective. While it could bring benefits in terms of greater central political and financial support for GMS activity, it also risked diluting the benefits accruing to Yunnan from the cooperation programme. Central government rhetoric increasingly stressed the ‘GMS members’, namely the six nation-states, as the core of the GMS concept. The subsequent evolution of this dynamic of Chinese participation is reflected in the PRC country report prepared by the National Development and Reform Commission (2008), the Ministry of Foreign Affairs and the Ministry of Finance in advance of the March 2008 Vientiane GMS Leaders’ Summit.

This statement of the views of key central government organs shows subtle but important differences from the 2002 country report mentioned earlier. The 2008 paper refers consistently to ‘China’ as the participant in the GMS, and to Yunnan and Guangxi as ‘the regions of China to participate directly in GMS cooperation’ (ibid.: 21), adding that both provinces need to increase their openness in order to develop. It further describes GMS – rather than Yunnan (or Guangxi) – as ‘a land bridge connecting China with southeast Asia and south Asia’ (ibid.: 2).

The effect of this emphasis on the GMS members rather than the GMS area is to increase the weight given to the role of the central authorities in the PRC’s GMS-related activity, and the report shows signs of substantial central coordination of Chinese activity. It contains analysis of PRC activity against a series of themes that broadly correlate to the main sectors of GMS programmes (ADB, 2006), and includes the challenges of avian flu, drugs, people trafficking and maintaining biodiversity. It has little on water and river management, with brief references to hydropower under energy. There is also analysis of bilateral trade flows with each of the five other GMS members (the PRC had substantial surpluses with all except Thailand), and this suggests that GMS is seen as much as a forum for promoting wider agendas with its members as an institution with primarily subregional goals. Indeed, the increasingly high-profile involvement of the PRC at national level over these years has marginalised ADB, at least to some extent, and possibly contributed to a reduction of its regional integrationist rhetoric, as seen in ADB’s 2007–2009 programme update document (ibid.).

The fourth GMS summit was held in December 2011 in Myanmar and endorsed a new strategic framework to 2022 (ADB, 2012), but to less fanfare on the Chinese side. This was perhaps because of the difficulties in China’s relations with Myanmar in late 2011, and was reflected in the fact that the Chinese delegation was led not by the premier (as it had been for the first three summits) but by the state councillor responsible for foreign affairs, Dai Bingguo. In his delegation was Li Jiheng, the new governor of Yunnan. Li’s own background is of particular interest, as he was born in Guangxi and worked there until 2006, when he was transferred to Yunnan as deputy party secretary. The relationship between Yunnan and Guangxi, and the latter’s own ideas of playing a bridging role to southeast Asia, are worth further comment.

Guangxi and regional institutions

Yunnan’s role in GMS came under challenge from 2004. In November that year the central government decided that Yunnan’s provincial neighbour, Guangxi Zhuang Autonomous Region, would host the newly established China-ASEAN trade fair (CAExpo) at its regional (provincial) capital of Nanning (Yunnan Economic Yearbook, 2006). The central government further agreed with ADB and the other members of GMS that Guangxi would also ‘join’ GMS. This should be understood as a broadening of the GMS area to include Guangxi rather than a change in membership, which remained at the national level.¹⁷

Guangxi also borders Vietnam. ADB has justified Guangxi’s inclusion in GMS as it is ‘one of the two provinces in the PRC that share borders with other GMS countries’; the province’s participation is ‘a natural northward extension of the GMS’ geography – a clear outcome of the strengthening economic relations between the PRC and other GMS countries’ (ADB, undated[a]). In more recent ADB material on the PRC and GMS, the formulation is that the PRC ‘is an active participant in the GMS Program through the implementation of priority subregional projects in Yunnan Province and Guangxi Zhuang Autonomous Region (Guangxi) as well as participation in regionwide initiatives’ (ADB, undated[b]). Given that Guangxi’s geography does not include the Mekong River or its basin, this inclusion shows that the construction of the GMS region has become further divorced from the Mekong itself, though ADB (2012: 3) still refers to GMS as a ‘natural economic area bound together by the Mekong River’.

Guangxi’s membership of GMS caused some angst among Yunnan’s policy elites, and the Yunnan government pushed hard to host the July 2005 Leaders’ Summit in Kunming, attended by Premier Wen Jiabao and other GMS heads of government, clearly one of the major events for Yunnan in that year (Yunnan Yearbook, 2006: 32).¹⁸ Part of the response was to attribute a primary role in GMS to Yunnan. For example, material from the Yunnan provincial government website, dated around the time of the GMS summit in Kunming in 2005 – when Guangxi’s participation was already decided – says that participation by China ‘refers to Yunnan province, China’ (Yunnan Provincial Government, 2005), and the same emphasis was given by a range of Yunnan officials whom I met on visits to the province around that time.

Subsequently, at a June 2006 conference in Kunming (Li, 2007), a scholar from Yunnan University was questioned about the claims of Nanning to rival Kunming as a regional centre. He responded by suggesting that the requirements for a centre for exhibitions and conferences should include temperate weather all year round, and argued that Kunming, but not Nanning, met this criterion (the Kunming weather is more pleasant in my view, though Guangxi and Nanning also lay claim to good weather). At a June 2008 meeting of the GMS Economic Corridor Forum in Kunming, then Provincial Governor Qin Guangrong reiterated the view that Yunnan was China’s ‘main province’ for participation in GMS, and was at the forefront of GMS cooperation (Kunming Daily, 2008).

Guangxi officials have been making much of their links to CAFTA, and the province’s trade with ASEAN has risen consistently over the last decade to reach US$9.6 billion in 2011. Investment in transport infrastructure connecting Guangxi to neighbouring parts of China and into southeast Asia has also continued apace over recent years. And just as Yunnan’s ‘bridgehead’ was mentioned in the Twelfth Five-Year Programme, so were Guangxi’s aspirations, with a reference to it becoming a new ‘high ground for Sino-ASEAN cooperation’ (Twelfth Five-Year Programme, 2011: 131).

There are clearly some structural similarities between the two provincial entities. For example, Guangxi Vice Governor Mu Hong’s speech at the Thirteenth GMS Working Group on Environment in June 2007 emphasised the potential benefits to Guangxi of CAFTA and Nanning’s role as host of CAExpo. At a September 2009 press conference in Beijing called to review the achievements of Develop the West as part of the celebrations of the PRC’s sixtieth anniversary, the chairman of the Guangxi Zhuang Autonomous Region government, Ma Biao, said that Guangxi’s biggest advantage was its location, situated at the meeting point of the southern China economic circle, the southwest China economic circle and the ASEAN economic circle; further, Guangxi was China’s only province which had both land and sea routes to ASEAN, and provided the fastest route to the sea from southwest China. Ma asserted that these ‘locational advantages’ – language familiar from the Yunnan context – meant that Guangxi had already become the front line and window for China’s openness to ASEAN.¹⁹

These, and similar messages, were clearly visible when I attended the Sixth CAExpo in Nanning, 20–24 October 2009. The slogans displayed around Nanning to promote the event focused on this larger relationship between China and ASEAN (Table 5.1). They also reflected the dominant ideology behind the free trade agreement: that building an integrated and common market, and increasing trade and investment, would increase economic growth and aid development across the region.

The attraction for PRC companies of investment in ASEAN countries, facilitated by CAFTA, was further reflected in the promotion at CAExpo of the new Fund on Investment Cooperation, with a target value of US$10 billion, which would help support Chinese companies’ investments in ASEAN countries. According to an official briefing at the 2009 CAExpo, this China-ASEAN project, set up by the Ministry of Commerce with the support of China Export and Import Bank, was to be run as a private equity fund, based in Hong Kong. The initial target was US$1 billion, to focus on infrastructure, transport, communications, energy and resources, with subsequent broadening of the scope as necessary. Officials stressed that it would be fully ‘market-oriented’ in its operation, while acknowledging the political context. It aimed to give private equity-style finance for economic and technical cooperation, with a focus on activities by Chinese companies in ASEAN countries. In presenting the fund, the Ministry of Commerce noted that investment in ASEAN countries had increased over 20 times between 2005 and 2008.

At this CAExpo particular emphasis was placed on the Beibuwan (Beibu Gulf or Gulf of Tonkin) development zone, which has been recognised by the State Council as a focal point for development and is highlighted as a subregional focus in post-2010 statements of the Develop the West policy (see Chapter 2). This area, situated along Guangxi’s southern sea coast, is described in promotional material as the intersection of a number of economic regions and corridors, each of which, by implication, offers potential to aid growth and development. These include the China-ASEAN region, southwest China, the Pan-Pearl River Delta region, GMS, the Nanning-Singapore economic corridor and the Beibuwan zone itself.

Although Guangxi elites play up their province’s strengths within the CAFTA region, neither CAFTA nor CAExpo is built at the provincial level in China. During the sixth CAExpo the dominant emphasis was on either China at a national scale or the China-ASEAN region. PRC Vice Premier Li Keqiang was clearly treated as the guest of honour, even though formally Laos was designated ‘country of honour’ for the event. From speaking to many of the businesses from ASEAN countries exhibiting at the trade fair, it seemed clear that China was also the major focus as either a market for exports or a potential competitor in ASEAN home markets.

Yunnan and domestic regionalism

As mentioned at the beginning of this chapter, Yunnan’s involvement in these transborder institutions is balanced by engagement with domestic (PRC) regional institutions, and the chapter concludes by looking briefly at these.

The earliest was the Economic Coordination Association of Southwest China, an important grouping for Yunnan from the mid-1980s onwards. As described by Zheng Yongnian (2007), the primary focus of this group was in lobbying the central authorities and devising policies which would help promote development, and it also had a role in coordinating strategic thinking on economic development between the provinces. Through to the 2000s, the association continued to meet most years.

In the 1990s, however, it seems that domestic regional cooperation – at least involving Yunnan – was somewhat weaker, though from 1993 hydropower produced in Yunnan began to be sent east to Guangdong to support continued economic development along the south coast (Magee, 2006). This was the period when what Yang (1997) called ‘competitive liberalisation’ between provinces was arguably at its peak. One of the consequences of this was rapid economic growth, but the 1990s also saw an equally rapid increase in economic disparities between provinces. This was the major driver behind the launch of the Develop the West policy framework at the end of the decade. Yunnan was one of the 12 provinces covered.

The key point for this discussion of Yunnan is that Develop the West provided a new institutional framework within which the province’s development would be considered at both national and local levels. Develop the West was not an institution in the sense of an organisation such as GMS, but to the extent that it shaped and provided ‘constraints’ on activity – to echo Douglass North’s definition of institutions²⁰ – Develop the West should be considered in this context. Further, although Develop the West was primarily motivated by the desire to close economic development gaps between coastal and western China, another feature of the centre’s motivation in devising the policy framework was to enhance national political and territorial integrity. This created structural political forces strengthening Yunnan’s sense of ‘national belonging’.

The next regional institution to involve Yunnan was initiated by the Guangdong provincial party secretary, with central support, in 2004. The Pan-Pearl River Delta regional grouping brought together nine provinces – apart from Yunnan, these were Fujian, Guangdong, Guangxi, Guizhou, Hainan, Hunan, Jiangxi and Sichuan – and the Hong Kong and Macau Special Administrative Regions; hence its short name of ‘9 + 2’. The aim of the PPRD was to promote economic interaction across this mega-region, as well as cementing a leading role for Guangdong province in the south (Yeung and Shen, 2008). There is substantial overlap between the PPRD members and the six provinces in the Economic Coordination Association of Southwest China, as all the southwest provincial units other than Chongqing and Tibet are also members of the PPRD.

Yunnan actors used the PPRD to promote their own wider strategic thinking. When Kunming hosted the third meeting of the PPRD in 2006, it brought this together with the annual Kunming trade fair, thus enabling the provincial authorities to host senior representatives from ASEAN countries at the same time. The theme of the meeting was linking up the domestic markets of the PRC (through the PPRD) with southeast Asia, though, according to observers present at the meeting, it also gave some of the southeast Asian politicians an opportunity to express their nervousness about the PRC’s rapid growth and the implications of its plans for regional integration. At the fourth PPRD meeting in Hunan in 2007 this link was expanded by the Yunnan delegation to include the other leg of its regional ambitions, south Asia – the first time that south Asia appears to have featured in the context of PPRD discussions (Yunnan Yearbook, 2008: 276). Both meetings allowed Yunnan policy-makers to put into practice their ideas of developing the province as a bridge between China and Asia.

Conclusion

This chapter has looked at how ideas of the repositioning of Yunnan from a peripheral region of the PRC to a bridgehead to Asia have been expressed in the development of regional institutional arrangements across China’s borders and within the PRC. Yunnan’s role in the three transborder institutions discussed in the chapter also speaks to the theme of this book relating to provincial agency in international interactions. This agency varies across each institution, for a number of reasons. Firstly, the nature of the institutions themselves differs: whereas CAFTA is a macro-regional agreement in which the province has no formal role, the geographical structure of GMS and the legacies of Yunnan’s early membership of the programme have created space for Yunnan to play a particularly prominent role. As for BCIM, its unofficial nature – frustrating though that may have been for Yunnanese actors – has actually created the political space for the province to dominate and lead PRC engagement with this forum. Indeed, the Yunnan authorities have not just led the Chinese delegations to meetings, but played an important role in setting up BCIM and subsequently keeping the meetings going: in the words of the Yunnan Yearbook (2007: 288), BCIM is something ‘promoted by Yunnan’.

These are not just provincial projects, however, and the centre-province dynamics within the PRC have differed both between institutions and over time. Central authorities’ interest in GMS clearly increased during the 2000s, leading to greater constraints on provincial activity than in the 1990s, and bringing the imperatives of national belonging more clearly to bear on provincial interactions across international borders and engagement in regional institutions. This was accompanied by a dilution of the dominance of one province, as Yunnan has been joined by Guangxi in GMS (that this might reflect a wider policy preference at the centre is evidenced by a similar structural shift in Tumen regional arrangements over the same time period, as Jilin province has been joined in the Greater Tumen Initiative by its northeast provincial neighbours).²¹ Again perhaps because of the less official nature of BCIM cooperation, the dynamic in this institution has been different, and Yunnan has not only been able to retain its leading role in the forum but has remained the sole PRC provincial unit to take part in its activities.

In terms of relative priorities towards southeast Asia, for Yunnan it seems that the preferred mechanism is GMS, although policy has attempted to instrumentalise CAFTA to help develop trade and investment linkages with southeast Asia. But from the central government’s perspective (as well as in Guangxi), CAFTA and relations with ASEAN occupy the most prominent position. There have always been tensions within ASEAN between maritime and peninsular, or the older and newer members, but the material in this chapter suggests that, as well as dealing with GMS, China continues to deal with ASEAN in toto. It is thus not the case – as suggested by Geoff Wade (2010: 13) – that the mainland countries of southeast Asia ‘are, together with China, forming a new bloc which in effect divides ASEAN’.

As for the potential for these various institutions to enhance cooperation, and thereby – as their rhetoric has it – deliver greater development for their participants, these examples show the extent to which bilateral and multilateral diplomatic relations constrain these regional projects. If GMS and CAFTA were made possible by geopolitical changes in southeast Asia, and given new life by an evolution in the PRC approach to the region following the Asian financial crisis, then the continued suspicion that characterises albeit-improved relations between China and India has prevented BCIM from developing more officially and limited its concrete achievements – though it also complicates the argument that the China-Pakistan relationship is the key and lasting one between China and south Asia. This does not mean that cooperation (economic or otherwise) between the four BCIM countries cannot continue to grow, and the same period has shown substantial increases in trade and investment volumes throughout these regions (see Chapter 7), under the influence of not just these regional mechanisms and bilateral relations but wider political and economic interactions.

The next two chapters explore these issues further by looking at some of the practical developments between Yunnan and its neighbours inside and outside China, firstly in terms of an area central to the work of GMS, infrastructure development, and then by examining trade and investment flows.