‘Opening Up’ Yunnan: What are the Chinese Objectives?

The People’s Republic of China (PRC) has been trying to promote Yunnan as a gateway to both South and Southeast Asia for nearly two decades now, in order to bring in much needed investment for developing its south-western hinterland, covering more than 60 percent of its total landmass. With an area of 394,000 square kilometres, Yunnan shares 4.1 percent of the PRC’s landmass and is its eighth largest province. Its external boundaries, amounting 4,060 kilometres, run contiguous to Myanmar (1,997 kilometres), Laos (710 kilometres) and Vietnam (1,353, kilometres). Thailand, Cambodia, Bangladesh and India are not very far. Yunnan’s internal borders are with the Tibetan Autonomous Region (TAR), Sichuan, Guizhou and the Guangxi Zhuang Autonomous Region (GZAR). Haiphong (in Vietnam), Beihai and Fangcheng (both in GZAR) are its nearest sea ports.[i] Hekou (with Vietnam), Mengla (with Laos) and Ruili (with Myanmar) are its major land border ports. This province has 8 border prefectures with 26 border counties and cities.

Therefore, its geography posits itself in a favourable condition to reach out to the outside world as a prime destination for investments to fuel economic growth and development. In an increasingly globalising world, based on ever-improving information and communications technology (ICT) networks, Chinese leaders, nationally and regionally, have been pushing ahead for turning such land-locked regions into areas of opportunity. In Yunnan’s case, it has been a part of the globalised world through the Southwest Silk Route (SSR) over the past two millennia, through economic, social and cultural ties in spite of the vagaries of rough terrain and climate.

Recent studies by scholars attest to its antiquity where, the main items of merchandise, over time, had been Chinese silks, horses, silver, and cowries among others.[ii] Yet, due to the very nature of its geographical isolation, Yunnan and its surrounding highland regions (an area stretching from India’s Northeast to the whole of Southeast Asian peninsula, termed and popularised as Zomia by Willem van Schendel and James C. Scott)[iii] had never been under the total subjugation of any centralised state, socio-politically, until recent times. This somewhat accounts for the lesser popularity and non-existence of extensive literary records pertaining to the SSR than its more famous counterparts — the Northern Silk Route (from Xi’an to West Asia) and the Maritime Silk Route (from China’s east coast to Southeast, South and West Asia).

Yunnan is rich in natural and mineral resources. It has been variously called the Kingdom of Plants, the Kingdom of Animals, the Kingdom of Medicinal Plants and the Kingdom of Non-ferrous Metals respectively.[iv] Out of the 2,000 species of medicinal herbs found here, about 400 are used in traditional Chinese medicine and pharmaceutical drugs. There are proven reserves of 142 minerals, of which 25 (such as lead, tin, copper, zinc, silver and phosphorous) rank among the top three in the country.[v] Some of the major non-metallic ores are marble, granite, halite, limestone and dolomite. The theoretical potential of its hydropower reserves amount to 103.64 million kilowatts (KW) amounting to 15.3 percent of the nation’s entire capacity.[vi] Of the proven coal deposits of 34.469 billion tonnes, about 15.5 billion tonnes (63 percent) are of the lignite variety, which are very suitable for power generation.[vii]

Given this rich endowment of resources, Yunnan’s regional leaders have been trying very hard to forge closer economic partnerships with the neighbouring countries since the early 1990s, with an initial emphasis upon Southeast Asia. The tone was actually set by Deng Xiaoping in 1990, when addressing a gathering of the Chinese Communist Party’s Central Committee he said that one coastal province could help one or two inland provinces, in a gradual manner, by starting off with technology transfers for development purposes.[viii] During his famous tour of southern China in 1992, he called for the richer provinces in the east to share more profits and technology with their poorer western counterparts. Yunnan stood a lot to gain from such a shifting of the national focus to the western periphery of the PRC.

 Countries like Thailand, Singapore and Malaysia were the prime drivers of the economic growth in Southeast Asia, within the overall ambit of the Association for the South East Asian Nations (ASEAN). Countries like Cambodia, Laos, Myanmar, and Vietnam (CLMV), though lagging behind in development, are resource rich, which could be exploited by the big state-owned corporations of the PRC. The Greater Mekong Sub-region (GMS) is one such outcome of such efforts. Funded by the Asian Development Bank (ADB) and Japan, it began in 1992 as a broad-based programme to engender cooperation in the areas of transport and communications, energy, environment, human resource development etc.

By 2000, the PRC came up with the Western Development Programme (WDP) to bring the level of development of this vast mineral-rich and minority-populated hinterland at par with the relatively prosperous coastal provinces over time. What the PRC lacks is a western coast to enable faster movement of goods and services, unlike that of the United States of America (USA).[ix] Coupled with the WDP was the simultaneous birth of the BCIM Forum (Bangladesh, China, India, Myanmar) in 1999 as a sub-regional process to foster cooperation in multiple areas to generate economic development. One of the major reasons for Yunnan to initiate these programmes was to remove poverty, since 94 percent of the terrain is hilly and many areas remain cut-off from the nearest towns.

The percentage of rural population in Yunnan even in 2011 was 63.2 percent, with the unemployment rate remaining at 4.1 percent in the urban areas.[x] Yunnan’s gross domestic product (GDP) increased from RMB 213.8 billion to RMB 889.3 billion in the period 2001-2011.[xi] However, even for 2011 GDP figures, it was way behind its eastern provincial counterparts like GZAR (RMB 1,172.1 billion), Fujian (RMB 1,756 billion), Zhejiang (RMB 3,231.9 billion) and Guangdong (RMB 5,321 billion) respectively.[xii] The corresponding GDP Per Capita figures for Yunnan, GZAR, Fujian, Zhejiang and Guangdong were RMB 19,265, RMB 25,326, RMB 47,377, RMB 59,249 and RMB 50,807 respectively in 2011.[xiii]

Such figures show the wide gap that Yunnan has to overcome in order to reach the levels of development and improved living standards of its eastern neighbours. When one talks about Yunnan’s promotion as a regional economic hub for East, Southeast and South Asia, the pursuance of sub-regional cooperation with its neighbouring countries through mechanisms like the GMS and the BCIM assumes importance. In fact, a regional bureau of the PRC’s foreign ministry has its office in Kunming to help the provincial government in formulating necessary policies for such issues. In 2009, PRC President Hu Jintao, during his visit to Yunnan, called for turning it into a bridgehead for the above-mentioned macro-region. The Qiaotoubao (Bridgehead) strategy calls for the development of industries in fields like export processing, clean energy, petrochemicals, agricultural production and processing, bio-industry and tourism in Yunnan.[xiv]

But the primary job is a systemic overhaul of the logistics system as well as the creation of an ecological security barrier by 2015 and 2020 respectively so that industrial development and environmental protection complement each other. Given the extremely high pollution levels of rivers like the Huang He and the Yangzi, and dense smog-filled atmosphere of cities like Beijing, the idea is to avoid such pitfalls for such a fragile ecosystem as found in Yunnan. The government authorities spent about RMB 1.37 billion (0.99 percent of the provincial GDP) for the treatment of industrial pollution in 2011. The total length of highways, expressway, railways and navigable inland waterways in 2011 stood at 214,524 kms, 2,746 kms, 2,491 kms and 3,158 kms respectively against the corresponding figures for 2001, which are 163,953 kms, 517 kms, 1,946 kms and 1,824 kms respectively.[xv] Although the growth in railways has been somewhat slow, there has been tremendous increase in those of expressways and waterways, with a respectable increase in the road length.

This transport infrastructure has been given a boost through the Three Vertical, Three Horizontal, Nine Channel[xvi] highway network by the central and the provincial governments as a move to strengthen the Yunnan International Passage project (envisaged on similar lines way back in 1992). These networks are aligned with the Asian Highway Network proposed by the United Nations Economic and Social Commission for Asia and the Pacific (UNESCAP) in 1959, and re-endorsed in 1992 through the Asian Land Transport Infrastructure Development (ALTID) project and the coming into force of the Inter-governmental Agreement on the Asian Highway Network in 2005. Aligned with this is the Eight-Route-In and Four-Route-Out[xvii] railway construction programme, overlapping in many sections with UNESCAP’s Trans-Asian Railway network, initiated in 1960 and reinvigorated by the ALTID project. To top it all, the brand new Changshui International Airport, in Kunming, was opened for traffic in 2012, with initial passenger footfall and cargo handling estimated at 38 million people and 950,000 tonnes respectively.[xviii] After Beijing, Shanghai and Guangzhou, it is the fourth largest airport in the country.

The efforts of the PRC and Yunnan provincial governments for opening up Yunnan to the outside world rest on a number of important premises. The above narrative shows the material background and efforts taken to prepare the basic ground for turning Kunming into a regional economic hub, under the aegis of a New Silk Route initiative. The broader national interests have to be factored in now. Firstly, there remains a competition for cornering resources and favourable policies among the PRC’s provinces from the central government. Yunnan and the GZAR were ideally placed as the country’s link with Southeast Asia, with the latter having the added advantage of a coastline. Both have a sizeable population of ethnic minority groups scattered across the borders in the entire Zomia region. Although not directly visible, the GZAR would have a natural advantage over Yunnan in taking part in the maritime trade with the Southeast and East Asian region, and the GMS programme could as well end up as its own baby.

In such a case, Yunnan can have a new role to focus more on South Asia. And herein comes the second point. The PRC has maritime disputes with most of its neighbours in the East and South China seas. Moreover, the USA’s naval presence is very strong in this region, which can in fact try to enforce a blockade at the narrow Straits of Malacca and deprive the PRC of its essential oil supplies (85 percent of them pass through these Straits).[xix] Therefore, opening up a gateway through the Bay of Bengal would be a more prudent option, wherein comes Yunnan’s push for the opening up of the old SSR links through the BCIM Forum. In fact, in 2013, all the four countries agreed to form a BCIM Economic Corridor from Kunming to Kolkata, following the successful completion of the Car Rally traversing the same route through Bangladesh and Myanmar in the early part of the year. The main endorsement for this proposal came after joint press conference of Prime Ministers Manmohan Singh and Li Keqiang in New Delhi, in May 2013. Given that the Sino-Indian boundary remains problematic and that the entire border is shared with Tibet, opening up of trade contacts extensively through the Nathu La would take time. Yunnan offers the best option for the PRC in such a case.

Thirdly, the entire western hinterland of the PRC is inhabited by ethnic minority groups and Tibet and Xinjiang have been big headaches for the central authorities. In a centralised polity any centrifugal tendency ought to be strictly frowned upon, and the PRC is no different. The Kunming knife attack involving Uighur separatists from Xinjiang in March 2014 is one such sore-point. In ethnically diverse Yunnan (with a 33 percent minority population) and the neighbouring GZAR, the growth of such extremism would spell doom for China’s ambitions. Although peaceful, Kunming saw Hui Muslims rioting in the 1970s and a century earlier leading the Panthay rebellion against the Qing dynasty. Many of groups like the Dai, Jingpo, Lisu etc. have cross-border kinship ties from India’s northeast to the highlands of the CLMV countries. Yunnan is also contiguous to the infamous Golden Triangle area (Myanmar, Laos and Thailand) where arms and narcotics smuggling (opium especially) have remained the main scourge for humanity, along with associated problems like the spread of HIV/AIDS and other sexually transmitted diseases (STDs).

Therefore, the PRC needs a peaceful periphery for its overall national development, something which can be furthered only through mutually beneficial economic partnerships with its neighbours. In both the GMS and the BCIM, Myanmar forms the common link. The Sino-Myanmar relational is often described as fraternal (Pawkphaw in Burmese) and Chinese support for both the erstwhile military junta and the new quasi-democratic dispensation has been steadfast, despite occasional hiccups like the Myitsone Dam issue among others. Myanmar is the PRC’s outlet to the Indian Ocean and the 2,520 km-long pipeline from Kyaukphyu (Myanmar coast) to the GZAR through Kunming aims at overcoming the Malacca Dilemma.[xx]

Myanmar also offers a strategic hedge against any Indian (and by extension any Western) efforts to fully engage with Southeast Asia overland and foment anti-Chinese sentiments in an already volatile region. Myanmar’s coast can also offer the Chinese Navy a base for its blue-water capabilities in the coming years and break the Indian and US monopoly over these essential sea lanes of communication. While the Burmese leaders have opened up to the USA and are trying to strike an even balance with the PRC, any drastic rupture in this time-tested relationship is unlikely in the near future. After all, China never attaches offers of financial aid and assistance to any assurances on Western agendas like human rights, democracy, freedom of the Press etc. Myanmar is still a quasi-democratic state with the army calling the shots from behind the curtains. In the event of any future domestic crisis anticipating Western sanctions, falling back on China would be a safer option for the generals.

Lastly, the entire BCIM-GMS area is home to a rapidly growing middle class with rising aspirations for a better life. Tapping into this emerging market of consumers could be a boon for the Chinese manufacturing sector with respect to consumer goods as well as inbound tourism. Yunnan has five UNESCO World Heritage Sites and a couple more are under consideration for official recognition.[xxi] The organising of the Kunming Import and Export Fairs, China-South Asia Expo etc. aims at bringing in investment from these areas into Yunnan, allowing Kunming to become an international economic hub in the long run. Therefore, Yunnan forms a key piece in the PRC’s efforts in the creation of a long-term secure periphery which is both globalised in outlook and yet contributing towards national development. Essentially, it stems from the Chinese tradition of looking at the future in terms of longue duree and making the best possible investments at present for reaping a more favourable outcome later alludes to this idea.

Disclaimer: The views expressed in this article are personal.

Ambuj Thakur, Doctoral Candidate in the Centre for East Asian Studies, School of International Studies, JNU, New Delhi.