15.07.2022 Author: Petr Konovalov

China, Thailand and Laos: Economic Friendship Growing Stronger

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Today, China aims to become a major foreign economic partner for as many countries as possible. It is well known that an efficient logistics system is an important factor for economic growth. This is why China is developing the One Belt, One Road Initiative, as well as many other significant infrastructure projects.

On July 5, 2022 in Bangkok, Chinese Foreign Minister Wang Yi met with his Thai counterpart Don Pramudwinai and said that the relationship between the PRC and Thailand could confidently be compared to that of members of “one friendly family”. The Thai Foreign Minister agreed with the PRC Foreign Minister’s judgment and praised the dialogue between the two countries and hoped to strengthen the bilateral partnership.

Wang Yi stressed that since the beginning of the coronavirus pandemic in 2020, China and Thailand have assisted each other in all possible ways to combat the epidemic. According to the Chinese diplomat, this was a clear example of the vitality and sustainability of the dialogue between the two countries, which was launched during that difficult period of time.

The Chinese Foreign Minister also added that the PRC and Thailand, as emerging economies, should deepen and broaden their strategic cooperation to accelerate overall development.

The Chinese diplomat ended his speech by saying that the PRC was positive about hosting the Asia-Pacific Economic Cooperation (APEC) summit in Thailand and also believed that the role of Asian countries in world politics should be given greater prominence.

For his part, Don Pramudwinai said that the strengthened partnership between the two countries creates very good conditions for the development of Thailand’s economy, as the PRC offers very favorable terms for fruitful cooperation.

The Thai Foreign Minister expressed his gratitude to China for supplying medical equipment to combat the coronavirus pandemic, as well as for greatly simplifying customs clearance processes for Thai agricultural products entering the PRC, which has been good for the well-being of Thai businesses.

Don Pramudwinai expressed his hope that China and Thailand would do their utmost to make the APEC Forums in 2022 as effective and positive as possible.

The two foreign ministers agreed to take bilateral relations and strategic partnership to a new level. Wang Yi recalled that 2022 marks the 10th anniversary of China-Thailand comprehensive strategic cooperation and partnership. The Chinese and Thai foreign ministers also said that scientific and technological progress would accelerate thanks to increased foreign trade.

At the same time, the two sides agreed to promote joint cooperation with another neighboring state, Laos, which is intensively involved in establishing rail links between China, Thailand and Laos. Improving this transport system will significantly increase freight traffic, thereby enhancing regional development as a whole.

The Chinese authorities plan to establish a joint economic corridor for the industrial development of Yunnan Province, while the Thai authorities plan to expand the Eastern Economic Corridor (EEC) infrastructure project to transform Thailand’s eastern provinces into a leading economic zone among ASEAN countries and create a powerful industrial hub in Southeast Asia.

In terms of benefits for Laos, this small Asian landlocked state of 7.7 million people has profited from cooperation with China, which has greatly accelerated its economic development. The country often faces serious infrastructure and logistical problems, but the development of a partnership with China is gradually improving Laos’ plight.

The China-Laos railway, which became operational on December 3, 2021, has demonstrated its high efficiency: in six months it has transported around 4 million tonnes of freight. It is also worth noting that more than 3 million passengers have used the railway since it had been commissioned. Additional development of the EEC project could significantly increase these figures in the long term.

In May 2022, the Chinese and Lao authorities agreed to speed up customs procedures. The signing of the agreement, according to experts, has tangibly increased the speed of rail deliveries of Chinese agricultural machinery and foodstuffs to Laos. One of the main ideas of the EEC, by the way, is also the facilitation of international trade.

The 1,035 km China-Laos railway connects the Lao capital of Vientiane with Kunming, the administrative center of China’s Yunnan Province. The project is certainly one of the most iconic endeavors of the One Belt, One Road Initiative.

In June 2022, a bi-directional power transmission was implemented between the PRC and Laos for the first time. The China-Laos energy supply interconnection project took 12 years to implement. Earlier, in March 2022, Lao electricity company Electricité du Laos and Chinese power grid company China Southern Power Grid (CSG) entered into a commercial agreement to supply Laos with hydropower during rainy periods. Also, Laos and the PRC have reached agreements to divert surplus hydropower from Laos to Yunnan Province during the rainy seasons. In return, CSG has pledged to supply the northern regions of Laos with additional electricity.

The implementation of Chinese infrastructure and energy projects in Laos and Thailand shows that the Chinese authorities have a clear objective of increasing their influence on their southern frontier. China is willing to invest heavily in the economies of neighboring countries to expand its sphere of influence.

Of course, the increasing Chinese presence in Southeast Asia cannot but cause concern for the US, which is attempting to maintain its former influence in the region. However, Washington’s ambitions are hampered by the high growth rate of the Chinese economy as well as by geography: while the US is far away, China’s proximity to Southeast Asia plays into its hands.

Thanks to increased trade with China, the economies of Thailand and Laos are seeing strong growth. It is in the Chinese leadership’s interest to have economically developed countries near China’s borders, with which it is profitable to trade.

To sum up, it can be assumed that the EEC project and other trade and economic initiatives are very beneficial to the three parties – China, Thailand and Laos. That is why the authorities of the two Asian countries welcome China’s presence in their economies. The successful implementation of diverse projects will enable the two countries to improve the living standards of their citizens and reach a new level of development.

Petr Konovalov, a political observer, exclusively for the online magazine “New Eastern Outlook”.

 


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