China spreads wings across the Indochinese Peninsula

Dr. Puyam Rakesh Singh *

China is spreading its wings across the Indochinese Peninsula with various connectivity projects which will have long-term implications in the region. It includes projects such as China-Myanmar pipelines, China-Myanmar Economic Corridor, China-Thailand Railway, China-Laos Economic Corridor, Cambodia's master plan for a transport system etc.

China's interest in Lao People's Democratic Republic (in short 'Laos') is driven by geographical realities in the Peninsula. The central position of Laos provides China overland access to Myanmar, Thailand, Cambodia and Gulf of Siam. Also, Laos is one of the closest allies of China in the region. Beijing is working towards expanding its influence in Laos through export of petroleum products and construction of transport infrastructure under the Belt and Road Initiative (BRI).

Following a two-year long preparation and feasibility study, PetroChina International (Yunnan), a subsidiary of PetroChina group, on October 31, 2018, exported over 64 tonnes of diesel to a Lao company marking the first export of Chinese refined oil to Lao market. The oil tankers which were loaded in China's Kunming arrived at Boten oil depot in Lao covering a distance of over 700 km.

Fig. 1 China-Myanmar Oil Pipeline and Anning oil refinery

Traditionally, Laos imports petroleum products from or via Thailand and Vietnam. With the arrival of Chinese refined oil into the Lao market, the Nationwide Trading Petroleum Public Company of Laos (NTP) became the first Lao oil company to import petroleum products directly from China. Thus, the China-Myanmar oil pipeline has helped Laos diversify its import route (See Fig. 1).

The Anning oil refinery near Kunming in Yunnan province is gradually tapping oil markets in Southeast Asia. The crude oil to the refinery in Yunnan province comes passing through the 2,400-km long pipeline with a capacity to supply 440,000-barrel per day (bpd). The oil terminal on Made Island in Myanmar's Kyaukpyu feeds the pipeline for the 260,000 bpd oil refinery plant at Anning.

China has built the China-Myanmar oil pipeline to diversify its energy import routes and reduce dependence on the Strait of Malacca. It is also aimed at industrial and economic development of the relatively underdeveloped south-western China. The first offloading of crude oil at Made Island oil port in Myanmar's Rakhine State happened in April 2017. A Suezmax tanker named 'United Dynamic' with the capacity to transport 140,000-tonnes crude oil offloaded crude oil for the first time to start operation of the oil pipeline.

Moreover, China is looking forward to enhance economic integration with the neighbouring Southeast Asian nations by building transport connectivity with the neighbouring countries. Here comes the significance of BRI in Laos and other Southeast Asian nations. Being a country with no access to the sea, the Lao government is working towards transition from a 'land-locked' to a 'land-linked' country in its strategy for economic development and transport infrastructure development.

Fig. 2 China-Laos and China-Thailand Railways under construction

Under BRI, China and Laos are building railway and expressway projects connecting the two countries. On December 2, 2018, the first concrete beam of the China-Laos railway was erected in Vientiane, the capital of Laos. The railway project which started construction in December 2016 is an extension of the Yuxi-Mohan Railway in Yunnan province of China (See Fig. 2).

Further south, the China-Laos Railway will be eventually connected to the China-Thai Railway line linking the north-eastern Thai city of Nong Khai and Bangkok, the capital city of Thailand.

China-Laos Expressway is a major transport infrastructure project as part of Lao's land-link strategy. Earlier, the project was planned to link Vientiane and Vang Vieng in Laos. In January 2018, the two countries agreed to extend the highway to Boten in Luang Namtha province on the China-Laos border.

On the Chinese side, the Kunming-Bangkok Expressway is already in place connecting Kunming with Mohan. Mohan on the Chinese side and Boten in Laos constitute the main border trading centres along the China-Laos border.

Fig. 3 The planned Boten-Vientiane Expressway and Vientiane-Pakse Expressway

The Laos-China Joint Expressway Development, a joint venture between the Lao government and the Yunnan Construction and Investment Holding Group (YCIH) will build the project on the basis of Build-Operate-Transfer (BOT) model in accordance with the concession agreement signed on April 4, 2018. The 460-km long expressway linking Vientiane and Boten will strengthen economic exchanges and people-to-people contacts.

Also, in May 2018, the two countries had signed an MoU on feasibility study for constructing an expressway linking Vientiane and Pakse in Champasak in southern Laos (See Fig. 3). If successfully completed, the highway will become a key north-south corridor for Laos. Besides, the highway would create room for more transport connectivity between Laos and Cambodia and help Laos to integrate its economy further with Cambodia, Vietnam and other ASEAN nations.

Taking into account the strategic importance of the neighbourhood, China has acknowledged that "China and ASEAN countries are as close as lips and teeth". Similarly, Beijing has described its ties with the five Mekong River countries in Southeast Asia as 'lips and teeth' relationship.

Myanmar, Laos, Thailand, Cambodia and Vietnam constitute a very strategic neighbourhood for China and, therefore, stability, peace and development in the immediate neighbourhood is closely intertwined with China's dream and aspiration.

China's efforts to safeguard its vital interests in the region will continue to shape the economic and security architecture in the Indochinese Peninsula and the surrounding areas. And it also implies more Chinese activities in the Peninsula.

Disclaimer: The views expressed are that of the Researcher and not of the Council.


Reference:

§ "Remarks by H.E. Li Keqiang Premier of the State Council of the People's Republic of China at the 18th China-ASEAN Summit", November 21, 2015,
http://asean.chinamission.org.cn/eng/zgwj/t1320500.htm..

§ "China starts exporting petroleum to Laos", The People's Daily, November 01, 2018,
http://en.people.cn/n3/2018/1101/c90000-9513977.html.

§ "1st bridge beam erected along China-Laos railway", The People's Daily, December 02, 2018,
http://en.people.cn/n3/2018/1202/c90000-9524435.html.

§ Chen Aizhu & Aung Hla Tun, "New China refinery faces delay as Myanmar seeks extra oil tax: sources", Reuters, October 10, 2016,
https://www.reuters.com/article/us-china-myanmar-oil/new-china-refinery-faces-delay-as-myanmar-seeks-extra-oil-tax-sources-idUSKCN12A0JF.

§ "Lao expressway to stretch to China: official media", Xinhua, January 3, 2018,
http://www.xinhuanet.com/english/2018-01/03/c_136869994.htm.

§ "Lao gov't, Chinese firm ink pact for 1st expressway in Laos", Xinhua, April 5, 2018,
http://www.xinhuanet.com/english/2018-04/05/c_137088851.htm.

§ "Laos, Chinese firm sign MoU on feasibility study for expressway", China Daily, May 30, 2018,
http://www.chinadaily.com.cn/a/201805/30/WS5b0e7dcea31001b82571d36c.html.

§ "China-Myanmar crude oil pipeline put into operation", Xinhua, April 11, 2017,
http://www.xinhuanet.com/english/2017-04/11/c_136199129.htm.

§ "Myanmar pipeline gives China faster supply of oil from Middle East", South China Morning Post, April 12, 2017,
https://www.scmp.com/news/china/economy/article/2086837/myanmar-pipeline-gives-china-faster-supply-oil-middle-east.