Private contractor gets China-Lao railway contract

January 12, 2011

 21st Century Economic Herald reports that a private company called Yunnan Xiaoxiang Pan-Asia Investment Co. got a BOT contract for constructing the Lao section of the much-talked-about China-Singapore “Pan-Asia” railway. The company, whose name suggests a connection to Hunan Province, was registered in 2010, and its chairman, Li Zhanqun, is unknown but claims to have spent many years in Southeast Asia. The company’s registered capital is $1 million, and the shareholders are three private individuals. There are currently many Hunanese migrants in Laos, but they tend to be very small businessmen.

The total investment in the Lao part of the railway is estimated at 40 bn yuan. According to Li, some of this will come from the $3 million provided to the Lao government by UNDP, about 15% will come from Chinese government aid, and the rest, about $2 bn, will be raised overseas. This clearly raises questions: first, China has not previously provided direct grants-in-aid of anywhere near this scale. Second, how and why would an unknown person able to and entrusted with raising two billion dollars overseas? It is almost certain that someone who does not want to reveal their identity is behind Li, but it is not clear why. Perhaps because the Chinese subcontractors who will carry out the construction and will certainly benefit from state loans would rather deal with a Chinese contractor? Or perhaps because the real investors are connected to high officials and do not want this revealed?

A Chinese manager at the Golden Triangle Special Economic Zone in Laos suggested that the investors might be gambling barons, like the owner of Malaysia’s Genting resort. He thought that, among the legal industries, only gambling tycoons have the cash to pay $2 bn, and it would be in their interests to get more Chinese gamblers via the railway.

But from my perspective the more interesting aspect of the deal is this: Li says that Xiaoxiang  will operate the railway and get all the income for it (he doesn’t mention the time period), and that in return for the investment it will also receive logging, mining and industrial concessions. He also says that the project will need 40-50 thousand Chinese workers. In other words, he pictures a massive concession along the lines of the China Eastern Railroad, constructed by Russia at the beginning of the 20th century, which remained under Russian control and whose employees enjoyed extraterritorial rights until the Japanese occupation in 1937. These Russians built and ran the city of Harbin, even though technically they had no concession rights, unlike, say, foreign powers in Shanghai.

So if the construction of the Golden Triangle SEZ, with a 99-year lease and Chinese management, recalls Hong Kong, the railway would hark back to another form of extraterritoriality.

The question is how much of this is true, and whether Peking likes it. The construction may well be embarrassing and unwelcome for the national government. Conflicts between Yunnan Province and Peking about how to deal with neighbouring countries are routine, with the former looking more at profit and the latter more at the long-term strategic fallout.

Baoding Villages 3

January 3, 2010

I received an email from Li Guangyi at UCLA with an update on the Baoding Villages. The email was sent in June last year but I only read it now. Since it was intended as a post, I am posting it here:

Hi All,
Liu’s old website is closed, but he has a new one:
The recent striking news is, thanks to Liu’s effort, the Lake Victoria Free Trade Zone is now in in partnership with China and the Uganda Government.
Paradise Investment Ltd. promised to invest 1.5 billon dollars on this free trade zone. The ceo of Paradise, Liu Jinlong, is an intimate friend of Liu Jianjun.
There are some astounding words in the report of Chinese media. After reading the news, many Chinese netizens are wondering if now China has an oversea colony or concession, like Hong Kong. But such words are not available in the speeches of Ugandan officials. I think the Chinese journalists are exaggerating. But I don’t know if Liu asked them to do so.

International Crisis Group’s new report on China-Burma relations

September 19, 2009

Following the conquest of Kokang by Burmese government troops and the reported flight of tens of thousands of refugees to China (described as Chinese businessmen in Chinese media; see earlier entry), the International Crisis Group has published a new report entitled China’s Myanmar Dilemma. The report suggests that there is a conflict of interest between Peking, which supports the Burmese government, and the Yunnan provincial government, whose primary interests lie in maximizing profits from border trade and which hence prefers to deal with the so-called “ceasefire armies” and keep the Burmese government at arm’s length. Many Burmese border towns rely on China for electricity, water, and telecommunications, which of course also provides China a powerful weapon: thus, after a series of abductions of gamblers in early 2009, the Yunnan government cut off utilities to the casino town of Maijayang to pressure the local authorities to shut down the casino. The closest relations are maintained with the 20,000-strong United Wa State Army: in March, a Yunnan Province official participated in the 20th century celebrations of the UWSA’s victory over the Communist Party of Burma (!), and its political leader, Bao You-Xiang, epxressed its thanks to China for its support. At the end of last year, both Kachin and Wa leaders wrote a letter to Hu Jintao appealing for investment and aid.

The report also details Chinese involvement in hydropower projects (at least 63, including the Tasang Dam on the Salween, which is to be the largest dam in Southeast Asia) and mining (the latest and largest project, the Tagaung Taung nickel mine, was approved in 2008 with an investment of $800 million). Official Burmese figures say that 99% of the foreign investment in 2008, or about $900 million, came from China.

While the authors of the report seem to have had privileged access to officials in China, parts of it — particularly those describing on-the-ground sentiments — appear to be based on flimsy evidence. Thus, in reporting on anti-Chinese sentiments in northern Burma, statements like “Burmese feel that they are being pushed out” and “It has been estimated that 60 per cent of Myanmar’s economy is in Chinese hands” are based on a single interview.

It is tempting to see the “special zones” in Northern Burma as a return to the “overlapping sovereignty” of precolonial times when many of the principalities in the region paid tribute to China but were under the loose military control of Burma. What continues to interest me is the role and conceptualisation of Chinese ethnicity in these borderlands today. Do people like Bao You-Xiang see themselves as Chinese, Wa, or both? And how are they seen by others?

Shan organisation reports fighting around dam site in Burma

September 2, 2009

According to 1 September press release by the Shan Sapawa Environmental Organisation, disseminated on the International Rivers mailing list,

Shan activists are calling on China to immediately halt all investment in dams on the Salween River following the recent heavy fighting between the Burmese military regime and the Kokang ceasefire army near the site of the Upper Salween Dam planned by Chinese companies in northern Shan State.

Heavy clashes have taken place just east of the town of Kunlong, about 15 kms from the planned dam site. Fighting broke out on August 27, 2009, after the regime deployed thousands of troops to seize control of the Kokang territory, shattering the 20-year ceasefire and causing over 30,000 refugees to flee to China. Kokang forces have sought to repel the Burma Army troops.

Plans to build the Upper Salween Dam, also known as the Kunlong Dam, were announced in April 2007 by two Chinese companies, Hanergy Holding Group (formerly Farsighted Investment Group) and Gold Water Resources Company. Since then a team of Chinese and Burmese technicians have been conducting feasibility studies for the 2,400 MW dam, 25 kms from the Chinese border.

The Kunlong Dam is one of five mega dams being planned on the Salween in Burma by the SPDC and Chinese and Thai companies, to produce electricity to be sold to China and Thailand. The Shan Sapawa Environmental Organisation, together with the Salween Watch coalition of environmental groups from Thailand and Burma, has been monitoring the controversial dam plans for ten years and advocating for their immediate halt.

“The renewed fighting and the flood of refugees into Yunnan should be a wake-up call to China about the risks of investing in Burma,” said Sapawa spokesperson Sai Khur Hseng.   “Not only is there no free and informed consent to these dam projects, but they are being built over the dead bodies of our people.”

The other mega dam being planned in Shan State is the giant 7,110 MW Ta Sang dam, 100 km from the Thai border. In early August, the regime renewed a scorched earth campaign in townships close to the Ta Sang dam site, torturing and killing civilians and driving 10,000 villagers from their homes.

In an earlier post, I noted the cooperation (or perhaps sometimes multiple identities) between environmental and ethnic organisations in northern Burma, how they represent a certain potential form of sovereignty in that highly contested terrain, and how the ethnic Chinese enclaves (like Kokang) represent another, more real form. What is particularly interesting in this news release is the claim that 30,000 refugees have fled the fighting to China. China is not a state that officially allows refugee flows across its border, so if this is true it raises additional questions about the nature of sovereignty and border in Kokang and the other “special zones.” Or are these people who possess Chinese citizenship?

The latest on the Baoding Villages

August 6, 2009

Today at the International Convention of Asia Scholars in Daejeon there was a panel on “Exporting China’s Development.” Yan Hairong and Barry Sautman presented a paper on their fieldwork at the Chambishi copper mine in Zambia, which I had much anticipated. In response to a question, they told me that they thought the Baoding Villages were a total hoax. Yan Hairong has visited Baoding and interviewed Liu Jianjun (the self-styled founder), and he repeated his story, but refused to share any contacts in Africa. In the ten African countries Yan and Sautman visited, no one has heard about Baoding villages.

Li Guangyi, a PhD student at UCLA, came to the same conclusion in his presentation. But he affirmed that the East Africa Trade Development Zone does exist, and Ugandan officials gave a press conference in Peking about it. The 518 square kilometers and the 99-year lease seem to be right, although it is less clear whether the legislative rights, the Chinese policing and judiciary structures will exist, or indeed if the zone has any investors. Liu Jianjun and the other main investors were, apparently, adamant that residents and workers of the zone will have to obey its rules, giving the specific example that three (sic) prayers a day for Muslims will not be allowed as they disrupt production. A flag of the zone has been circulating on the Internet, very similar to Hong Kong, with five red stars at the centre.

Li also discussed the reactions to this on Tianya. According to him, some expressed suspicions that this too was a hoax. Others wrote that China should be more equitable and fair in its dealings with Africa and not repeat Western colonialism and brutality. But most expressed satisfaction about the Chinese “concession,” saying it demonstrated that Chinese civilization has stood up again.