Nikkei Asian Review - 05 March 2020
Chinese investment upheavals anger Laos’ indigenous tribes
By Robert Bociaga
Rackety trucks rush across China’s border with its backwater neighbor, stirring up clouds of dust and drowning the tweets of tropical birds. Chinese projects to construct roads in one of Asia’s poorest countries date back to 1962 when Laos was subject to a proxy war between the global Cold War superpowers. Nowadays, China is its largest foreign investor and aid provider in a series of infrastructure projects, claiming to change local life for better.
But critics have raised serious concerns about the impact of the projects, pointing at their gigantic price tags and environmental issues, among others. Slated to open in December 2021, the China-Laos railway will cost almost $6 billion, 30% of which is to be financed by Laos with loans.
In Laos, Chinese money fuels growth in every sector, but it is agriculture that remains the largest branch of the economy in the northern provinces, accounting for almost 50% of their GDP. China’s engagement can potentially transform the region, but at what cost?
In proximity of this hectic trade route, people from tribes such as Khmu, Akha and Hmong continue to cultivate old-fashioned lifestyles. After the government forced them to resettle from remote mountainous areas in the 1970s, tribes have slowly become integrated in the process of communist state building.
Every morning, before the sun starts baking, families with children carry heavy bamboo baskets along the winding paths. Armed with homemade tools, teams of farmers hike up and down the hills to work in the fields for hours on end.
Since time immemorial, tribal people have been practicing slash-and-burn agriculture, which requires burning forested land to utilize its nutrient-rich soil for planting crops.
"We do not want to stop using this method," insists Khong Deng, a member of the elderly council of Khmu people. "Here, crop cultivation does not take many working hours and the burned forest recovers after 10 years." This tradition remains so deeply rooted among the communities, that even low productivity does not force them to seek alternatives.
"We regularly face crop destruction due to rat invasions or fire," says Nyang Bo, a villager from Ban Namang. "The rice banks, constructed by the European Union over 10 years ago, help us tackle food insecurity. Foreign NGOs also contributed by securing the water supply and construction of the schools across remote parts of the northern provinces."
Khong Deng says he remembers the day he almost died with his father in the bombardment of Laos. "I didn’t even get a basic education due to the Laotian Civil War," he complains. The U.S. made Laos the most-bombed country in the world in a failed attempt to stop the spread of communism after World War II.
"But when European projects were launched in my hometown 15 years ago, I volunteered and mastered English. Today I am a certified guide," Khong Deng says, stressing that life changed enormously for all the people of the North thanks to those programs. In his opinion, Chinese benefit from the cheap labor that acknowledges the need for life improvement, but their contribution is insignificant. "They are here only for their own benefit, and breach local customs."
The 4,000-km Mekong River passes through China, Laos, Thailand, Myanmar and Cambodia before flowing out to sea in Vietnam. Laos is estimated to absorb 25% of the Mekong basin, which supplies 270 billion cubic meters of water yearly with 39 tributaries and subtributaries. Laos’ northern provinces rely on electricity from China due to the fact that Laos’ own hydropower is exported to Thailand. With 40 dams already completed and 50 scheduled by 2020, Laos harnesses its natural resources on an enormous scale, at the same time disturbing the ecosystem. Beijing is engaged in half the hydropower projects that, according to environmentalists, threaten the fishermen’s livelihoods.
At first, the arrival of the Chinese was greeted with some optimism. Tribal people admit it heralded modernization and a new wave of opportunities to help lift people out of poverty.
The government of impoverished Laos had lacked funds to build proper infrastructure in the North, so invented the strategy of turning land into capital, which Laos was meant short of, although rich in resources.
However, in 2019 Laos was ranked 154 of 190 on the World Bank Group’s 2019 Ease of Doing Business Index.
Chinese businesses have rushed to plant other crops like banana, watermelon and sugar cane, but misbehavior from some, who have been accused of not paying on time and dumping trash, has caused uproar in tribal communities which had previously boasted of being conflict-free. "After a pent-up argument, some villagers destroyed the Chinese’ crops," says a policeman from Luang Namtha province. "They are awaiting trial in custody."
A greener growth model aimed to provide efficient resource management could be a solution. An estimated 70% of the country’s population relies on forests and rivers. Nurturing the need for sustainable nature combined with generating diversified income sources is, however, on the ruling party’s agenda.
Meanwhile, an increased number of villagers suffer from a variety of cancers, according to statistics from local hospitals. In 2017, the Lao government declared the shutdown of all Chinese banana farms in several provinces, encouraging growth of alternative crops. "But the lack of rigorous control over fertilizers continues," Khong Deng says. "Local authorities facilitate the creation of new plantations without environmental impact assessments."
Despite being an authoritarian state, Laos already has a long history of decentralization, and with economic transformation on the way, tribespeople are concerned about threats to the social structure of the community.
"We cannot let our women marry the Chinese," protests one of the Akha tribal leaders. "They transport them to Yunnan in China and we never hear back from them." In addition, a few have ended up sold to another ’husband’ or forced into sex work.
Furthermore, the villagers, who used to be pure subsistence farmers, needed to understand the fundamentals of the market economy by experiencing price fluctuations. "The Chinese promised to purchase crops from us, but did not want to sign a written contract," says the Akha tribal leader. "Because the Chinese market has unlimited potential, many rely on the buyers that visit the area. It was a shortsighted approach and we were left with unsold crops."
While the relationship with their northern neighbor has been cemented for many decades, many indigenous people say they do not consider the Chinese as friends. "In spite of it, we sent our sons to study Mandarin at university," one ethnic Khmu admits.
The Central Committee of the Lao People’s Revolutionary Party has addressed the issue of bad governance in a resolution, but locals are skeptical. "We have found ourselves between a rock and a hard place," says Khong Deng. "We do not have money for development and the government has not been doing enough to attract other investors."
There are 12 economic zones nationally which may benefit from the Belt and Road Initiative and the Laos-China railway. The Boten Special Economic Zone, covering over 700 hectares, is a special case. In the past, the border city of Boten was even treated extraterritorially and served as a gambling center for the Chinese. Today, it anticipates investment of $10 billion in exchange for land leases of up to 90 years.
After the construction of several large buildings to accommodate shopping, banking and service centers, the zone shall magnify trade, investment and tourism in the region. But analysts warn that the country does not have enough qualified workers to take advantage of this. Moreover, due to securing multiple loans for development projects, the International Monetary Fund and other institutions have raised the alarm on the elevated risk of debt distress.
Laotians have proved that their opposition to Chinese investment could reverse the Communist Party decision. In 2008, Deputy Prime Minister Somsavat Lengsavad was forced to deny plans to build a Chinatown in Vientiane. For many, that was a sign that even authoritarian regimes sometimes needs to follow the people’s wishes.