China’s Involvement in the Mekong: Why the Switch in Strategy?

China’s refusal to participate in the Mekong River Commission has exacerbated problems in the region. This changed in 2016 when a new cooperation framework, the Lancang Mekong Cooperation Mechanism, came into being with China as a leading member. Why has China adopted this new posture?

At 4,909 km, the Mekong is Asia’s seventh-longest river. There are approximately 60 million people living in the Lower Mekong Basin alone. Abundant in biodiversity and natural wildlife, the Mekong River provides a livelihood for riverside communities in the six countries through which the river winds its course.

The origins of the MRC date back to 1957 when Lao PDR, Cambodia, Thailand and Vietnam set up the Committee for Coordination of Investigations on the Lower Mekong Basin – The Mekong Committee – with the endorsement of the United Nations.

Since then, the Commission has been struggling to fulfill its role due to a range of complex challenges. First, there has been a lack of coordination between the international donors who provide most of the funding for the Commission and local governments’ agendas. Second, member countries are not required to seek consensus with other members when planning and implementing projects with transboundary effects: only a consultation is required. Third, there is no binding agreement between China and the Lower Mekong River countries on water-allocation and hydropower development. Thus, the Commission cannot force its members to establish and comply with agreements on water allocation, dam building, and projects with transboundary effects: issues which are sensitive and typically generate governance conflicts within shared river basins.

China’s refusal to take part in any cooperation agreement has been central to the MRC’s lack of success. As the Mekong’s hegemon, China sets an example for the other nations in the basin. If China fails to seek consensus with downstream countries surrounding its dam building and hydropower development, why shouldn’t other countries do likewise? And that’s exactly what’s happening. Laos’ construction of the Xayaburi, Pak Beng and Don Sahong dams across the Mekong River is fully underway. Laos did not seek consensus when either developing or implementing these controversial projects. Cambodia too, which plans to build the Sambor dam on the Mekong mainstream, is likely to follow the precedents set by China and Laos.

“China’s refusal to take part in any cooperation agreement has been central to the MRC’s lack of success.”

Things changed when leaders of all riparian countries of the Mekong River signed the Lancang-Mekong River Cooperation Framework in March 2016. First championed by China’s prime minister in November 2014, this new inter-governmental organisation takes on a role similar to the MRC, though with a greater emphasis on tackling political and security issues, fostering economic and sustainable development, and securing social, cultural and people-to-people exchanges among member countries.

The dialogue and cooperation to be achieved through this new body are meant to address five key areas: connectivity, production capacity, cross-border economic cooperation, water resources and agriculture and poverty reduction.

China had several motivations fueling this decision to finally take part in a cooperative framework with the other Mekong riparian countries.

First, China aims to boost the implementation of its One Belt, One Road initiative and wants to start with Southeast Asia due to its geographical proximity and strong economic ties.

So far in the region, China has been using tariff reduction as an instrument to promote cooperation and trade. But, tariffs are already slated to be dropped to zero between China and all MRC member countries except Thailand. Hence, reducing tariffs can no longer be China’s main trade strategy, setting the stage for a new mechanism.

Through the new Cooperation Framework China will increase investment in the region to develop regional infrastructure and improve the regional connectivity network. China will provide preferential loans of US$1.54 billion and a credit line of US$10 billion for infrastructure investment in the region. The funds will be used to build railways, highways and waterways ports between China and Southeast Asia.

Second, China’s previous diplomatic approach hasn’t been very successful. Over the years, enhancing political relations mostly through economic cooperation has resulted in a dominant and highly asymmetric relationship with the Mekong riparian countries. These countries feel anxious and suspicious about China’s intention with regional policies, as they have no means to balance the scale in the event of disputes or conflicts. China, therefore, has adopted a softer touch and is now trying to balance the sub-regional economic and political landscape. The signing of the Cooperation Framework also allows China a new diplomatic tool to temper downstream complaints concerning Chinese construction of large-scale dams on the mainstream Mekong.

Lastly, cooperation on political, security and social concerns between China and Mekong riparian countries prior to the new cooperation framework made little to no progress. There are still serious recurring social problems among the riparian countries such as international drug trafficking, smuggling, gambling and human trafficking. Also, there is very little cooperation in cross-border water allocation, dam-building and environmental protection. The signing of the new Cooperation Framework allows China a formal mechanical to take action with its downstream neighbours to tackle such issues.

Which of these motivations ultimately proves most significant only time will tell. On the whole, however, it appears this new cooperation framework is poised to deliver positive results that will most likely surface within the next decade.

Victor Fernandez is a research assistant at the Institute of Water Policy, Lee Kuan Yew School of Public Policy, National University of Singapore. 

This article first appeared in the Mekong Eye on 11 October 2017. 

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