Chinese People’s Diplomacy

and Developmental
Relations with East Asia

As China takes up the mantle of a global power, its diplomatic policy has changed
significantly as it assumes a role of regional leadership.
Until recently, China has not tended to talk about its developmental strategy
as a model for others to follow. Since the rise of Xi Jinping this has changed, and
the state has become more open in sharing its developmental experiences with its
neighbours. This has become an important part of China’s diplomatic relations
with other countries in East Asia. Beijing has also emphasized people-to-people
diplomacy, with outward tourism and other exchanges of peoples seen as an
important part of building stronger relations with its neighbours. The chapters
in this book all address different elements of this strategy, looking at China’s
bilateral relationships with other East Asian countries in terms of developmental
relations and the increasing mutual exposure of their citizens.
This book will be of great interest to scholars of Chinese diplomacy, especially
those with a particular interest in soft power.

Lee Lai To is Senior Professor and Director of the Asian Research Center for
International Development, Mae Fah Luang University, Thailand. He was
previously Head of the Department of Political Science at the National University
of Singapore and Director of the Singapore Institute of International Affairs. He
is currently an advisor to the Political Science Association of Singapore.
Politics in Asia series

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Edited by Chong-Min Park and Eric M. Uslaner

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Shishir Upadhyaya

Post-Politics and Civil Society in Asian Cities

Spaces of Depoliticisation
Edited by Sonia Lam-Knott, Creighton Connolly, and Kong Chong Ho

Chinese Constructions of Sovereignty and the East China Sea Conflict

Czeslaw Tubilewicz

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Yutaka Kanda

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Ray Christensen

Governance and Democracy in the Asia-Pacific

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Edited by Stephen McCarthy and Mark R. Thompson

Chinese People’s Diplomacy and Developmental Relations

With East Asia
Trends in the Xi Jinping Era
Edited by Lee Lai To

For the full list of titles in the series, visit: www.routledge.com/Politics-in-Asia/

book-series/PIA
Chinese People’s Diplomacy
and Developmental
Relations with East Asia
Trends in the Xi Jinping Era

Edited by
Lee Lai To
First published 2021
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Names: Lee, Lai To, editor.
Title: Chinese people’s diplomacy and developmental relations with
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Description: Abingdon, Oxon ; New York, NY : Routledge, 2020. |
Series: Politics in Asia | Includes bibliographical references and index.
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Subjects: LCSH: China—Foreign relations—21st century. | Economic
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In memory of Professor Zhuang Liwei
Contents

List of contributorsix
Prefacexiii

Introduction 1
LEE LAI TO

1 The gap between China’s people-to-people exchange policy

and its aim to promote understanding among peoples
in the world 10
ZHUANG LIWEI

2 Chinese outbound tourists, policy reforms, and

mobility regime 30
ARANYA SIRIPHON AND ZHU JINSHENG

3 Toward an “Asian Century”: can China and Japan

cooperate? 49
MASAYA SAKURAGAWA

4 Transboundary river cooperation between North Korea

and China: the Yalu and Tumen rivers 68
SEUNGHO LEE

5 China–ASEAN natural rubber trade relationship:

policy redesign for mutual competitive advantage 94
MONTCHAI PINITJITSAMUT

6 Forty years’ reform and opening-up of Yunnan

and its implications for the Mekong region 110
LEI ZHUNING AND CHEN TIEJUN
viii  Contents
7 Rethinking diplomatic discourse with Chinese
characteristics: the brotherhood discourse 132
KORNPHANAT TUNGKEUNKUNT AND KANYA PHUPHAKDI

8 Disturbing the inequality of PRC influence on the position

of ethnic Chinese in Thailand in the New Era 146
WASANA WONGSURAWAT

Index162
Contributors

Seungho Lee is currently working as Professor at the Graduate School of Inter-

national Studies, Korea University. His research interests are diverse, includ-
ing institutional change in water policy, transboundary water cooperation and
conflict, and public-private partnership projects in water supply and sanita-
tion services, with reference to China, Korea, Southeast Asia, and Europe.
Recent publications include “Power Asymmetry over Hydropower Develop-
ment in the Mekong River Basin”, Southeast Asia Studies (2017) (co-author);
“Benefit Sharing in the Mekong River Basin”, Water International (2015);
and “Wastewater Treatment Transfer-Operate-Transfer Projects in China: The
Case of the Hefei Wangxiaoying Wastewater Treatment TOT Project”, KSCE
Journal of Civil Engineering (2015). Professor Lee often consults with various
ministries of the Korean government, development agencies such as GGGI
and UNESCAP, and water companies such as K-Water.
Zhu Jinsheng is currently a PhD student at the International Program in Social
Sciences, Faculty of Social Sciences, Chiang Mai University, Thailand. His dis-
sertation focuses on “Chinese Outbound Tourism and Alternative Modernity:
A Case Study of Chinese Tourists in Thailand”.
Kanya Phuphakdi received a BA in political science (international affairs) with
second-class honours from Thammasat University, Thailand. She is a research
assistant working on projects related to the major powers in Southeast Asia,
especially in CLMV countries, in which she has a great interest.
Montchai Pinitjitsamut received his doctorate in economics from National
Institute of Development Administration, Thailand. He received awards and
scholarships for his graduate and post-doctoral studies. His publications include
reports to Thai ministries and organizations and articles in international jour-
nals. Presently, he is lecturer and researcher at the Department of Agricultural
and Resource Economics, Faculty of Economics, Kasetsart University, Thailand.
Masaya Sakuragawa is Professor in the Department of Economics at Keio Uni-
versity. He obtained his doctoral degree in economics from Osaka University.
His research interests include macroeconomics, international finance, and the
x  Contributors
political economy. He has authored academic papers in economics that have
been published in International Economic Review, Economic Theory, Japanese
Economic Review, Journal of Japanese and International Economies, Macro-
economic Dynamics, and others. He has also had nine books published (six in
Japanese, two in English, one in Chinese). One of his latest co-edited books is
China and Japan in the Global Economy (Routledge, 2018).
Aranya Siriphon is currently Associate Professor in the Department of Sociology
and Anthropology, Faculty of Social Sciences, Chiang Mai University, North-
ern Thailand. Her research interests are border and trans-border studies, and
recent Chinese migration and mobility in the Mekong region.
Chen Tiejun is an economist and Senior Professor at the Institute of Myanmar
Studies of Yunnan Academy of Social Sciences (YASS), China. His research
covers a wide range of areas, including regional economics, Yunnan’s eco-
nomic development, the Greater Mekong Sub-region, the China-ASEAN Free
Trade Area, and international regional cooperation. He had been in charge
of a number of important national, provincial, and international cooperation
research programs. He is the author of several books, including On Yunnan’s
Balanced Regional Economic Development, Yunnan’s Two-way Opening-up
in Pan-Pearl River Delta Region Cooperation and the Greater Mekong Sub-
regional Cooperation, and 30-years’ Border Opening-up of Yunnan: The History,
Achievements and Experiences.
Lee Lai To is Senior Professor and Director of the Asian Research Center for
International Development, Mah Fah Luang University, Thailand. He was
Head of the Department of Political Science, National University of Singa-
pore; Senior Teaching Fellow of the School of Humanities and Social Sci-
ences; and Adjunct Senior Fellow of the S. Rajaratnam School of International
Studies, Nanyang Technological University, before taking up his position in
Thailand. He took part in many track II meetings hosted by ASEAN Institutes
of Strategic and International Studies (ASEAN-ISIS), Council for Security
Cooperation in the Asia Pacific (CSCAP), and other institutions as Director of
the Singapore Institute of International Affairs. Presently, he is the advisor of
the Political Science Association of Singapore. His publications include three
single-authored books and many conference papers, and articles in interna-
tional and regional journals. In addition, he is the editor or co-editor of ten
books.
Kornphanat Tungkeunkunt (陈玉珊), PhD, born and bred Thai-Chinese, is
an assistant professor teaching East Asian history and Chinese history at the
Faculty of Liberal Arts, Thammasat University, Thailand. She received a BA
in Chinese from Chulalongkorn University (Thailand), an MA in Chinese his-
tory from Nanjing University (PRC), and a PhD in Chinese Studies from the
National University of Singapore. Her interests lie in interactions between East
Asia and Southeast Asia. Her English publications appear in Asian Perspective
and the International Journal of China Studies, and her Chinese publications
 Contributors xi
in Southeast Asian Affairs, as well as many articles in Thai journals. Currently,
Kornphanat is doing documentary research on the Cold War as a collaboration
project with the Center for Cold War International History Studies at East
China Normal University.
Wasana Wongsurawat is Associate Professor at the Department of History, Fac-
ulty of Arts, Chulalongkorn University, Thailand. She obtained her doctoral
degree in Chinese history from the University of Oxford in 2007. She served
as a postdoctoral research fellow at the Asia Research Institute (ARI) at the
National University of Singapore in 2008 and at Hong Kong Polytechnic Uni-
versity in 2011. Wasana specializes in the history of modern China and the
Chinese Diaspora. Her recent publications include the edited volume Sites of
Modernity: Asian Cities in the Transitory Moments of Trade, Colonialism and
Nationalism (2016) and her forthcoming monograph, The Crown and the Cap-
italists: The Ethnic Chinese and the Founding of the Thai Nation (2019).
Lei Zhuning is the Deputy Director and Associate Professor of the Institute
of Myanmar Studies of Yunnan Academy of Social Sciences (YASS), China.
His research covers Myanmar studies, the Greater Mekong Sub-region
(GMS), Lancang-Mekong Cooperation (LMC), the Bangladesh-China-India-­
Myanmar Economic Corridor (BCIM-EC), and Yunnan Province’s opening-
up policy. He participated in the drafting of Yunnan’s overall gateway strategy
for further opening up to South and Southeast Asian countries which was
approved by the central government of China in 2011, as well as other related
development plans, including the 13th Five-year Plan (2016–2020) for the
BCIM-EC for the Yunnan government of China.
Zhuang Liwei was Professor of Politics at the School of International Studies
and Director of the Institute of Southeast Asian Studies, Jinan University.
Preface

This volume is a collection of revised papers presented at a symposium on “Chi-

na’s Reforms in the New Era – Implications for East Asia”. The symposium was
never meant to give a comprehensive review of China’s reforms. After all, numer-
ous meetings, official or otherwise, were held to commemorate, celebrate, ana-
lyze, or assess China’s reforms at the time of the 40th anniversary of what China
calls gaige kaifang (“reform and opening up”) in 2018. Our purpose was basi-
cally to host a modest meeting to look at selected issues of reformist China from
East Asian perspectives. Invitees to the symposium were free to define the focus
of their papers. In the end, most, if not all, of them examined contemporary Chi-
nese issues, especially Chinese people-to-people and developmental relations and
impacts on East Asia from the perspective of the author’s own country. It should
be added that efforts were made by the symposium to reflect some Thai scholar-
ship on China as our support came from Thailand. In this regard, we thank the
Thailand Research Fund (TRF) for the grant to organize the symposium. We
also thank the academic staff of the School of Social Innovation, especially the
dean, Professor Siriporn Wajjwalku, for all their support, as well as the research
and administrative staff of the Asian Research Center for International Deve-
lopment, especially Ms Yarinda Bechiku, at Mae Fah Luang University, Chiang
Rai, Thailand.
In conjunction with the presentation of papers by participants, the symposium
was also an occasion for the major research centers working on China in Thailand
to link up to promote Chinese studies. We were most encouraged when Profes-
sor Vanchai Sirichana, founding president of Mae Fah Luang University, dropped
in on our symposium to give us moral support. Eventually, the Thai University
Network for Chinese Studies was formed by five founding institutional members
at the symposium. The newly established network comprises the following cent-
ers/institutes: Asian Research Center for International Development, School of
Social Innovation at Mae Fah Luang University, Center for China and Globaliz-
ing Asia Studies, Faculty of Social Sciences and Humanities at Mahidol Univer-
sity, China-Southeast Asian Studies Center, Faculty of Social Sciences at Chiang
Mai University, Institute of Asian Studies at Chulalongkorn University, and Insti-
tute of East Asian Studies at Thammasat University.
xiv  Preface
To begin, the Asian Research Center for International Development, School
of Social Innovation at Mae Fah Luang University, the initiator of the network,
will serve as the secretariat.
It must be added that it was most unfortunate and tragic that one of the par-
ticipants, Professor Zhuang Liwei from Jinan University, was fatally wounded in
a traffic accident just before the presentation of his paper. We were all shocked
and deeply sorry for the whole episode. The symposium paid its due respect
to Professor Zhuang Liwei and wished him rest in peace. The study of China
and Southeast Asia has certainly lost an important scholar. In memory of Pro-
fessor Zhuang Liwei, this volume is dedicated to him for his contributions to
scholarship.
Introduction
Lee Lai To

After more than 40 years of reform and opening up in China, it is opportune to

pause and reflect on the progress and challenges of the Chinese developmental
strategy and its implications for the rest of the world, particularly for the neigh-
boring East Asian region.
Emerging as the second largest economy and the largest trader in the world,
China is no doubt in the ascent in regaining its power and influence in interna-
tional affairs. While realizing the Chinese Dream is still quite a distance away,
President Xi Jinping has already laid down a roadmap for China to become a
strong, modern socialist state by 2050. As noted by some of the authors of this
volume, the low profile and gradualist or incremental approach to development
emphasized by Deng Xiaoping is giving way to a more ambitious, if not auda-
cious, strategy, so much so that some observers would regard China as an asser-
tive power. To be sure, China has become more confident in trying to regain its
historical greatness and past glory. It has mapped out grand strategies like the
launching of the Belt and Road Initiative (BRI), Asian Infrastructure Investment
Bank (AIIB), and Lancang-Mekong Cooperation Mechanism and suggested
constructing what it calls a community with a shared future for mankind. Cer-
tainly, it would not shy away from taking the lead. In fact, in emphasizing mul-
tilateralism, globalization, consultation, and cooperation in world affairs, China
would like to play “an active part in shaping global governance”.1 As elaborated
by Foreign Minister Wang Yi, China is working actively to forge a new type of
international relations.2
It is interesting to note that China, as a communist state, is now emphasiz-
ing free trade, globalization and multilateralism, strategies, concepts, and poli-
cies that were supposed to be promoted by the Western world. Nonetheless,
these “liberal” emphases by China in international economics and politics should
be coupled with the understanding of the “conservative” developmental strate-
gies and approaches at home. Notably, while the market plays a role in parts of
the economy, what China has is essentially state-driven capitalism. The hand of
the government is omnipresent. In this connection, the leadership of the Party
is the golden rule. In addition, the Party-state oftentimes uses economic instru-
ments or economic statecraft to promote its national interests. In many ways,
China is still sinocentric despite talk of making the global governance system
more just and equitable.
2  Lee Lai To
The relative success of China’s developmental strategy has no doubt attracted
worldwide attention, particularly from developing countries. Interestingly, it has
enthused some academics to come up with what is called the Beijing Consensus
as an alternative to the Washington Consensus. Essentially, the Beijing Consensus
emphasizes a pragmatic and gradualist approach a la Deng Xiaoping, highlighting
independence and self-determination in meeting the developmental challenges
according to the needs of the country. In contrast to the neoliberal and one-
size-fits-all approach of the Washington Consensus, there is flexibility in the Bei-
jing Consensus in solving developmental issues, and it accepts the need to have
unique approaches to meet the needs of the countries. In many ways, the Beijing
Consensus, based on the experiences of a developing country, shows that the
developmental strategy that has helped developed countries in industrialization
may no longer be regarded as instructive or applicable.
It seems that China was coy to talk about its experiences as a model initially.
With growing confidence and success, it is now ready to firm up with the view
that there is a China developmental model. According to official sources in
China, this developmental model could be summarized by seven characteristics.
They are: (1) practice-based reasoning; (2) a proactive government; (3) stability
as a top priority; (4) improving people’s livelihood as a main goal; (5) gradual
reform; (6) mixed economy; and (7) opening to the outside world.3 If these fea-
tures are followed, it is clear that the model differs from the Western emphasis
on liberalization, privatization, and deregulation of free-market capitalism as it
accepts only semi-free markets and places the state in a position to play the critical
role in developmental strategy.
China’s economic success no doubt has emboldened its desire to spread its
wings and share with other states, especially those in developing regions, its
developmental experiences. So far, it seems China does not impose conditions on
governance in foreign aids, investments, and trade, or for that matter, in foreign
policy. After all, it has been professing the importance of non-interference in the
internal affairs of others. It remains to be seen if that is practiced, especially in
countries that are increasingly dependent on Chinese assistance.
One of the best examples in sharing its developmental experiences with other
countries is perhaps the relentless efforts by Beijing in promoting the BRI under
Xi Jinping. The BRI is essentially based on two routes, a maritime road and
an overland road with multiple networks. Undoubtedly, the BRI is the center-
piece of China’s foreign policy in the New Era. It is not only an ambitious effort
to rebuild cooperation and connectivity along the “Silk Roads” and strengthen
China’s economic performance, but also an attempt to transform the develop-
ment model led by the West to ones tailored or led by developing countries. It is
a massive and ambitious effort to show that emerging economies, led by China,
could become providers of development needs. China would like to think that
the BRI is a drive that could deepen South-South cooperation and even facilitate
“changes in the global governance structure”.4 In this regard, China’s pride and
confidence is evidently displayed. In a way, it is trying to exert global leadership of
a rising super power. More importantly perhaps, it is trying to regain the respect
 Introduction 3
that it used to get in traditional China. However, unlike the inward looking
“Middle Kingdom” of the past, reformist China is “getting out” and would like
to make its presence felt globally.
For this volume, the chapters make no attempts to give a comprehensive cov-
erage of China’s reform and developmental strategies and their implications for
East Asia. They do not really deal that much with high politics or economics,
areas that are covered widely, especially at the time when China was celebrating
its 40 years of reform and opening up. Instead, it starts off with two chapters
dealing with issues at the people’s level, issues that are perhaps more related to
the common people.
To share China’s developmental experiences, and oftentimes to showcase Chi-
nese strengths and achievements, Beijing has been conducting what is called
people-to-people exchange with other countries. In this regard, the first chapter,
written by Zhuang Liwei, highlights the general features of China’s policy ideas/
objectives and policy practices in people-to-people exchange. His prognosis is
that there are some discrepancies between the ideas/objectives and practices.
Whereas the major emphasis of the practice for the exchange is orchestrated by
the government to build up “soft power” by publicity and public and one-way
display mainly on culture, the objective of promoting people-to-people interac-
tions is not really implemented. In fact, there is a lack of direct exchange at the
grassroots, and as such, the exchange lacks the social foundation for international
understanding. Zhuang would like to suggest that a genuine realization of under-
standing among people “requires full activation and use of the power of non-
governmental organizations [NGOs] and the formation of transnational civil
societies” in people-to-people contacts. If China wants to work for Xi Jinping’s
grand plan on a community with a shared future for mankind, Zhuang would
emphasize that working together and people-to-people contacts conducted by
transnational NGOs and civil societies could be an important way in building
community. In light of the backlashes against some of the projects promoted
by China’s BRI, it is most pertinent to note Zhuang’s analysis that the one-
way people-to-people exchange should be coupled with the understanding of the
concerns, aspirations, and demands of the people at the grassroots level in the
host countries along the Silk Roads.
The second chapter dealing with issues at the people’s level is a study of China’s
outbound tourism by Aranya Siriphon and Zhu Jinsheng. With more than three
decades of developmental success at double-digit growth rates, more and more
Chinese citizens can afford to travel. Their pent-up desire to see the world seems
to have been met when droves of Chinese tourists are seen, especially in Asian
countries such as Thailand, Japan, Korea, Hong Kong, Indonesia, Vietnam, Sin-
gapore, and Malaysia. In fact, China is “the world’s largest international tourist
senders and spenders”, according to Aranya’s and Zhu’s study. While tourists
usually decide their destinations for themselves, the authors suggest that the hand
of the state in the case of China is evident. By examining the chronological devel-
opments of China’s outbound tourism since the 1980s and the use of outbound
tourism by China in international politics, it is demonstrated that Beijing’s control
4  Lee Lai To
and intervention has been important in shaping China’s outbound tourism. In
addition, Beijing could use outbound tourism to serve its diplomacy. In fact, Chi-
nese outbound tourism could be a very important diplomatic tool in rewarding
or punishing the destination countries. It may be asked if China has challenges or
problems in controlling and directing the flow of Chinese tourists. From the study,
it seems that at the people’s level, as suggested by the authors, Beijing is effective in
mobilizing its citizens as the latter behave as citizens-subjects and are exhorted to
be “good members” in building a rising China. Perhaps more importantly, there is
what the authors call “filial nationalism”, notably among the young, to defend the
interests of the country.
While China’s developmental success has strengthened its confidence in pro-
moting and projecting its influence overseas as demonstrated by the first two
chapters, it should be added that its developmental success has certainly affected
the way other states would like to relate to China. With regard to the neighbor-
ing East Asian countries, the focus of this volume, it starts with the way that
Japan could relate itself to China. Analysts on Sino-Japanese relations are well
aware of the occasional tensions between the two countries because of history,
territorial disputes, security, power rivalry, and competition. However, in terms of
economics, there is actually a lot of room for cooperation between the two coun-
tries. This is precisely what Chapter 3 by Masaya Sakuragawa tries to suggest by
exploring whether China and Japan could work together for an “Asian Century”.
He would like to think that to overcome the dominance of the international
system by the West, a rising China, with the support and cooperation of Japan,
could strengthen Asian leadership in the global order. To do that, he notes that
China and Japan would have to tackle several problems. Among them could be
China’s slowdown in technological progress, rapid credit expansion and housing
bubbles, trade war with the US, dependence on the dominant role of the US dol-
lar in the world economy, and constraints in taking a leadership role. The author
adds that Japan, just like China, has problems in taking a leadership role in Asia
because of its close links with the US, resulting in its inability to make decisions
independently. Last but not least, the author notes that China and Japan do not
have the experiences in exercising joint leadership, and this may make it difficult
for the two to work together to pursue their common interests. In light of the
problems, Sakuragawa comes up with proposals to promote cooperation between
China and Japan. These proposals include trade policy, international rule making,
investment in infrastructure, cooperation with the Association of Southeast Asian
Nations (ASEAN), and establishing currency autonomy. The author contends
that China or Japan by itself alone cannot compete with the US. The best-case
scenario would be for the two to join hands and cooperate for the future “Asian
Century”.
Chapter 4, which also deals with China’s developmental relations with East
Asian countries, is a study from a Korean perspective by Seungho Lee on “Trans-
boundary river cooperation between North Korea and China: the Yalu and
Tumen rivers”. North Korea is probably one of the classic examples of the kind of
cooperation between China and a state considered to be close and friendly. From
 Introduction 5
a strategic perspective, North Korea is oftentimes regarded by China as a “lips
and teeth” relationship. The truth is that, if the North Korean regime is in trou-
ble, it will definitely affect China, especially the northeastern part of the country.
Strategically, North Korea can serve as a buffer state in dealing with Japan and
the US. Ideologically, it is also one of the few remaining communist states with
which China is comfortable working. Thus, it is not surprising that China has
been accommodating in cooperating with North Korea on transboundary rivers,
namely, the Yalu and Tumen rivers. After an overview of the two rivers, Lee dem-
onstrates that the focus of cooperation has been on hydropower development
in the case of the Yalu River, and trade, investment, energy, tourism, and the
environment in the case of the Tumen River. It is interesting to note that in light
of challenges such as floods, maintenance of dams, and sustainability issues per-
taining to the Yalu River, Lee suggests trilateral cooperation among South Korea,
North Korea, and China with reference to its water resources management. In
the case of the Tumen River, the “sluggish development” of the Greater Tumen
Initiative (GTI) could be attributed to its shortage of funding, lack of general
and specific long-term plans, differences in the political and economic systems
of member nations, and uncertainties about the membership status of North
Korea and Japan. Naturally, extra efforts are needed to overcome these challenges
in order to have sustainable development and cooperation in the Tumen River
Basin. Lessons could also be drawn for multilateral cooperation of other rivers,
for example, the Mekong River. This is precisely one of the major points in the
conclusion when Lee touches on the implications of the two case studies for the
Lancang/Mekong River Basin. In this regard, he suggests that China’s new ini-
tiative, the Lancang-Mekong Cooperation Mechanism, can have “a far-reaching
impact on transboundary river relationships in due course”. He also emphasizes
that seeking benefits for all parties in transboundary rivers would carry a long way
and that such an approach would be helpful to China’s BRI. Last but not least,
he suggests that cooperation in the Yalu and the Tumen rivers could pave the way
for peace and prosperity and continuous dialogues among the countries which
would create enhanced benefits for all.
Having dealt with the Northeast Asian states, the remaining chapters look
at developmental relations between China and Southeast Asia. It begins with
Chapter 5, an analysis on Sino-ASEAN relations with regard to natural rubber
trade by Montchai Pinitjitsamut. He points out that ASEAN is a major producer
of rubber, accounting for no less than 75% of the world’s supply. Among the
ASEAN states, Thailand, Indonesia, Malaysia, and Vietnam are the four largest
producers and exporters of rubber in the world. Most of ASEAN’s natural rubber
is exported to China. In fact, China is the world’s largest rubber user, especially
its tire industry, as a result of its rapid economic growth. From the various sce-
narios of Sino-ASEAN natural rubber trade, Pinitjitsamut emphasizes that if both
ASEAN and China adopt protectionist measures, they may create unnecessary
costs and new risks. Logically, promoting mutual collaboration would be benefi-
cial to both sides. As such, policies should be designed to encourage cooperation
in trade, research, price stability, and other areas. From Pinitjitsamut’s analysis,
6  Lee Lai To
China, as the world’s largest rubber user, has the ambition to develop Qingdao
in Shandong as an international rubber trade center. It begs the question whether
ASEAN states are likewise planning to come together to form an ASEAN rubber
center to strengthen the region’s power and influence in the international rubber
trade not just with China but also with other parts of the world.
After the analysis on the overall developmental relations between ASEAN and
China with reference to the natural rubber trade, Chapter 6 deals with China and
selected parts of Southeast Asia. In this regard, the focus chosen by Lei Zhuming
and Chen Tiejun in their study is about the reforms and opening up of Yunnan
and their implications for the Mekong region. As is well known and widely ana-
lyzed, China’s initial reform and opening-up strategy under Deng Xiaoping was
to apply it experimentally in four special economic zones in Shenzhen, Zhuhai,
Shantou, and Xiamen and later on coastal cities in eastern China. This tilted
emphasis actually contradicts Maoist emphasis on balanced growth and bridg-
ing the developmental gaps between the coastal regions and the inner regions.
As coastal cities prospered under Dengist policies, Beijing probably realized that
the gaps between the eastern region and the western region should be narrowed
and that more attention and resources should be paid to the relatively backward
provinces in western China. In this way, Yunnan began to reap some benefits in
advancing its development. As analyzed by Lei and Chen, Yunnan’s opening-up
was different from that of the coastal areas of China. It was not until 1992 that
the Chinese government decided to have border economic zones in Yunnan pro-
moting cooperation with Southeast Asia in terms of South-South cooperation
and not so much to upgrade the modernization and internationalization of the
Chinese economy designed for the coastal regions. As highlighted by Lei and
Chen, Yunnan’s border economy is “intended not only to promote economic
development and poverty reduction, but also to strengthen and ensure border
stability and security, ethnic harmony and good-neighborliness”. In this regard,
the authors use Yunnan’s participation in the Greater Mekong Sub-region (GMS)
cooperation and roles in the BRI and the Lancang-Mekong Cooperation to sub-
stantiate their analysis. They also presented the achievements in such regional
cooperation schemes. By using a case study on cross-border activities along the
China-Lao border, they noted the importance of benefit-sharing and inclusive
growth in promoting border cooperation. While recognizing the role of the gov-
ernment, they highlight that bilateral and regional cooperation should also take
into account the role of the market and participation of the people. Looking
ahead, the authors stress the necessity to combine economic development with
poverty alleviation and environmental protection. The latter is no doubt the con-
cerns of the common people. In addition, they emphasize the importance of pol-
icy coordination, institutional construction, and people-to-people connectivity.
Again, the last emphasis centers on interactions and cooperation among the peo-
ples. Finally, among the difficulties and challenges for border development, the
authors recommend more attention to solve non-traditional security problems.
In the final analysis, the authors would like to think that Yunnan is prepared to
further promote regional cooperation and contribute to the improvement of the
 Introduction 7
livelihood and well-being of the peoples in the Mekong region. It is interesting
to note the overall tone presented by the authors seems to have given the place
of the people more prominence in regional development.
The final two chapters basically deal with China’s developmental relations with
special reference to Thailand, one of the leading ASEAN states. Chapter 7 by
Kornphanat Tungkeunkut and Kanya Phuphakdi examines the diplomatic dis-
course in Chinese diplomacy. The authors emphasize that “the diplomatic dis-
course is the language used in a diplomatic realm” to highlight its foreign policy
and strategy. In addition, the diplomatic discourse could reveal types of China’s
bilateral relations. In this regard, the chapter deliberates on the use of the broth-
erhood discourse in China’s bilateral relations with neighboring countries, with
special reference to Thailand. Having examined China’s diplomatic thought in
the contemporary era, the authors proceed to survey how China uses the broth-
erhood discourse to set normative principles with Southeast Asian countries, indi-
cating its expectations and mutual shared history. They suggest that China puts
neighboring countries as “the top priority in its foreign policy” and that the close
relationship between China and Southeast Asian countries is oftentimes framed
in family and kinship terms. While the authors note the overall brotherhood rela-
tionships between China and Southeast Asia, they would admit that some are
more brotherly than others. In addition, the authors note that China has a deeper
tradition to draw from in its neighborhood diplomacy, at least when compared
with Sino-African relations. With regard to Thailand specifically, the brother-
hood discourse is always expressed in the standard phrase “China and Thailand
are brothers”. While this brotherhood seems to be adhered to from the historical
survey for political, economic, and cultural reasons, it is perhaps useful to bear
in mind that there are always sibling rivalries and family squabbles. More impor-
tantly, each side would place emphasis in promoting its own national interest. As
mentioned by Lord Palmerston, “there are no permanent friends or permanent
enemies, only permanent interests”.
Chapter 8, written by Wasana Wongsurawat on the developmental influence
of the People’s Republic of China (PRC) on the ethnic Chinese in Thailand, is a
treatise of how the rise of China in the New Era has produced what the author
calls “a surprising equalizing effect in Thailand’s domestic scene” and that Chi-
na’s rise “would appear to be a strong force behind Thailand’s development into
a fairer and more equal society”. To substantiate her views, Wongsurawat starts
with a succinct historical summary of events leading to the anti-communist, US-
backed Thai government to adjust its policy to improve relations with communist
China. The change of the Thai conservative regime in dealing with the PRC was
reflected not only in the establishment of formal ties with Beijing in 1975, but
also the cosy relationship between the Thai royal family and the Chinese govern-
ment in the New Era. For the latter relationship, Princess Sirindhorn becomes
the “royal icon of PRC-Thailand relations”. The remaining part of the chapter is
basically an analysis of the impact of China on the ethnic Chinese in Thailand.
It is noted that with the influx of Chinese capital, tourism, and immigration,
the center of action for the Chinese communities is not only based in Bangkok
8  Lee Lai To
but also in northern and northeastern regions of Thailand. Provincial centers
of the ethnic Chinese communities have become more influential and China-
oriented, producing an equalizing effect in the Thai domestic scene. Finally, this
chapter examines the impact of the rise of China on the diasporic nature of the
ethnic Chinese community in Thailand. In light of the prevalence of Putonhua
and Chinese culture, tourism, and relocation of Chinese citizens in Thailand,
Wongsurawat argues that the ethnic Chinese in Thailand are “slowly but certainly
becoming increasingly nationalized to become more of an extension to the Chi-
nese nation and part of the expanded greater Chinese economy”. As such, the
ethnic Chinese community will “eventually cease to function as a Diaspora com-
munity”. In this connection, for the ethnic Chinese in Thailand, the rise of China
would attract them to follow or identify with the cultural and linguistic standards
of China as analyzed by the author. While the rise of such a cultural and linguistic
identity is natural and probably inevitable, it remains to be noted that the chal-
lenge is, at least from the perspective of nation-building and national security, will
this eventually influence the political identity of the ethnic Chinese in Thailand,
or for that matter, in other countries with sizable ethnic Chinese communities?
In addition, a related question is will these ethnic Chinese communities be able
or willing to make a deliberate distinction between the socio-cultural identity and
political identity? With the rise of China and its upgrading of living standards
and the environment, especially in urban areas, will there be emigration of some
ethnic Chinese from Southeast Asian countries and other parts of the world to
China? These are probably some of the challenges in dealing with overseas Chi-
nese issues in the future.
In pursuit of the Chinese Dream, China will follow the framework laid down
by what is called Xi Jinping Thought on Socialism with Chinese Characteristics
for A New Era. While there may be improvements and adjustments along the
way, be it the restructuring of the economy by emphasizing supply-side reforms
at home, or BRI strategies abroad and other initiatives, it is evident that China
will not follow some of the practices of the developmental strategies of the West.
The record shows that China wants to benefit from the developments of the West
without embracing its ideals and norms. While attracting foreign investments,
endorsing a place for the private sector, and use of market forces in the economy,
China has never lost sight of the importance of emphasizing the role of the state
over liberalization. While joining multilateral organizations like the World Trade
Organization, China does not want to accept all the international rules and laws
which it did not play a part in formulating. Certainly, it is not inclined to accept
the Western-led world order. As the second-largest economy and a rising super
power, China is determined to chart its own course and future. In this light, it
is unproductive for the West to tell the Chinese to adhere to the Western liberal
model. While the West, especially the US, finds it difficult to adjust to a stronger
China, countries in East Asia have basically accepted that it is better to work
with a rising China, as demonstrated by the chapters in this volume. East Asian
countries probably find it easier to understand China’s aspirations, behavior, and
 Introduction 9
culture. For some, their geographical proximity to China would reinforce on
them that it is wiser to work with the Dragon for mutual benefits.
It remains to be asked that with the trade war, or strategic competition between
China and the US, how would other countries in East Asia balance their ties with
China and the US, especially in light of the fact that many of these countries have
strong ties with the latter? To be sure, while the lure of China is great, the US
remains important for the security and economic stability of East Asia and the
Asia-Pacific region. In its contest for influence in the region, the US may pres-
sure East Asian countries, especially its allies and friends, to support its policies.
A good example is the US initiative in promoting the Indo-Pacific strategy to
counteract the influence of China, notably the BRI. It is clear that many coun-
tries, including the small and medium states in East Asia, will have to perform a
delicate balancing act in this major-power competition. While many of them are
no stranger to major-power politics, the hope of small and medium states is that
they will not be forced to take sides in the China-US contest. Better still, ASEAN
and East Asian countries could get together and play a role in lessening the ten-
sions or even promote understanding and cooperation between these two great
powers.

Notes
1 Speech by Wang Yi, state councilor and minister of foreign affairs, at the opening
of the Symposium on the International Situation and China’s Foreign Relations
in 2018 on 11 December 2018 retrieved from http://fi.china-embassy.org/eng/
zxxx/t1621221.htm on 23 April 2019.
2 “Six keywords representing China’s diplomacy in 2018: Chinese FM” retrieved
from http://en.people.cn/n3/2018/1214/c90000-9528599.html on 14 Decem-
ber 2018.
3 For details of these characteristics, see, for example, “What is China’s development
model?” in People’s Daily Online, 21 March 2019.
4 “Belt and Road brings new changes to global governance” in Global Times, 5 May
2019.
1 The gap between China’s
people-to-people exchange
policy and its aim to promote
understanding among
peoples in the world
Zhuang Liwei

Currently, building political trust, promoting trade and economic cooperation,

and developing a people-to-people exchange have been the three major focuses
of China’s foreign policies. The purpose of “people-to-people exchange” is to
promote “understanding among people” and solidify the social foundation of the
relations among countries. Therefore, local and central governments have stipu-
lated plans for “people-to-people” exchange and many enterprises, institutions,
and social groups have actively participated in “people-to-people exchange”
activities organized by the government. However, there are some cognitive
errors and inappropriate working guidelines that are detrimental to the quality
and effects of the implementation of relevant policies. They include at least the
following problems:

First, “people-to-people exchange” mainly refers to the exchange of culture

(the great culture concept generally includes arts, education, sports, tour-
ism, and media, etc.);
Second, the objective of “people-to-people exchange” mainly includes exter-
nal publicity and public display, including why China is a friendly and grow-
ing country, why China’s foreign policy is right, and so on;
Third, “people-to-people” exchange is a government project and thus is
mainly funded and organized by the government; and
Fourth, Chinese-style “people-to-people exchange” can build up “soft power”
and promote understanding among people.

A number of reports of and comments on policies show one common phe-

nomenon within China: papers with titles or subtitles including the expres-
sion “people-to-people exchange” (a literal back translation of Chinese ren wen
jiao liu) discussed in the main body are in fact using the concept of “culture
exchange”. It is a widespread subconscious practice. Nevertheless, if we com-
pare this with its official English translation of “people-to-people exchange”, the
difference becomes more obvious because the original meaning of “people-to-
people exchange” suggests “exchanges among people” or “exchanges in the civil
society”. It includes exchanges among people in various fields and issues (such as
life, work, belief, public welfare, interests and hobbies, and so on). The main part
 China’s people-to-people exchange policy 11
of “people-to-people exchange” is “among people” or directly between “people-
to-people” and “people-and-people”, and it includes a great many spontaneous,
scattered, and private exchanges among people. Therefore, the key point of “people-
to-people exchange” is “people” rather than “culture”.
For foreign “people-to-people exchange”, at best, the following tendencies
should be avoided: (1) excessive emphasis on exhibitive and even pretentious
“exchanges”, (2) undue inclination towards unilateral and even spoon-­feeding
“exchanges”, (3) over-emphasis on “cultural” and even art “exchange”, and
(4) over-reliance upon the government to plan, orchestrate, and host the
activities.
As for foreign policies to promote understanding among people and solidify the
social foundation of relations among nations, this paper believes that firstly, one-
sided, mechanical, and subjective understanding of “people-to-people exchange”
should be avoided; secondly, the concept of “people-to-people” exchange is not
the best and most fruitful path to promote understanding among people and
solidify the social foundation of relations among countries, and more appropriate
political doctrines can be found to replace it. Overall, the purpose of this chap-
ter is to determine the basic characteristics of policy ideas and practices of China’s
foreign “people- to-people exchange”, explore the cognitive errors, debate and
discuss differences in relevant concepts and ideas, and propose personal opinions
concerning ways to effectively promote understanding among people and solidify
the social foundation of relations among countries.

Basic features of China’s current foreign

“people-to-people exchange”
The “people-to-people exchange” referred to by the academic, political, and
socio-cultural groups within China mainly focuses on the exhibition of arts, edu-
cational and touristic cooperation, themed forum, scholastic dialogue, and visits
among media in terms of its contents and styles.
Take, for instance, the 2016 consultation list of the “Meeting of the China-
United States High-Level Consultation on People-to-People Exchange” (CPE),
China’s largest external people-to-people exchange mechanism. It divides the
content of “people-to people” exchange between China and the United States
into seven categories: (1) education (48 specific projects), (2) science (29 pro-
jects), (3) culture (22 projects), (4) hygiene (14 projects), (5) sports (31 projects),
(6) women (three projects), and (7) adolescents (seven projects). The content is
varied and includes educational policy exchanges among governments, Ameri-
can people learning Chinese, student leader study camps, Chinese government-­
sponsored studies in the United States, exchange visits by university sports teams,
children’s theater mutual visits, Chinese modern dance groups participating in the
American Dance Festival performances, a United States library holding “China
Watermark Woodcut Exhibition”, Chinese art groups participating in the “World
Music Festival” in Chicago, exchange visits by over a hundred directors of hos-
pitals between China and the United States, Sino-United States Youth Thinkers
Round Table, China Youth Travel Service and other organizations jointly calling
12  Zhuang Liwei
for papers under the theme of “China-United States Tourism Year – Stories of
People-to-People Exchange”, and other activities.1
The “people-to-people exchange” activities just mentioned generally share the
following characteristics: (1) Chinese institutions and personnel visiting the United
States far outnumber those of the United States, and the visits are mostly dis-
patched by government organs and state-owned units; (2) in terms of the number
of exchange projects, the “great culture” projects (culture + education + sports)
number 101, ranking first, and that in the field of “technology + hygiene” is 43,
ranking second. The exchange is a profitable project since China benefits from
technological and hygienic exchanges far more than the United States does. It
should be noted that for “people-to-people exchange” projects between China
and Asian, African, and Latin American countries, there are generally compara-
tively fewer technological exchange projects; (3) the number of “women” projects
in the public welfare category (aiming to promote the rights of women) is minimal
(three projects), and they are mostly proposed by the United States; (4) of all seven
youth projects, four are forums and dialogues; and (5) exchanges between the
press and non-governmental organizations (NGOs) have barely been mentioned.
The China-United States “people-to-people exchange” framework shows
more traces of China’s initiative as the number of Chinese people and institutions
participating in exchanges far exceeds that of the United States, and the number
of exchange projects that the Chinese government has paid for and coordinated
has also far surpassed that of the United States. Judging from the list of exchange
projects, the US government has spent little money in coordinating people-to-
people exchanges between China and the United States.
The aforementioned exchanges are the result of seeking common ground
while reserving differences after negotiations between Chinese and American
counterparts. Therefore, there are few exchange projects in the area of promot-
ing women’s rights, news media, and NGOs. And the exchange mainly focuses
on areas of the great culture (culture + education + sports) and utilitarian fields
in science and hygiene.
Currently, many other practices of foreign “people-to-people exchange” poli-
cies in China also equate “people-to-people exchanges” with “cultural (great
cultural concept) exchanges”, and in many relevant texts interpreting the poli-
cies, “people-to-people exchanges” and “cultural exchanges” are often used
interchangeably. “People-to-people exchange” is even translated as “cultural
exchange” in English, rather than “people-to-people exchange”.
For example, the article entitled “The Belt and Road Promotes Cultural
Exchange between China and Foreign Countries” points out that:

The BRICS Summit held in Xiamen has adopted “people-to-people

exchange” as the third pillar to strengthen the BRICS cooperation on the
basis of the two pillars of political security and economic cooperation, pro-
moting the transformation of the BRICS countries from a community of
shared interest to a community of shared future. It has profound implica-
tions for cultural exchanges along the Belt and Road.
 China’s people-to-people exchange policy 13
The rest of the article discusses mostly “cultural exchanges” as well. Another
example is that till the end of 2016, China has signed 318 inter-governmental
cultural exchanges and cooperation agreements, executive plans, and other agree-
ments with countries along the “Belt and Road”. They established 11 Chinese
cultural centers and jointly established five major alliances: the Silk Road Inter-
national Theatre Alliance, the Silk Road International Library Alliance, the Silk
Road International Museum Alliance, the Silk Road International Art Museum
Alliance, and the Silk Road International Festival of Arts.2 One more example
is found in a policy report published in December 2016 on a Yunnan website
under the title “Yunnan Plans for the Establishment of South and Southeast Asia
­People-to-People Exchange Center (2016–2020)”. It proposed that in the next
five years, Yunnan Province will establish people-to-people exchange and coop-
erative mechanisms in the fields of cultural arts, news publishing, radio, film and
television, education, hygiene, sports, tourism, cultural industries, think tanks,
and so on.3 The foregoing examples represent China’s general understanding of
the area covered by “people-to-people exchange” and is basically emphasizing
the notion of “great culture” exchange.
In addition, the pattern of external “people-to-people exchange” is gener-
ally one way, with more exchanges exported and fewer exchanges imported.
For example, in the area of press/media exchanges, according to the report
on “Enlarging the Circle of Friends through People-to-People Exchange”, the
Yunnan Daily Press Group has cooperated with mainstream media in more than
ten countries and published in the mainstream newspapers of countries such as
the United States, Indonesia, Myanmar, Cambodia, and India for special issues
on Yunnan China in the local languages. Yunnan Television, together with Lao
National Television, have jointly organized shows such as China Theater, Chinese
Farm, Chinese Animation, and other TV shows. It has also cooperated with Thai
companies, launching tourism programs such as “Thai Play” in Thailand.4 How-
ever, this report on the “exchange” does not mention any foreign counterparts
reaching China.
It is interesting to note that in the report “Guangxi Strengthens ‘People-to-
People Exchange’ and Cooperation with the Association of Southeast Asian
Nations (ASEAN): Concerto Getting Grander”, Guangxi Television and Guangxi
People’s Broadcasting Station have broadcast several excellent Chinese movies
and TV dramas in ASEAN countries in their respective languages since 2013.
They also co-organized the China Theater with ASEAN television stations and
held China-ASEAN Film Week to promote China’s outstanding films to “go
out”. TV dramas such as Happy Memories of the Ma’s, Romance of Three King-
doms, and Beijing Youth; Chinese animations such as Bao Dada, the Boy with Cat’s
Eyes; and films such as Lost in Thailand and Tangshan Earthquake have been
broadcast successfully in some ASEAN countries and are remarkably popular with
the local people.5
Last but not least, a report about past performances by China Culture Daily,
a newspaper affiliated with the Chinese Ministry of Culture, has also men-
tioned many instances of China’s theater troupes going out. Take Indonesia as
14  Zhuang Liwei
an example. In August 2014, the Chinese Ministry of Culture sent the large-
scale stage play troupes “Taichi Chart” and “Colorful China” to Indonesia to
perform; from 2015 to 2016, the Ministry sent theater troupes successively to
Surabaya, Bali, Yogyakarta, Semarang, and Jakarta to participate in the “Happy
Spring Festival” event; in April 2016, China’s Philharmonic Orchestra, under the
theme of the “Maritime Silk Road”, went on tour in Indonesia and the large-scale
dance drama “The Dream of the Maritime Silk Road” was performed there; and
in November 2016 the Chinese ballet Raise the Red Lantern was performed in
Indonesia.6 In addition, the song and dance dramas Angkor Wat Mysterious Smile
of Buddha and Angkor Dynasty, created by Chinese arts institutions, have long
been performed in Cambodia. By 2017, the four Chinese classics A Dream of the
Red Chamber, Romance of the Three Kingdoms, Water Margin, and Journey to the
West have all been translated into Malay and published and distributed in Malaysia.
The aforementioned pattern of conducting unilateral exhibitions could be
related to the gap in the strength of cultural industries between China and
Southeast Asia. In building China’s image, whether in the US, Southeast Asia, or
elsewhere, it was done mainly through displays rather than interactive communi-
cation, the effect of which has been severely criticized.
In summary, the basic characteristics of China’s current “people-to-people
exchange” activities are: the government pays and organizes them, they focus on
(great) cultural exchanges, and one-way cultural output and display.
With regard to the mutuality of cross-border exchanges, an American non-
profit organization, People to People International (PTPI), puts forward its
objectives “to promote continuous cross-cultural interaction among ordinary
citizens around the world” by stating that “Our mission is to promote mutual
understanding and friendship among nations through activities in the fields of
education, culture, and humanitarianism, including motivating direct exchanges
of ideas and experiences among people in different countries and cultures”.7
Obviously, the output of cultural products and cultural industries of one-way
display cannot meet the goals of “direct exchanges” and “mutual understanding
and friendship”.
In response to the lack of direct exchange at the grass roots in China’s cultural
exchange activities with Africa, Li Anshan criticized and noted the following:

This (exchange) is run by the government and often lacks a solid social foun-
dation. Cultural activities are limited to the official level that it is difficult to
include the grass roots. Poor management of the government will result in
negative outcomes of these activities which will enlarge the distance between
the two parties.8

And this form of “going out” but not “going in” “people-to-people exchange”
with little social foundation is exactly a reflection of some of China’s working
styles that pursue extravagance and superficiality.
Different voices can also be heard from the targets of China’s foreign “people-
to-people exchanges”. At the China-United States High-Level Consultation on
 China’s people-to-people exchange policy 15
People-to-People Exchange in 2016, the then US Secretary of State, John Kerry,
seldom mentioned the numerous “cultural exchanges” that the Chinese govern-
ment coordinated but praised the physicians of the United States and China for
the improvement in health of the people of the two countries and their joint work
on challenging the diseases of breast cancer, diabetes, and cardiovascular disease.
Kerry emphasized this by noting that:

In the view of the United States, the concept of people-to-people exchange

is just that. It’s people to people; not government to people or government
in the way. It’s people to people. It’s a chance for citizens in both of our
countries to communicate, to compete, to study, to share experiences in a
genuine, balanced, and transparent way. And it’s a way for them, like that
walk up the mountain, to get rid of all the politics and just break through as
human beings. So what does that mean when we translate it into policy? It
means that American schools and representatives should have the same access
to information and people in China that Chinese institutions and individuals
enjoy in the United States. It means that our exchange programs have to be
equally open to American and Chinese scholars, speakers, and programs. It
means that U.S. public diplomacy programs should never be canceled or dis-
rupted from some kind of external interference – just as I absolutely guaran-
tee you we would never seek to constrain any Chinese program whatsoever
occurring in the United States.9

Obviously, when China is carrying out the Chinese style “people-to-people

exchange” with the United States with great fanfare (official coordination, c­ ulture-
focused, and one-way display), the United States emphasizes unfettered, unoffi-
cial, informal, two-way and people-to-people interactions, communications, and
“working together” on topics or activities. To be sure, the two sides have some
common interests as well as some considerable conceptual differences in “people-
to-people exchange”.

Differences in concepts and ideas

A number of compound concepts similar to “people-to-people exchange” can
be found in English, such as “people-to-people contact”, “people-to-people
engagement”, “people-to-people diplomacy”, “people-to-people dialogue”,
“people-to-people cooperation”, “people-to-people communication”, and so
on. It is acceptable to translate “people-to-people” as “between people” (a
literal back translation of its Chinese translation). Yet, in China’s official tran-
script, “people-to-people exchange” is translated as “humanistic exchange”
(a literal back translation of Chinese ren wen jiao liu) rather than “exchange
between people” or “people-to-people contact”. And herein lies the question
whether the “humanistic exchange” of Chinese characteristics is the same as
“people-to-people exchange” in English and whether there are any cognitive
differences.
16  Zhuang Liwei
In fact, translations of “humanism” (a literal back translation of Chinese ren
wen) in China’s foreign communication differ in policy texts and policy inter-
pretation documents, suggesting sloppiness and incongruity in political beliefs
and confused understandings of what content and forms of people-to-people
exchanges (of different countries) should be.
Take “Humanistic Olympics” (a literal back translation of Chinese ren wen ao
yun) proposed by the Chinese government in 2008 as an example. Its English
translations in China’s official documents and media include “People’s Olympics”,
“Human-oriented Olympics”, “Humanistic Olympics”, “Humanity Olympics”,
“Cultural Olympics”, and “Culture-enriched Olympics”, etc. Whether Beijing
Olympic Games is one “oriented towards the people” or one “of culture” natu-
rally is the result of differences in working mindsets. Then what is China’s official
translation of “Humanistic Olympics”?
In the English version of the speech made by Liu Qi, president of the Bei-
jing Organizing Committee for the Olympic Games (BOCOG), at the closing
ceremony, “Humanistic Olympics” (ren wen ao yun) was translated as “Peo-
ple’s Olympics” instead of “Cultural Olympics”. The author believes that it is a
proper translation. People-oriented and centered thought is in itself the essence
of “humanism” in the past as well as in the present and is a worthy human
value to be recommended. The meaning of “humanism” in Chinese includes
both “human” and “culture” literally, and the combination of the two suggests
human-oriented culture.
Since we acknowledge the translation of “humanistic exchange” (a translation
of ren wen jiao liu) as “people-to-people exchange”, then it is an exchange activ-
ity that takes the people as the main body and the people as the main service tar-
gets. If we understand that “people-to-people exchange” is only the output and
display of culture, then it is likely that we understand the “People’s Olympics”
as “Cultural Olympics” or “Culture-enriched Olympics”, which deviates from
the theme. In short, the “people-to-people exchange” among countries refers
to extensive and daily cross-nation, non-governmental exchanges of the people,
by the people, and for the people and can be translated directly as “exchanges
between people” or “people-to-people contact”.
In addition, “people-to-people exchanges” (a literal back translation of Chi-
nese min jian jiao liu) is not equivalent to “people-to-people diplomacy”. The
interpretation of “people-to-people diplomacy” in the Oxford International
Encyclopedia of Peace is that people-to-people diplomacy is a transnational
­conflict-resolution strategy, underpinning the role that private citizens may play
in mitigating hostile interstate relations.10 Compared with the “people-to-people
exchanges”, “people-to-people diplomacy” is a concept in a relatively narrow
sense because it has a clear utilitarian and country-based nature, whereas “people-
to-people exchanges” are spontaneous and entail a wide range of topics and the
wills of the authority and policies are not the primary starting points for “people-
to-people exchanges”.
“People-to-people exchange” is a logical result of human nature. In the real
world, there are also many transnational non-governmental exchanges that do
 China’s people-to-people exchange policy 17
not bear a utilitarian consciousness of “executing national diplomatic tasks”. If
these daily, spontaneous, and unofficial transnational non-governmental exchange
activities have promoted friendly relations among countries, it is just an indirect
and objective result. As for those “civil diplomacy” or “public diplomacy” that
are promoted, guided, and funded by the government to serve explicitly the
country’s foreign policy objectives, they constitute only a special area in the mass
of civil exchanges. On the whole, transnational exchanges among peoples tran-
scend diplomacy and interstate politics. They are not an appendage to govern-
ment policies (such as “public diplomacy”) but have their own laws, rhythms,
and independence.
In China, there is also a concept of “people-to-people diplomacy” (literal back
translation of Chinese ren wen wai jiao). At the press conference of the second
session of the 11th National People’s Congress of China on 7 March 2009, the
then Foreign Minister Yang Jiechi proposed the policy concept of “people-to-
people diplomacy” under the topic of “People-to-people Olympics” with the
English translation of “people-to-people diplomacy” as “cultural diplomacy”. By
comparing the official translation of “People’s Olympics”, it can be found that
while the Chinese of both “people-to-people diplomacy” and “People’s Olym-
pics” include “people”, their connotations differ. The latter emphasizes “peo-
ple”, and the former emphasizes “culture”. In China, it is normal to think of
“culture” implying everything. Traditionally, China has paid much attention to
culture (evidence can be found in old sayings such as “value culture and educate
people with it”). In the current world, culture has become more important as
a commodity. Therefore, the official translation of ren wen ao yun as “People’s
Olympics” rather than “Cultural Olympics” can be seen as a kind of conceptual
progress.
It is also worth noting that in the English version of one declaration of the
Fifth China-Philippine cooperation forum in Beijing in 2012, “humanistic
exchanges” (literal back translation of Chinese ren wen jiao liu) were translated
as “people to people and cultural exchanges” (i.e. people-to-people contact +
cultural exchanges). The “people to people exchange” refers to the exchange of
NGOs for social welfare and the dispatch of international volunteers. Interest-
ingly, in 2015, the Chinese government issued a new version of China’s policy
to Africa in Johannesburg in which shen hua he kuo da ren wen ling yu jiao liu
yu he zuo was translated as “deepening and expanding cultural and people-to-
people exchanges” (i.e. cultural exchanges + people-to-people contact). As for
“people-to-people exchanges”, the document points out that China will con-
tinue to enhance people-to-people exchanges to increase mutual understanding
between Chinese and African people and push forward cooperation on improv-
ing people’s livelihoods; encourage and guide Chinese young volunteers to go to
African countries to deliver volunteer services and engage in poverty alleviation,
education assistance, and other activities; maintain good cooperation on multi-
lateral women’s affairs; and intensify friendly exchanges and cooperation between
Chinese and African trade unions.11 The awareness that “cultural exchange” was
unable to cover “people-to-people exchange” had at least been explicit in the
18  Zhuang Liwei
China-Africa Cooperation Forum and the texts on China’s policy toward Africa.
As a result, “cultural exchange” and “people-to-people exchange” have to be par-
atactic. Under the framework of people-to-people exchange (which even includes
the interaction of the trade unions of the two parties), they are matters of differ-
ent people “working together”.
In short, it can be seen that ren wen jiao liu in Chinese and its English transla-
tion “people-to-people exchange” show connotative and cognitive differences in
which the former emphasizes “culture”, whereas the latter emphasizes “people-
to-people”. That the peoples of different countries convene only for the exchange
of culture, and only for high-end fine cultures, with no communications of daily
life or work, is after all shaky in foundation, superficial, and lively for only a brief
period.
Then why is there this kind of cognitive differences?
First, it is related to the formalistic working style of the Chinese government
and society, including the pursuit of high-end, high-grade superficial livelihood,
with the appearances of leaders and cultural utilitarianism featuring “economic
opera in cultural setup”, deviating “people-to-people exchange” from the origi-
nal connotation of “people-to-people”.
Second, it is also related to simplified sloppiness of the Chinese academia and
think tanks, such as the habitual annotation following the government intention
and casual use of concepts. As a result, a mixed or equivalent use of “cultural
exchange” and “people-to-people exchange” can be seen in some interpretations
of policies by academia.
The last and most important reason is that China traditionally has valued “cul-
ture” (such as rituals, grand appearances, and doctrines) over “people”. Although
government officials pronounce that the head of state “loves the people as their
sons”, the logic behind this is simply arbitrary hierarchical logic indicating that
“I am the boss”. People’s and citizens’ subjectivity cannot be manifested. As a
result, people-to-people exchanges that were originally part of human nature
and social daily life have become “government projects”. And once they become
“government projects”, their day-to-day and grassroots nature cannot be main-
tained and they cannot grow spontaneously, resulting in superficial scenes of hav-
ing a “cultural feast” or “humanistic feast”.
The author believes that a true understanding of “people-to-people” and a
lasting and profound “people-to-people exchange” (or “people-to-people con-
tact”) require valuing people’s subjectivity, the day-to-day nature of these activi-
ties, and the extensiveness of the issues covered.
First of all, do not evade the exchange of values. “People-to-people exchanges”
have included the content of values and universal public welfare since ancient
times or else how can the world be transformed? If China only exports and dis-
plays its characters, calligraphy, paintings, dramas, martial arts, cooking, soap
operas, pandas, and other soft contents, but avoids the hard issues of common
concerns of the world, such as good governance, the rule of law, peace, human
rights, freedom, justice, and civil society, then China’s foreign “people-to-people
exchange” will bring to people around the world no more than a taste of exotics
 China’s people-to-people exchange policy 19
but no demonstrative, sharing, and resonating functions on values and issues of
public interest.
“People to People International” (PTPI) is a non-profit organization in the
United States. Julius from the Philippines came to the United States in 2014 to
participate in the Global Youth Forum hosted by PTPI. This was his first time
abroad. His experience is that the real need of a community is determined by itself.
Learning by experience is the best way. Leaders must share a common vision with
their groups. The connection with different people is the greatest wealth one
can possess. Everyone can help improve his or her communities. Finally, peace –
although a very big concept – can be achieved through mutual understanding.12
There was no praise of the United States in his exchange experience. The great-
est lesson this Philippine juvenile acquired in the American “people-to-people
exchange” project is that he can learn good values there. Suppose a Filipino
youth comes to China to participate in a series of “people-to-people exchange”
activities. How would he (she) talk about his (her) own experience? A compre-
hensive review of media reports within China may show that their common idea
is: “Wow! China is amazing. Great fun. I want to come to China again!” Since
China has spent so much money on “people-to-people exchanges”, why cannot
it be a learning and export center of nice values?
Second, the promotion of “people-to-people exchange” (or “people-to-people
contact”) cannot rely solely on certain special, grand government projects held
several times annually but should rather depend on the building of fine images,
the showing of friendly gestures, and the sharing and co-constructing of beauti-
ful things during the extensive, day-to-day and cross- national exchange activities
by the Chinese people. For instance, currently, many immigrants from Africa
and local Chinese have been contacting and communicating directly and work-
ing and living together at the grass roots, forming an important field of China’s
foreign “people-to-people exchange” (or “people-to-people contact”). The way
a Guangdong resident treats an African immigrant living in the same city and the
way an African resident from Guangdong interacts with the locals make no less
contribution to “people-to-people exchange” than the sweeping visits of cul-
tural troupes. The interactions of these at the grass roots are exactly examples of
“people-to-people” daily interaction. It is unrealistic to just translate “people-to-
people” as “ren wen” (meaning humanities).
Along with the development of globalization and increasing convenience of
communication today, a number of “indirect people-to-people interactions”
appear in daily life through media information as the medium. For example,
some Chinese netizens posted aggressive, presumptuous, prejudiced, and racist
online Chinese remarks about people from other countries, thus bringing about
huge costs to China’s heavily spent “heart-winning projects” in the conduct of
“people-to-people exchanges” with those countries.
The everyday spirits of the Chinese people and the country’s everyday social
scenes can form indirect or direct civil interactions through the global informa-
tion media. The perception gained through such information is also an interac-
tion. Therefore, features of a country’s system, society, and people through the
20  Zhuang Liwei
influence of the global information media, can automatically become the con-
tents of transnational perception and interaction. Thus, the so-called platform for
“cultural diplomacy” and “people-to-people diplomacy” does not only reside in
cross-border settings (such as the sending of art performance teams and public
welfare volunteers overseas), but also in daily life scenes (such as the unremitting
development of civilized and beautified individuals and society).
Third, the promotion of “people-to-people exchanges” (or “people-to-people
contact”) and realization of “understanding among people” requires full activa-
tion and use of the power of non-governmental organizations (NGOs) and the
formation of transnational civil societies. The establishment of mutual trust and
closeness among peoples and societies demands that the peoples and societies
themselves stand up and conduct cross-border interactions rather than be led by
the government. Doing this would require thousands of NGOs to participate
so that societies of different countries can be automatically and organically con-
nected, forming common social space across nations. In this new type of social
space, people of different countries can seek common ground while reserving dif-
ferences, help one other, and form a community of shared future across the border.
And the transnational NGOs’ network is an important part of the commu-
nity of a shared future. “Working together” and “sharing the results of work-
ing together” are the basic operating principles of it. In fact, the interaction
among these people can no longer be simply summarized by “people-to-people
exchanges”. For example, more and more ordinary Chinese people are participat-
ing in the works of Medecins Sans Frontieres (MSF) so that an increasing number
of Chinese volunteers can be seen in this prestigious international humanitarian
aid organization. This will undoubtedly help improve foreign people’s under-
standing of Chinese society – such as the humanitarian dedication and inter-
national perspective of the Chinese people, and the openness of the Chinese
society as the Chinese are free to join international NGOs. Another example is
the China Climate Action Network (CCAN, whose blogs include “to Copen-
hagen”, “persisting moving of carbon”, “non-governmental research team on
policies restraining plastic bags”, etc.). It is an action network built up by Chinese
NGOs that focuses on climate change, and one of its important works is com-
municating and cooperating with Climate Action Network (CAN). Its members
include many grassroots NGOs dedicated to ecological protection. They have
cooperated and acted along with experts and volunteers outside China to protect
the indigenous ecology. Their works have been praised by people in other coun-
tries. In 2016, CCAN also participated in the UN Climate Change Conference
in Paris and presented to the General Assembly an article concerning the position
of Chinese NGOs on climate change. This is a typical case of “working together”
between Chinese civil society and international civil society.
From the author’s perspective, the aforementioned case is the most important
way to realizing “understanding among people” and “solidifying the social foun-
dation of relations among countries”. Conducting merely “people-to-people
exchanges” is not enough to achieve understanding among people, and more
targeted policy concepts should be made clear.
 China’s people-to-people exchange policy 21
The author believes that “deepening people-to-people contact” can be adopted
to substitute “developing people-to-people exchange”. In the Chinese language,
“exchange” is only a part of “contact”, and the latter entails important contents
such as “working together” and “sharing the results of working together” in
addition to exchange. Next comes the understanding of “deepening”. It refers
to promoting the formation of “common transnational social space”, enabling
people to actively build working networks beyond borders and establish common
transnational living space while loving their own countries. It is also the proper
connotation of “the community of shared future for mankind”.
“People-to-people contact” is a concept that is more compatible with the prac-
tical needs of today’s relations between China and the rest of the world than “peo-
ple-to-people exchanges” or “non-governmental exchanges”. Non-­governmental
exchange is an important part of people-to-people contacts. “Exchange” sug-
gests the circulation of values, knowledge, emotions, and aesthetic experience,
whereas “contacts” involves making friends and together building teams, doing
businesses and public welfare projects, establishing transnational living and work-
ing circles, and constructing common social space beyond borders in addition to
“exchange”. Under the guidance of the policy concept of “deepening people-to-
people contact”, workers in the field of external relations will not only be limited
to the superficial exchange and display of a country’s own distinctive cultures,
but also dive deeper and more actively in concluding emotional ties “between
people” and showing greater initiatives understanding the core interests of each
other. In this way, a “community of shared future for mankind” will truly be put
into place.

From one-sided display to “working together”

China’s one-sided “people-to-people exchange” mostly focuses on three things:
(1) teaching Chinese, (2) exhibiting Chinese culture, and (3) explaining to oth-
ers why the Chinese road to socialism and China’s domestic and foreign policies
are right. This may be understandable from a national perspective. After all, these
exchanges are promoted and funded by the government. However, this may not
be appropriate in view of the impact on national interests because of one-way
“exchanges” neglecting understanding of the value preferences, core concerns,
and cultural traits of the other countries, thereby impacting the effects of the
implementation of foreign policies and even bringing unnecessary troubles to
bilateral relationships.
Because of different national conditions, the day-to-day core concerns and mat-
ters of urgency in other countries are probably not the same as the emphases in
China (such as learning Chinese, understanding Chinese culture, and evaluating
Chinese ways and policies); it may be difficult for other countries to copy China’s
way just as China has always wanted not to follow the paths of other countries.
Therefore, while teaching others Chinese, China should also help local educa-
tion. While demonstrating Chinese culture, the Chinese government should also
help local communities to carry forward and develop their own cultural heritage.
22  Zhuang Liwei
When it comes to the persuasion of others about the correctness of China’s roads
and policies, the ways and values of indigenous development that are generally
acknowledged by the local society should also be understood and supported.
Changing the so-called people-to-people exchange mode featuring one-
way indoctrination means that China should follow a “working together” and
“among people” mode, not only dispatching teachers of the Chinese language
and Chinese artistic groups and broadcasting video advertisements about “good
images” of China locally, but also sending volunteers to “work together” with
local people in “fields of their core concerns” (such as poverty alleviation, medical
care, employment, life conveniences, human rights, social justice, and environ-
ment protection) so that an “organic linkage” between Chinese and foreign civil
societies can be promoted and the social foundation of relations among nations
can be solidified.
The Chinese people and government can, whether directly or indirectly, help
the local people of other countries on issues they are most concerned with in legal
and practical ways. What are the issues that the local people are mostly concerned
with? Take the “ASEAN Socio-Cultural Community” as an example. Its objec-
tives involve issues on the environment, human rights, education, social welfare,
disaster relief, rescue and prevention, women’s and children’s rights, rights of
people with disabilities, rights of the elderly, labor rights, lower-level people’s
rights, indigenous rights, etc. There are many things to do in these areas of “peo-
ple to people contact” and “working together” that can contribute to the solid
promotion of “understanding among people”.
For example, exchanges or communications in education shall not be limited
to only helping local people to learn the Chinese language, but also to under-
stand their most urgent problems in achieving certain targets in the whole edu-
cation system, such as helping drop-out youth back to school, assisting in the
popularization of knowledge on health and epidemic prevention, promoting the
growth of local grassroots theater groups and offering scholarships for outstand-
ing local students (award them for good performance in any subject such as
technology and arts, but not necessarily Chinese), and so on. People of other
countries may prefer arts and technology to the Chinese language. The design
of China’s educational exchanges or aid policies should not be made subjectively
and aggressively for immediate interests.
Strengthening the interaction and cooperation between NGOs of the two sides
should also be an important task to promote understanding among the people.
For example, in Southeast Asian countries, NGO activities are generally relatively
active, constituting a part of their governance systems and a part of their interna-
tional soft influence (such as the role of the Philippine NGO as a publicist van-
guard in the United Nations system). Given the good image of NGOs in the minds
of local people in Southeast Asia, it is of great importance for Chinese NGOs and
Southeast Asian NGOs to develop positive relations of cooperation. The promo-
tion of interaction and cooperation between the NGOs of China and other coun-
tries can start from areas of low political sensitivity such as poverty alleviation,
environmental protection, education, anti-drug campaigns, and public health.
 China’s people-to-people exchange policy 23
The author believes that “working together” is the best way for “people-to-
people” exchange because it is more detailed, thorough, and down-to-earth than
a few hours of artistic performances, one-day forums, and several days of visits
and excursions. Only by working together for a long period can people learn
about the possibility and necessity of knowing one another, contributing to the
formation of a cooperative team, understanding and toleration of one another’s
differences. Speeches at forums, watching performances, and visits and excur-
sions do not require in-depth and comprehensive understanding by both parties,
whereas working together for a long time will expose the strength and kindness as
well as weakness in human nature. Only through such a true interpersonal inter-
action can people start in-depth communication, returning goodwill to goodwill
and dealing frictions with wisdom, bringing about true affinity and understand-
ing among people and people’s hearts.
The author suggests that extensive and long-term “working together”, which
is “people-to-people” “working together” day after day on issues involving the
core concerns of the target society (such as poverty alleviation, disaster relief,
education, health care, employment, human rights, justice, the rule of law, and
environmental protection, etc.), is the most profound people-to-people contact
and most effective people-to-people exchange. Under the larger framework of
“people-to-people contact”, there are “people-to-people exchanges” and non-
governmental exchanges (i.e. the exchange and circulation of values, knowledge,
emotions, and aesthetic experience “between peoples”). They are also funda-
mental projects “promoting understanding among people” “working together”.
However, the exchanges emphasized in this chapter must be direct and down-to-
earth contacts among people of the parties involved, not the one-way demonstra-
tive and superficial “people-to-people exchange”.
Besides, if China is to become an international world power, then the “inter-
national” and “world” features should be manifested within China through more
global “working together” platforms generated domestically. China could invite
more foreigners to study, work, visit, and share stories of their own countries
in China (just as an increasing number of Chinese people are doing the same
abroad), let more Chinese and foreign volunteers and grassroots NGOs work
together for a long time in China, establish more international public welfare
projects, headquarter international NGOs, and invite international NGOs of dif-
ferent kinds to set up subsidiaries and launch activities in China. In this way,
China becomes a great platform for transnational people-to-people contact.
A relevant policy concept of “people-to-people exchange” and “understanding
among people” is the building of a good image of China. A good image cannot
be acquired only through historical static images just as the current Greek gov-
ernment cannot depend on the world’s homage to the “ancient Greek civiliza-
tion” for compassion and assistance to rescue itself from its debt crisis. Scenes
of humanity in current society and attitudes and qualities people show in trans-
national social interactions (particularly when “working together”) are more
representative of the international image of a country and its people than “fine
traditions and culture” existing merely in classics and literature.
24  Zhuang Liwei
For instance, Chinese volunteer Huang Hongxiang (graduated from Fudan
University and Columbia University successively), who participated in an non-
governmental action against the ivory trade in Africa, won the praise of the local
and international public welfare community for his life-risking devotion to the
international public welfare activity. One of his original intentions was to change
harsh stereotypes of people outside China who believe the Chinese are involved
in illegal ivory trade and do not care for wild animals. When stories of Huang’s
deeds circulated back to China, some Chinese netizens immediately shifted the
topic, suggesting Europeans once hunted wild animals in Africa. They did not
pay attention to the value of Huang’s deeds as a precious model of grassroots
activism raising the international image of China and the Chinese people or the
stigma on China by some Chinese ivory dealers but instead were satisfied with a
sort of immoral thought that “we are not the worst”.
Huang mentioned the following: China is the world’s largest ivory market,
and it has purchased about 70% of the world’s ivory. Therefore, in Africa, a Chi-
nese face is a favorite of ivory traffickers and is also the most hated by many local
people. He noted that he participated in many international and African wildlife
conservation conferences where he could not see another Chinese person except
himself. It was even more difficult to see Chinese people in NGOs and African
non-governmental communities related to wildlife conservation, even though
one million Chinese people live there.13 He said:

I gradually realize that problems of wildlife protection have become one of

the major negative images of Chinese people overseas, especially in Africa. . . .
I decided to stay in Africa because since the Chinese are part of the wildlife
protection problem, then the Chinese should also be part of the solution.

If Chinese people do not personally solve the problems they have created
abroad, then what is the use of more so-called people-to-people exchanges? Can
they restore the image of the Chinese people? Should we not set up a list of
China’s negative images overseas and eliminate them through actions? Huang
recalled:

When I was studying at Columbia University, almost half of the American

classmates had participated in the “Peace Corps” (many young Americans
would spend some time in developing countries when they just graduate
to participate in works of agriculture, medical care, and all kinds of things
related to sustainable development). During class discussions, when my
classmates talked about “I was in Haiti during the earthquake” and “When
I was in Mozambique,” I had no idea of how to follow up the conversation
as I had not even heard about some of the places they mentioned, and could
only stutter and say “in China . . .”.14

The good image and high public praise of the Chinese abroad is not the result of
the broadcast of China’s exquisite propaganda film in New York’s Times Square.
 China’s people-to-people exchange policy 25
Rather, it depends on the accumulation of deeds and words of hundreds of thou-
sands of common Chinese people during massive cross-border non-governmental
contacts, including “beautiful Chinese folk stories” of Huang Hongxiang risking
his life to do undercover work and prevent illegal ivory trade.
Participating in international volunteer activities is one of the important ways
for “working together” in transnational people-to-people contacts. The history
of international volunteers dates back to 1909 when the British Red Cross Soci-
ety established a special task force of volunteers. Now there are a number of
prestigious international volunteer groups such as the Peace Corps, Voluntary
Service Overseas (VSO), Oxford Committee for Famine Relief (Oxfam), Japan
International Cooperation Agency (JICA), and so on. In China’s Taiwan, there
are influential transnational, non-governmental volunteering organizations such
as Tzu Chi Foundation and Taiwan AID. And it is necessary for China’s main-
land to establish large-scale international public welfare NGOs with numerous
branches globally and substantial volunteer groups like Oxfam so that the works
of Chinese volunteers can be further internationalized.
The American Peace Corps, established in 1961, usually works in poverty-
stricken and underdeveloped areas of developing countries and with the local
grassroots groups to change their living conditions and increase their devel-
opment opportunities. Their works mainly involve agriculture, community
economic development, education, environment, health care, and youth devel-
opment. So far, there have been more than 220,000 Americans who have par-
ticipated in the Peace Corps, and their footprints have spread across at least 140
countries.15 Volunteering is an entrenched tradition in the West, a result of its
religious background and developed civil society. It can be said to be a product of
civil society. And Western volunteer activities have always followed the principle
of connecting and interacting with the civil society of the help-receiving countries
and with their own volunteers in recipient countries. The network of volunteers
from different countries “working together” across the borders is a transnational
network of civil society.
In fact, China’s transnational volunteer services are also rapidly keeping pace
with the international ones. In his speech in the Indonesian national congress
in 2013, Xi Jinping mentioned that after the Indian Ocean tsunami in late
2004, the Chinese international rescue team was the first international team
that arrived in Aceh, Indonesia, the worst hit area. The team treated more than
10,000 people in just 13 days; and Indonesia, in return, dispatched a medi-
cal team immediately after the devastating earthquake in Wenchuan, China, in
May 2008. They worked day and night regardless of the dangers of aftershocks
and treated 260 victims, 844 residents, and 120 students for free. Before return-
ing, they donated all their money and belongings to the affected region.16 Wang
Xianpeng also mentioned in his article that China’s civilian volunteers sent to
Laos contributed to a great harvest of fruit farmers by improving the melon
cultivation method; teams led by Chinese volunteers set three historical records
in the Lao national basketball championship trials; and currently, young Chinese
volunteers are active in many countries in Southeast Asia such as Laos, Myanmar,
26  Zhuang Liwei
Thailand, and Cambodia, engaging in Chinese language teaching, medical and
health service, agricultural science and technology, physical education, computer
training, vocational education, industrial technology, international relief, and so
on for six months to one year.17
The aforementioned “working together”, “mutual help”, and “philanthropy”
between the people are clearly beyond the scope of the foreign policy concept
of “people-to-people exchange”. These activities have already surpassed the
“exchange” but are a much-needed and effective way of solidifying the social
foundation of relations among nations.

Epilogue: “global system of nations”

and “global system of societies”
The author believes that China’s current external “people-to-people exchange”
activities have played a positive role in promoting the outside world’s under-
standing of Chinese culture and society. Nevertheless, there is still a long way to
go in terms of achieving the goal of promoting understanding among people.
And the fundamental problem is that it lays too much emphasis on exhibitive and
pretentious unilateral exports of values, cultural displays, and government plan-
ning and neglects organic links among civil societies.
In fact, whether it is in domestic or international affairs, every country would
try to participate in or even “incorporate” civil societies and exchanges, making
them instrumental to implementing the will of the nation and the national policy.
Hillary Rodham Clinton, former US secretary of state, in 2010 published in
Foreign Affairs an article entitled “Leading through Civilian Power: Redefining
American Diplomacy and Development”, stating that the United States should
value the use of military force as well as civilian power (meaning the power held
by various non-violent organs and civil social organs), and the United States
could use its strong civilian power in a good way to continue to lead the world.
She referred to numerous cases proving that the civilian power decades preceded
the proposal of the concept of “soft power”, including the establishment of
the Peace Corps by President John F. Kennedy, showing a different side of the
United States to the world, and the “Green Revolution”, led by American scien-
tist Norman Borlaug, helping hundreds of thousands of people out of famine.18
In China, many have linked the concepts of “people-to-people exchange”,
“people-to-people contact”, and “national soft power” together, whereas in fact
no country would be willing to be overwhelmed by the “soft power” of any
other country. Joseph Nye, Jr., suggests that “soft power” is a concept in power
politics and a political ideal proposed for the United States’ goal of hegemony
(i.e. soft power is necessary for the purpose in addition to hard power). There-
fore, it could be interpreted as a political idea oriented toward hegemony. While
in Chinese, ruan quan li is translated as “soft strength” (a literal back transla-
tion) instead of soft power, deviating, to some degree, from its original meaning
of political power and hegemonic politics. Yet, its English equivalent is still “soft
power”, which already entails connotations of power politics and hegemonic
 China’s people-to-people exchange policy 27
politics. Therefore, if “soft power” is listed as an objective of China’s foreign
policy, it is inevitable to ignite hostility of other countries toward China. Quite a
few scholars within China have discussed ways of channeling the power of Chi-
nese people abroad to develop China’s soft power and approaches to attracting
them to serve the construction of China’s foreign “soft power”. These kinds of
discussions and approaches will be detrimental to and damaging to the interna-
tional image of China if it is known to other countries, especially where sizable
overseas Chinese reside.
In general, “people-to-people exchange” and “people-to-people contact” are
spontaneous and independent activities of human society, and they are not the
byproduct of “government projects” or “public diplomacy”. They do not have
to be incorporated by the government as “civil power” to prosper. The two are
natural to human society and emerged earlier than the birth of countries and
international relations.
In the contemporary world, visible civil activities have become an increas-
ingly important source of a country’s external soft influence. For instance, the
Philippines, Denmark, and India have all developed their international influ-
ence through visible transnational activities of their own NGOs, while Britain,
the United States, and France have acquired additional foreign policy resources
because they have created many multinational NGOs. However, it is also neces-
sary to point out that most of these NGOs or multinational NGOs are spontane-
ously initiated by the people rather than products of government policies. Most
of them have independent principles, and many are even designed to fight against
domestic “government evils” and international “country evils”, possessing phi-
losophies and missions transcending the nations and pursuing the common inter-
ests of mankind.
Granted that the government can channel non-governmental sources to realize
objectives of foreign policies such as letting private individuals or NGOs act as the
government’s voice or lobbyist to improve the country’s image in other societies
and then affect the public opinion of that country and its government’s decisions.
But these are only a part of numerous people-to-people exchanges. The “national
image” and “public support” formed in the extensive and in-depth daily non-
governmental exchanges are more real and reliable. Of course, whether it is a
really good image or a really bad one depends on the down-to-earth improve-
ment and upgrading of the connotation of the activities of the country. The effect
of mere embellished external publicity and lobbying is ultimately limited.
Since the nation-state system is still the mainstream structure of human poli-
tics, it is helpful to transcend “inter-organizational (i.e. inter-state) relationship”
when thinking about the existence of the “international” entity and explore the
power of “inter- society (or people-to-people) relationship” against the nation-
state system. Relationships of non-governmental societies of different countries
embody independent and spontaneous natural attributes that are distinctive
from the politics of the nation-state. The “social global system” formed by the
“organic links” of various non-governmental groups could bring about much
positive influence on the “national global system”.
28  Zhuang Liwei
In fact, different countries are also trying to form their own “social systems”
and practice ancient human traditions such as “social associations” and “working
together”. For example, the ASEAN Socio-Cultural Community has established
its own ambition to

contribute to realising an ASEAN Community that is people-centred and

socially responsible with a view to achieving enduring solidarity and unity
among the nations and peoples of ASEAN by forging a common identity
and building a caring and sharing society which is inclusive and harmonious
where the well-being, livelihood, and welfare of the peoples are enhanced.19

When it comes to the chaotic situation in Southeast Asia at the beginning of the
establishment of ASEAN, it must be acknowledged that building such a commu-
nity is a painful and yet ambitious idea.
It should be considered that the community of shared future for mankind is a
manifestation of people’s return to the original aspiration and is the goal of dif-
ferent countries “working together”. So what is the community of shared future
for mankind?
First of all, it is not a product of unilateral construction. When Chinese leaders
talk about policy objectives such as “a community of shared future for mankind”
and “21st Century Maritime Silk Road” on international occasions, they usually
use “co-construction”, a word of bidirectional and multilateral meaning, instead
of a one-way construction. After all, a community of shared future for mankind
means different countries “working together” as “colleagues” toward the same
direction through bilateral and multilateral cooperation.
Second, it means that in such a transnational common social space, “people-to-
people” interactions among people of different countries for common interests
and emotional concerns have formed transnational joint activity networks and
even a set of common values system. That is to say, a “community of shared
future for mankind” should be a “transnational common social space” where
boundaries of countries still exist. It enjoys numerous attributes and spirits simi-
lar to the “society” such as watching out and helping one another, alleviating
poverty, joint consultation, and “working together”. It has an increasing num-
ber of common beliefs, rules and regulations, and shared interests. It is like a
continuous, co-habiting, and mutual-helping social network, gently linking the
fragmented self-help pattern of a country to realize people’s self-redemption.

Notes
1 《第七轮中美人文交流高层磋商成果清单》，中国外交部官网2016年6月8日发
布，www.fmprc.gov.cn/web/zyxw/t1370467.shtml
2 何亚非： 《“一带一路”助推中外文化交流》，FT中文网（2017年9月14日更新发布,
http://m.ftchinese.com/story/001074288?page=3
3 刘 晓 ： 《 云 解 读 ：云 南 努 力 建 设 面 向 南 亚 东 南 亚 人 文 交 流 中 心 》， 云 南 网
2016年12月17日发布，http://yn.yunnan.cn/html/2016-12/17/content_465
7746.htm
 China’s people-to-people exchange policy 29
4 郎晶晶： 《人文交流扩大“朋友圈”》，云南网2017年2月16日报道，http://
yn.yunnan.cn/html/2017-02/16/content_4731181.htm
5 本报讯： 《广西加强对东盟人文交流与合作：合作曲越奏越恢弘》，载《广西
日报》2016年6月21日。
6 王立元、宋佳烜、屈菡、薛帅、程佳： 《文化交流文明互鉴：促进“一带一路”民
心相通》，载《中国文化报》2017年5月15日。
7 People to People International “Our Mission & Vision” www.ptpi.org/About-
Us/Our-Mission
8 李安山： 《 中 非 合 作 的 基 础 ： 民 间 交 往 的 历 史 、 成 就 与 特 点 》， 载 《 西 亚
非洲》2015年第3期。
9 John Kerry, remarks at the seventh annual U.S.-China Consultation on People-
to-People Exchange (CPE), 6 and 7 June in Beijing. https://china.usembassy-
china.org.cn/2016-u-s-china-people-people-exchange/
10 www.oxfordreference.com/view/10.1093/acref/9780195334685.001.0001/
acref-9780195334685-e-564
11 2015年版《中国对非洲政策文件》(中英文版)，参见 www.china.org.cn/chinese/
2015-12/07/content_37256882.htm
12 See People to People International “Stories”, www.ptpi.org/About-Us/Stories-
Submit-Your-Story/2015/Julius-Philippines
13 黄泓翔口述： 《在非洲卧底象牙交易，这位中国小伙正在改变“中国人最坏”的
偏见》，文字记录：单子轩。网易“百家人物”2017年10月13日发布，http://
dy.163.com/v2/article/detail/D0LBPDNS05148UNS.html
14 据前引黄泓翔口述记录。
15 数据来源：美国和平队官网 www.peacecorps.gov 2017年10月26日登录）
16 习近平： 《携手建设中国－东盟命运共同体──在印度尼西亚国会的演讲》，新华社
2013年10月3日电，www.xinhuanet.com/world/xjpynghyj/
17 王宪鹏： 《中国与东南亚的民间外交》，载《公共外交季刊》2011冬季号。
18 Hillary Rodham Clinton, “Leading through Civilian Power: Redefining American
Diplomacy and Development”, Foreign Affairs, November/December 2010.
19 See www.asean.org/wp-content/uploads/images/archive/5187-19.pdf
2 Chinese outbound tourists,
policy reforms, and
mobility regime*
Aranya Siriphon and Zhu Jinsheng

Since the 2000s, Chinese outbound tourism has expanded globally. The expan-
sion appears to stem from two main conditions. For one, this could be attrib-
uted to a steady booming economy and an expanding Chinese middle class with
high disposable income. For another, the expansion appeared together with the
government’s ease of its control over outbound mobility for leisure activities as
evidenced by liberalizing outbound travel laws little by little and regulations to
facilitate its citizens to have more free time and traveling for their pleasure and
leisure. The relaxation has supported Chinese citizens’ decision to travel around
the world.
In light of the circumstances just mentioned, the number of Chinese tour-
ists traveling abroad is exploding nowadays. According to data provided by the
World Bank,1 Chinese tourists traveling outboard climbed from 5.3 million in
1997 to 130 million in 2017, spending and contributing around USD 258 billion
to the global economy in 2017.
These circumstances made China the world’s largest international tourist send-
ers and spenders. Chinese tourists and China’s outbound tourism market nowa-
days become the most significant. They are the largest source of visitors regarding
trips abroad and expenditure on the global tourism economy. Many destination
countries such as Thailand, Japan, South Korea, Vietnam, Cambodia, Russia,
Maldives, Indonesia, the United Kingdom, and South Africa, plus their own
regions (so-called border tour destinations of Chinese territories in Hong Kong,
Macao, and Taiwan), sought to derive higher income from Chinese tourists and
international Chinese tourism (World Tourism Organization 2017).
Many scholars in tourism studies have adopted international relations as an
alternative approach (e.g., Arlt 2006, 2013; Tse 2008, 2013; King and Tang
2009, 18–32; Fan 2010; Mak 2013; Ree 2018) to understand the issues. They
argue that the growing outbound traveling of Chinese citizens nowadays, as well
as in the past, is not determined by Chinese individuals themselves regarding
their desire, motivation, and satisfaction, or regulated by the demand-supply and
economic explanation under the market-driven economy. Instead, the Chinese
state’s control and intervention have been a critical factor in influencing China’s
outbound tourism. The Chinese state at all levels has played significant roles in
regulating Chinese citizens’ traveling abroad.
 Chinese outbound tourists 31
By using the aforementioned alternative approach, intertwined with “cultural
authority” (Nyiri 2006, 2010), this study examines how outbound Chinese tour-
ists intersect with the cultural control of the hegemonic Chinese state through
tourism policy reforms within national and global tourism contexts. This study
also examines how outbound tourism becomes the arena of the Chinese state
exercising its power within international and state geopolitics. It seeks to under-
stand the underlying driving forces of China’s outbound tourism that the Chi-
nese state has been influencing in the exertion of its control over its mobility
under the current mobility regime.
This chapter is based on documentary research and a review of the literature,
including scholarly studies, official papers, and publications in English and Chi-
nese. It is divided into two parts. The first part illustrates the dynamism of Chi-
na’s outbound tourism according to changing tourism policies under the reform
since the economic opening in the 1980s. As elaborated later on, there are at
least four stages changing through time that correspond to the driving force, and
economic and political conditions in China and the world. The current tourism
policy reform (2017–present) is marked as “a cultural turn” of reproducing Chi-
nese civilization in domestic tourism, while China wittingly engages the global
tourism industry by setting up a new ministry and tries to lead the “emerging
world tourism governance”, expecting global organizations would be influential
in global tourism.
The second part summarizes the lessons that destination countries learned in
the past from China’s outbound tourism when dealing with Chinese issues in
international and state geopolitics. Several case studies show how the Chinese
state harnessed its outbound tourism and its citizens toward the flow of inter-
national traveling when China encountered a political issue. Under the Chinese
mobility regime (that the Chinese state has power and economic and adminis-
trative structures to control), this study contends that the mobility regime led
by the Chinese state can potentially direct and regulate the flow of outbound
Chinese tourists to punish or reward destination countries following China’s
foreign policy goals. By saying this, it implies that, although the Chinese state
opens the economy under the market-oriented notion, the Chinese state excels in
governing mobility, regulating Chinese citizens through several structures han-
dling China’s economy and politics. Some scholars (e.g., Urry 2000, 186; Nyiri
2010, 3–4) have argued that the Chinese state has retained its role of a “garden-
ing state” while adapting the rules of “gamekeeper state” to regulate and order
travel of Chinese citizens. Nyiri (2010) asserted that the Chinese state maintained
hegemonic representations of Chinese culture, history, and geography through
a multiplicity of media, the design and use of public (online/offline) space, and
economic and administrative tourism enterprises. It shows the unique Chinese
characteristics of the People’s Republic of China (PRC) nowadays, characterized
by a mixture of state harness and market mechanisms.
The authors argue that, when China faces international and political issues,
especially when these pertain to significant national interests, Chinese citizens not
only act in accordance with the guidance of the Chinese state through designated
32  Aranya Siriphon and Zhu Jinsheng
multiple media, economic and administrative controls of tourism, and a hegem-
onic televisual/virtual discourse, but also respond to the issues self-consciously.
They would support actions such as sanctions, bans, condemnations, cancella-
tion of trips, and even boycotts of cars and products from foreign countries. The
motivation of Chinese citizens to act self-consciously does not derive from the
order of the Party-state but from a desire to defend the discourse of their harmo-
nious and civilized nation as the “land of propriety” (li yi zhi bang) against those
who challenged it. It is what Fong (2004) called “filial nationalism”, displaying
patriotic loyalty to the fatherland, especially by the young Chinese generations
and millennials.

China’s outbound tourism: dynamism and policy reform

“Pragmatism” is the approach applied by China’s outbound tourism policy. Its
instrumentality is based on the effectiveness of purpose and experimentation of
methods (Wang 2017, 1038–1044). The Chinese state, over time in different
stages, used pragmatism to guide economic and political developments and pat-
terns of internal and external relationships (Dai et al. 2017, 253–258). China’s
outbound tourism experienced strict control from 1950 to 1980 when the Cul-
tural Revolution almost closed off China from the outside world. Tourism dur-
ing that time was a “non-issue” (bu zheng zhi feng). It was prohibited because
traveling for leisure was a wasteful behavior, representing a sign of bourgeois life-
style against ideological communism (Nyiri 2010). After Chairman Mao’s death
in 1976, China’s new regime under Deng Xiaoping and his designated succes-
sors turned Maoist policies upside down. The reform of the economy, polity,
and social structures shifted to become more open, leading to market-oriented
capitalism with unique Chinese characteristics (Huang 2008). The new trend
has transformed tourism policy, both domestic and outbound. Some scholars
(e.g., Zhang and Heung 2002; Arlt 2006; WTO 2017, 21–24) suggest that Chi-
na’s dynamic outbound tourism policy and its implementation after the 1980s
could be classified into at least four stages.

Stage 1: visiting friends and relatives—VFR regulations

(1983–1997)
From 1983 to 1997, the developmental stage of visiting friends and relatives
(VFR) in Hong Kong or Macao and border tours was implemented as a tenta-
tive policy. The tentative policy was experimentally introduced under the specific
idea of “strengthening the bonds with ethnic Chinese living in Hong Kong,
Macao, Taiwan and elsewhere outside China. Ideally and experimentally, the ten-
tative VFR policy and strengthening of bonds with the ethnic Chinese with the
state’s encouragement was part of the Chinese citizens going-out, and Chinese
overseas and compatriots coming-in strategies” (To 2014, 105–107; Siriphon
2016, 1–17). At the time, the Chinese state recognized the strengthened Chinese
bond connecting with the overseas Chinese, Huaqiao, and compatriots as a major
 Chinese outbound tourists 33
source of rebuilding the “new China”. The strategy was to help boost invest-
ment and economic growth, and to make known the new business opportunities
in China. The policy implementation worked well, gaining the sympathies of
overseas Chinese, who wished to restore their sense of being Chinese by flowing
into a homeland for both business and cultural attachments. It is important to
note that such a notion is debatable among Chinese scholars who look at the flux
of Chinese overseas and their investment into Mainland China as opportunism
(Ong 1997, 176–178).
Following the tentative VFR policy, from 1983 onward, the China Interna-
tional Travel Service (CITS) was structured as the core of this process in setting
mobility regulations, allowing Chinese citizens traveling to visit friends and rela-
tives, crossing the border to Hong Kong and Macao. The tentative VFR policy
also included outbound traveling to some Southeast Asian countries such as
Thailand (1988), Malaysia, Singapore (1990), and the Philippines (1992), illus-
trating the idea of using outbound tourism to build closer bonds with the over-
seas Chinese. The policy was somewhat successful as approximately eight million
Mainland Chinese citizens crossed the border to Hong Kong, Macao, and Tai-
wan in 1996. By 2017, the number of Chinese citizens for border tours in these
areas, the so-called greater China locating within China’s territorial sovereignty,
alone reached 100 million.2
While CITS is responsible for the VFR policy, the China National Tourism
Administration (CNTA), another official body that implemented tourism policy
and mobility regulation, was tasked to apply the policy to the moderately devel-
oping outbound tourism to other areas. The policy aimed to restrict outbound
traveling to Western countries for official delegations, students who pursued
their education abroad following the Chinese modernization policy, and study
groups traveling to leading economic countries to visit fairs or business partners,
or attend training programs (Lim and Wang 2005; Arlt 2006). It is noted that
when CNTA applied a “moderately developing outbound tourism” policy, the
policy was deliberately ambiguous. This was to allow the government to have
more time to prepare for unfamiliar situations, to gather more information to
see how Chinese people might react to opportunities to travel overseas, to learn
how to negotiate with foreign countries to overcome the complex processes and
restrictions in visa application, to make overseas travel more accessible to Chinese
citizens, to observe how the destinations might treat Chinese visitors, to moni-
tor how outbound tourism might affect the balance of trade and the domestic
economy in China, and so on (Tse and Hobson 2008).

Stage 2: the Approved Destination Status (ADS) system

and the great leap forward in tourism (1997–2005)
The years 1997 to 2005 signified official recognition of the existence of out-
bound leisure tourism. As stated in 1997 by He Guangwei, the former director
of the CNTA, China should develop its outbound tourism in an “organized,
planned, and controlled” way (Guangwei 1997). The policy during the time was
34  Aranya Siriphon and Zhu Jinsheng
proactive when the ADS mechanism in 1995 and the 1997 “Provisional Regula-
tion on the Management of Outbound Travel by Chinese Citizens at Their Own
Expense” were implemented. The ADS system is the outbound tourism approv-
als based on bilateral tourism agreements signed between China and destination
countries. The agreement allowed self-paying Chinese tourists to visit another
country for pleasure on the condition that they traveled with guided package
groups (at least five persons per group), with special visas operated by approved
and licensed Chinese travel agencies and companies.
The CNTA, the Ministry of Foreign Affairs, and the Ministry of Public Secu-
rity co-worked to regulate the ADS system beginning in 1995 and were respon-
sible for managing the outflow of tourists from China abroad. Since then, more
bureaucratic procedures regarding passports, currency exchange, visa application,
and relevant outbound procedures were simplified and relaxed. It is important
to note that during 1999–2002, ADS agreements signed between China and
destination countries focused mainly on Asian and Oceanic countries where large
overseas Chinese communities could connect to China. However, in 2002 China
granted ADS to some countries with small overseas Chinese communities such as
Malta, Egypt, and Turkey in 2002, and Croatia, Cuba, Germany, Hungary, India,
Maldives, Pakistan, South Africa, and Sri Lanka in 2003.
Apart from the ADS policy granting permission for the destination, regulat-
ing the behavior of Chinese citizens when going abroad has also been the state’s
concern and mission, because Chinese tourists, during the early stage of China’s
opening policy, did not have much sophisticated experience for traveling abroad.
The Chinese state treated Chinese tourists, among other Chinese groups going
abroad, as representatives of the nation. Therefore, they should reflect the good
image of the Chinese nation as the “land of propriety” (li yi zhi bang). This
mission reflected “the cultural authority” in an attempt by the Chinese state
to govern its citizens. To achieve the mission, CNTA and the central govern-
ment’s Office of the Spiritual Civilization Development Steering Commission
(the latter was established in 1997) are the mechanisms to promote nationwide
propaganda and ideological dissemination on building a “spiritual civilization”
(Jingshen Wenming). After 2003, their tasks were to promote civilized behav-
iours among Chinese travelers and restore the country’s image. The two official
institutions designed the particular action plan entitled “Action Plan to Raise the
Civilizational Quality of Chinese Tourists” to outline the good manners of Chi-
nese citizens traveling abroad. The action plan included the publication “Guide
to Chinese Tourists’ Civilized Behavior Abroad”, and setting special courses
on the “habits and customs” of destination countries. All regulations, instruc-
tions, and manuals from the government were sent to travel agencies, tour opera-
tors, and tourism enterprises owned by the Chinese state, such as CITS, to train
guides and ask tour guides to remind tourists about proper behaviours during the
trip (cited in Nyiri 2010, 134–137). The Chinese state is concerned with citizens’
exposure to areas beyond its territory since international tourism involves cultural
consumption. The exposure could lead to issues confronting self-conscious Chi-
nese citizens and destination cultures socially and culturally.
 Chinese outbound tourists 35
Stage 3: modernizing outbound tourism with
Chinese characteristics
From 2006 to 2016, the Chinese state aimed at a “healthy, sustainable and orderly
development” by adopting appropriate regulations and laws, making its citizen
more sophisticated. After 2003, the flood of outbound leisure group tourists
increased when China granted ADS partly or fully to different regions, especially
Western/European countries. It marked the change from previous policies of the
VFR into a release of more Chinese outbound destinations to serve the “desire of
the Chinese citizens to see the world” (cited in Tse 2013). Notably, the Chinese
government granted more types of visas to Hong Kong, which included not only
the VFR permission for friends and relatives visitation, but also the addition of
another type of Individual Visit Scheme (IVS) in July 2003, allowing tourists or
visitors from Mainland China to visit Hong Kong as independent travelers. While
adding more types of visas for Chinese individuals to go on border-crossing tours,
the National State Council also granted more ADS for Chinese package groups.
By 2017, the ADS permission was granted to 146 countries.
During this time, the Chinese government, CNTA, and relevant official bodies
sought to strengthen supervision, improving the tour qualities and administra-
tive arrangements to better regulate tourism activities. The CNTA drafted a new
and more positive approach to outbound tourism, changing from controlling the
volume of outbound travels toward a more pragmatic policy giving more room
for balancing the market with the government’s encouragement and restriction
(Arlt 2006). The Chinese government has paid closer attention to set better
regulations in light of a chaotic and mostly unregulated situation that developed,
with many travel groups organized by non-authorized agencies in the form of
zero-dollar tours and other undesirable effects both in China and outbound. For
the outbound travel policy, the government put its effort into regulating and
scrutinizing tour industry and market practices, especially when long-standing
malpractices of the travel trade were found to be rampant after 2006 (e.g., zero-
fare tour groups, negative commission tours, over-promises of travel advertise-
ments, coercive/commissioned shopping in designated shops, illegal overstaying,
and operating outside of licensed businesses). Along with the proactive quality
improvement, the Chinese state requested Chinese tourists to keep promoting
the good image of a nation with a 5,000-year history by being courteous and
well-mannered, and respecting local customs and laws (Arlt 2006).
China’s new tourism regulations led to the enactment of the 2013 Tourism
Law, the first such law replacing the administrative regulations made by the
state council (Ma et al. 2015, 229–237). Among the objectives, the 2013 Tour-
ism Law of the PRC is expected to build a better regulatory environment and
strengthen the protection system. The law aims to help Chinese tourists to get
better and fair travel services through the regulation of the behaviours of various
stakeholders such as tourist agents, operators, and tour guides within the tour-
ism industry (Ma et al. 2015, 203–204). After enactment of the 2013 law, tour-
ism malpractices soon diminished, with a temporary increase of packaged tour
36  Aranya Siriphon and Zhu Jinsheng
prices, banning of certain shopping behaviours, and the forcing of travel agencies
and Chinese outbound tour operators to improve their operations. The Tour-
ism Law and regulations helped improve fair trade to destination countries and
Chinese consumers in particular. However, some scholars (e.g., Jørgensen 2018,
1–13; Tse 2015, 297–314) argued that the Tourism Law and implementation are
not effective yet when compared with the anti-corruption campaign. The China
Tourism Academy (CTA) (Dai et al. 2017, 253–258) suggests that the tourism
market policy still has room for development to protect the traveling rights of
Chinese citizens and to enhance the well-being of Chinese citizens during travel.
When some incidents went viral, showing Chinese tourists ignoring local
cultures and misbehaving during their visits (e.g., a Chinese teenager defacing
the 3,500-year-old Luxor Temple in Egypt and Chinese tourists washing their
feet in 2013 at the Louvre in Paris), the Chinese state became more concerned
about losing face. It requested Chinese citizens to undergo education in patri-
otism, calling for the “propagation of correct notions of leisure” and exhorted
Chinese tour guides to ensure members of the group behave with the dignity of
the fatherland. Regulations and propaganda concerning the awareness were clear.
For example, the state-run China Central Television (CCTV) ran a series of video
campaigns aiming to make Chinese tourists more polite and less embarrassing
(Taylor 2013). These included Chinese President Xi Jinping requesting citizens
to behave politely and respectfully when going abroad. In 2014 he said, “We
should educate our citizens to be civilized when traveling abroad. Don’t litter
water bottles, don’t destroy their coral reef, eat less instant noodles, and more
local seafood” (cited from Taylor 2014).
More applicable in 2016, China’s National Tourist Bureau issued a public
travel regulation that restricts and blacklists Chinese tourists from traveling if their
“uncivilized” behaviours were proved evident while traveling (Koetse 2016). The
blacklist does not only attempt to stop such travelers from future travels, but also
aims to embarrass them socially by broadcasting details of the incidents, their
full names, and cities of residence via CCTV, and the official media throughout
China.

Stage 4: another shift in tourism policy, a cultural turn

for domestic tourism, and Chinese influence in the
global tourism industry (2017 to present)
From 2017 onward, the Chinese state has made another institutional effort,
changing tourism policy, especially establishing a new ministry, and reforming
institutional and governance structures to be more efficient and service-oriented,
to better facilitate and regulate both domestic tourism and outbound tourism of
Chinese citizens (The State Council the People’s Republic of China 2018). Apart
from the national policy, the Chinese state has launched an emerging institution,
World Tourism Alliance (WTA), to engage the global tourism industry under
China’s lead, similar to other economic reforms cooperating with others at the
international level.
 Chinese outbound tourists 37
The emerging ministry
Historically, the China Travel and Tourism Administration was established under
the Ministry of Foreign Affairs in 1964. It cooperated with the CITS, function-
ing as both the administration for welcoming and receiving China’s counterpart
national leaders in international relations, and managing the service as an enter-
prise. In 1982, as part of the policy to separate the enterprise from the admin-
istration, CITS specialized in all travel-related service, and CNTA concentrated
on national tourism management. When tourism was commercially active from
the 2000s onward, CNTA expanded its works toward both national and inter-
national tourism management, and the state council supervised CNTA directly.
Specifically, CNTA became a unique official body that took charge of national
tourism promotion in China and control over the outflow of Chinese tourists
to foreign destinations through ADS management and tour agency regulations
(CNTA 2018).
However, the 13th National People’s Congress in 2018 approved combin-
ing the Ministry of Culture and the CNTA into one official body under the
new “Ministry of Culture and Tourism”. Inaugurated on 8 April 2018, the new
ministry is tasked with improving cultural industries and enhancing tourism
development, following the political and cultural guidelines and policies of the
Communist Party of China (CCP) (Xin Jing Bao 2018; China Daily 2018). The
new ministry’s responsibilities include promoting Chinese culture and monitor-
ing media contents like online games, cartoons and videos, dramas, movies, and
so on. It is expected to expand China’s ideological influence, guarding against the
infiltration of foreign cultural value through various forms of the cultural indus-
try, and dispersing Chinese soft power overseas. The new Ministry also aims at
media regulators as the primary target to ensure that online dramas, movies, and
so on follow the Communist Party’s ideological line (SCMP 2018).

A cultural turn
Tourism restructuring under the current regime has revealed another turn of pol-
icy reform, aiming to use “culture” and Chinese tourism as a strategy to develop
the national and foreign agenda. For the new ministry, although China adopted
the structures and functions following examples in other countries such as the
Ministry of Culture in Western European countries, the United States, India,
and South Korea, it is integrating tourism and culture, positioning culture as the
content and tourism as a platform for cultural influence. With reference to the
national agenda, institutional restructuring by setting up the Ministry of Culture
and Tourism was meant to focus on the crucial roles of national/domestic tour-
ism strategically to assist the stabilization of the modern market economy and
serve the political agenda in China.
It is important to note that the application of culture in tourism as a strategic
move toward development for China is not new. This is because the Chinese state
has been using the invisible authoritative forces, the so-called cultural authority,
38  Aranya Siriphon and Zhu Jinsheng
to control Chinese mobility in either national or international tourism since the
1990s (Nyiri 2006, 2010). Using cultural strategies in national tourism (e.g., red
tourism or scenic spots) became the activities and objects to rebuild and emplace
within touristic spheres a sense of patriotic and national pride guiding Chinese
citizens traveling domesticlly. On the one hand, scenic spots of traditional tour-
ism coupled with tourist sites constructed in China by the state brought Chinese
traditions and 5,000 years of Chinese civilization and national glory into modern
places like museums, zoos, and theme parks. On the other hand, red tourism
served as a contemporary Chinese version of communist relic and heritage tour-
ism to re-inform China’s young generation about the CCP’s leading contribu-
tions to the national independence, liberation, and prosperity of China (Li et al.
2010, 101–119). China’s national tourism with a national agenda needed to
build the sites, restructure the provincial/county authorities, delimit the physical
boundaries, organize the interiors of tourist sites, create itineraries of perfor-
mances and festivals, especially the themes and narratives, and advertise all the
sites through designated media channels.
Additionally, the national institutional restructuring aims not only at Chinese
citizens and the young generation to learn about the national glory and CCP
contributions via domestic/national tourism, but also functions as a platform
for implementing projects beneficial to culture, to expand Chinese tourism
markets, and increase the Chinese gross domestic product (GDP) in light of
the recent drop in domestic tourism. The new move of the Chinese state is
to balance its tourism deficit regarding inbound and outbound tourism. Sta-
tistically, the number of Chinese tourists going outbound has increased every
year, with an impressive 139 million trips in 2017 alone, while the number of
inbound tourists of China reached 120 million, of which only 29.1 million were
foreigners.3
Moreover, the direct contribution of travel and tourism to GDP growth for
China was RMB 2,712.2 billion in 2017 (or 2.90% of direct contribution to
China’s GDP, and 9.50% of total contribution to China’s GDP). The Chinese
government hopes to increase the direct contribution of travel and tourism from
RMB 2,712.2 billion in 2017 to RMB 5,578.7 billion by 2028 (or 3.90% of
direct contribution to GDP, and 12.90% of total contribution to GDP. See World
Travel & Tourism Council-WTTC 2018). The statistical trend implies that the
Chinese government needs to shift more emphasis on inbound tourism, develop
more mechanisms to balance the tourism deficit, and expand inbound tourism
as planned. Therefore, the move to have better structures and efficiency is an
attempt to attract more Chinese and foreign visitors to tourist places in China
and experience Chinese culture with “a good story” about the country.
To serve the foreign agenda of the Chinese state, the new Ministry of Culture
and Tourism used Chinese outbound tourism as its soft power. It is stated in
the official media that the new ministry aims “to coordinate the development of
cultural and tourism industries, enhancing the country’s soft power and cultural
influence, and promoting cultural exchanges internationally” (www.gov.cn中国
政府网 2018; www.xinhuanet.com 新华网 2018).4
 Chinese outbound tourists 39
According to Arlt (2018), the foregoing statement has asserted two main
aspects. They are: (1) the Chinese government still actively uses outbound tour-
ism in the political arena, considering it as a soft power in increasing influence –
only this time it has gained more confidence and sophistication in handling
international politics; and (2) the Chinese government still supports outbound
tourism and Chinese traveling abroad, although China has experienced a widen-
ing tourism deficit for several years caused by the flood of Chinese tourists trave-
ling internationally and a drop in arrivals to China.

The emerging world tourism governance led by China

Apart from the emergence of a new ministry establishment, another essential
strategy the Chinese state has been ambitiously implementing is an attempt to
engage the world tourism industry under the context of the rise of China nowa-
days. Proposed by China in September 2017 during the 22nd General Assembly
of the United Nations World Tourism Organization (UNWTO) in Sichuan Prov-
ince, the WTA was established as another body challenging other world tourism
organizations (like the UN World Tourism Organization, World Travel & Tour-
ism Council, and Pacific Asia Travel Association). This time, WTA is a China-led
world tourism organization.
According to the WTA website and the Chinese official source,5 the WTA is
an international non-profit organization, aiming to promote development and
peace through tourism, relieve poverty through tourism, strengthen exchanges
of global tourism, and push forward the inclusive and sustainable development
of the global tourism industry. The WTA today has a good start, with 89 found-
ing members from 29 countries and regions, including China, the United States,
France, Germany, Japan, Australia, Malaysia, and Brazil. Membership is com-
posed of tourism associations, enterprises, and academic institutes from around
the world, providing information about the global tourism market and updates
for the alliance and its members. Li Jinzao, chairman of the China National Tour-
ism Association-CNTA, who established the WTA, stated in 2017 that the new
China-led WTA would be a new platform for international cooperation, creating
a new space for the Chinese tourism industry. Taleb Rifai, secretary-general of
the UNWTO, expressed that China’s model of tourism development and meas-
ures may solve some problems like poverty alleviation and rural development,
and provide value to tourist destinations. He also saw that China was committed
to international cooperation and tourism at the highest level when President Xi
Jinping gave a speech to the 22nd General Assembly of the UNWTO in Sichuan
province in September 2017 during the WTA establishment in the global forum
of 1,000 representatives from 130 countries.
However, the China-led WTA has turned into a new initiative by serving as
another influential “gamekeeper” in world tourism governance. Although WTA
proclaims that it is only a non-profit and non-governmental organization, and
that it only wishes to expand the international tourism cooperation channel, it
definitely gives China greater rights and larger influence in the world tourism
40  Aranya Siriphon and Zhu Jinsheng
sector (Yang 2017). In another aspect, WTA could be part of the “soft power”
which the Chinese state strongly supports and uses when necessary. The strong
support for the WTA by the Chinese government is evident not only by President
Xi Jinping’s speech as mentioned earlier, but also his congratulatory letter to the
22nd General Assembly of the UNWTO when the meeting inaugurated WTA in
2017 and Premier Li Keqiang’s congratulatory message for the same inaugura-
tion. Moreover, WTA premier members are led by the Beijing Tourism Group,
a state-owned enterprise supported by the Chinese state. Yang (2017) suggests
that the WTA could shake up the global tourism industry and its global organiza-
tions when the Chinese government under China’s rise realizes its significance as
the world’s leading outbound market. It will give China more influence on the
global tourism industry, fitting well with China’s One Belt, One Road Initiative
(OBOR) that aims to connect 65 countries across three continents, namely, Asia,
Africa, and Europe (Hamdi 2017).

Lessons learned from China’s engagement of outbound

tourism with international politics
Even though China‘s outbound tourism policies aim to positively affect the
outbound tourism market, it should be noted that outbound tourism plays
an important part in Chinese political intervention either through the use of
soft power or political sanctions. Since the 1990s, the Chinese government has
been applying its outbound tourism as a weapon when engaged in international
relations. From the year 2005 onward when China gradually modernized its
outbound tourism with regulations and laws, the Chinese state could use out-
bound tourism and Chinese tourists to serve its economic and political agendas
internationally.
Many scholars (e.g., Arlt 2006, 2013; Tse 2008, 2013; King and Tang 2009,
18–32; Fan 2010; Mak 2013; Ree 2018) argued that outbound Chinese tourism
and Chinese tourists traveling outbound and destination selection for leisure are
not solely determined by individual Chinese citizens with regard to their desires,
motivations, satisfaction levels, destination’s facilities, and convenience. The Chi-
nese state also motivates, intervenes, and harnesses Chinese citizens’ direction
and mobility. All layers of the Chinese state have played important roles in regu-
lating citizens’ travel abroad regarding the choice of destination countries. For
the Chinese government, CTA (Dai et al. 2017, 253–258) views that the increase
in numbers of China’s outbound tourists promotes not only bilateral tourism
exchanges, but also enhances mutual friendship and understanding.
To understand the Chinese state’s power in the international political context,
this section illustrates how the Chinese state has used outbound tourism and
Chinese tourists as a political mechanism in manipulating the choice of different
destination countries in diplomacy, either to promote Chinese soft power or to
manage political conflicts and negotiation.
As mentioned earlier, the ADS scheme is a bilateral arrangement between the
Chinese government and destination countries whereby Chinese tourists may
 Chinese outbound tourists 41
undertake leisure travel in groups. Many destination countries realize the impor-
tance of Chinese tourists who could help generate income and consequently
attempt to negotiate diplomatically with China for the ADS permission. How-
ever, only some countries receive the ADS permission and are welcome to pro-
mote their tourism markets in China. From the 2000s onward, the Chinese state
has been using outbound tourism development and the travel industry as a form
of diplomacy sanctioning international relationships (Tse 2013). Confrontations
with the United States, Canada, Japan, and the Philippines in the past several
years could be examples of this.
ADS negotiation between China and the United States took many years dur-
ing the 2000s when China expected US visa issuance to be made more conveni-
ent. But the United States was concerned about the influx of people overstaying
illegally if large Chinese groups were granted admission. While the United States
was concerned with the immigrant issue, Canada incurred the political displeas-
ure of China. It negotiated with China for many years about the ADS permission
as Prime Minister Stephen Harper criticized China’s human rights record and
other politically sensitive topics. The political action of the Canadian leaders by
allowing the Dalai Lama to visit Canada in 2007 upset the Chinese government.
Not until 2009 did Canada realize the importance of the economic power of
outbound Chinese tourism and China’s way of exercising power when Prime
Minister Harper finally visited China in December 2009 as a symbol of apology.
Since then, Canada has negotiated with China to receive ADS permission, but in
exchange for the repatriation back to China of Lai Changxing, a Chinese fugitive
fleeing from a guilty verdict in a Chinese court.
As for Japan and the Philippines, Tse (2013) found that in 2012 when the
heated territorial dispute of islands (called Diaoyu in China and Senkaku in Japan)
turned into a political issue, the Chinese state used China’s outbound tourism
as a negative mechanism and economic sanctions over the political conflicts. The
Chinese state ordered state-owned enterprises (SOE), like Ctrip.com Interna-
tional, to refrain from promoting Japan ahead of a weeklong Chinese holiday
during 1–7 October 2012, and CITS to stop advertising tours to Japan. In addi-
tion, trips to Japan were cancelled by Chinese travel agencies and companies and
refunds were arranged for their customers following the sanction. Additionally,
China ended a contract to send 50,000 Chinese tourists to Japan, to jointly com-
memorate the fortieth anniversary of the normalization of diplomatic relations
between China and Japan. The territorial dispute between China and Japan gave
rise to “anti-Japanese sentiments” of Mainland Chinese citizens, a widespread call
to boycott Japanese products, especially Japanese cars and cancellation of trips
to Japan by the Chinese Free Independent Travelers (FIT) from 2012 to 2013.
Like Japan, the Philippines was engaged in political tensions over the Huang-
yan Island (Scarborough Shoal or Panatag Shoal) and other territorial disputes
in the South China Sea with China. The Philippines received similar negative
mechanisms and economic sanctions over the political conflicts in 2012. It was
announced to Chinese tourism operators, agents, and companies in China that
tours to the Philippines were postponed.
42  Aranya Siriphon and Zhu Jinsheng
Another case in 2017 took place in the Republic of Korea, or South Korea.
Similar to Japan and the Philippines, South Korea encountered negative sanc-
tions from China when South Korea agreed with the United States that the
Terminal High Altitude Area Defense (THAAD) missile defense system would
be deployed in South Korea. The Chinese state opposed it because THAAD is
considered to be a potential threat to China’s security. The Chinese state then
reacted by restricting South Korean businesses and trade, canceling K-pop shows
in China, as well as calling off Chinese tourists and group tours to South Korea.
The Palau nation, one of 17 countries refusing to give up diplomatic relations
with Taiwan and switch allegiance to China, became another case in 2017 when
China exercised its power by using outbound tourism as a means for political
sanctions.6 Regardless of the commercial aspect or tourists’ decisions, China’s
widespread practices of using tourism for political purposes coexisted with its
encouragement to SOEs, travel agencies (Ctrip.com and flight companies), and
official media organizations to produce supporting campaigns over political con-
flicts with other nations. It is worth noting that when one nation upsets China
politically, it would have to face not only the Chinese state itself using outbound
tourism to pressure it in response to the political issues, but it also would face
Chinese citizens with strong national sentiments reacting collectively and posi-
tively to the proposed campaigns. Whenever China encounters political disputes
with other countries, and the issues become national issues in the eyes of Chi-
nese citizens, a sense of “filial nationalism” encourages them to act promptly
and collectively (Fong 2004). Sanctions, and boycotts such as canceling trips to
and boycotting products from certain disputed countries, are eminently evident
examples.

Outbound tourism: blessings from China,

the great power with benevolence
For the Chinese state, the role of outbound tourism does not only imply the use
of negative political mechanisms and diplomacy, but also positive mechanisms
representing the “soft power” that the Chinese state has been applying since the
1990s in international engagements. This is actually well accepted by the destina-
tion countries. Taking the cases of Hong Kong, Taiwan, and Southeast Asia as
examples, the Chinese state showed how China’s outbound tourism became the
soft power in that regard (Xu et al. 2018).
According to Tse (2013), IVS, another type of visa launched by the Chinese
government in July 2003 allowing visitors from Mainland China to visit Hong
Kong as independent travelers without joining group tours, was part of the soft
power of China’s tourism policy in supporting China’s Special Administrative
Region (SAR). The IVS and Chinese tourists could help boost Hong Kong’s
economy after the lethal H5N1 avian flu epidemic in 1997, the Asian financial
crisis in 1998, and the deadly severe acute respiratory syndrome (SARS) epidemic
in 2003. Since the granting of the IVS permission, the number of Mainland tour-
ists to Hong Kong under IVS has increased from 667,271 in 2003 to 18 million
 Chinese outbound tourists 43
in 2011, and 31 million in 2014 (Sung 2015, 18). Macao was another case in
which the economy declined noticeably under the authority of the Chinese gov-
ernment after 1999. The Chinese government sought to help boost Macao’s
economy by allowing Mainland Chinese to visit casinos there. Mainland Chinese
tourists became the most important source of customers to the gambling and
gaming industry in Macao with the IVS system.
Taiwan could be a case of using either sanction or support by China. For
sanction, China decided to ban Chinese tourism to Taiwan in 2017, without an
apparent reason justifying the ban (Rowan 2016). But for support, the events in
2008 showed that the Chinese government did support Taiwan by sending Chi-
nese tourists to boost Taiwan’s tourism economy. This happened as a result of the
change in leadership of the Taiwanese government from the Democratic Progres-
sive Party to the Kuomintang (KMT) in 2008, giving rise to more political relaxa-
tion between the two regions and more emphasis on economic development.
Taiwanese authorities dropped the overall ban on Mainland residents traveling to
the island in July 2008, and signed an agreement for cross-strait weekend char-
tered flights, allowing Mainland Chinese to visit Taiwan.
More cases in Southeast Asian and South Asian countries (Thailand, Indonesia,
Malaysia, India, and Sri Lanka) after the 2004 tsunami illustrated how diplo-
matic power of tourism from China helped restore the tourism economy of these
countries by sending Chinese tourists and arranging travel packages for Mainland
Chinese to visit them. Du and Dai (2006) even suggested that China responded
to such a situation with promises of supporting tourism. For Japan, when faced
with the devastation of an earthquake and tsunami in 2011, the Chinese govern-
ment helped recover post-quake tourism by implementing specific measures to
help restore Japan’s struggling tourism industry. Some measures were restart-
ing group tours to Japan, opening Shanghai–Kagawa charter flights, restarting
Shanghai–Ibaraki charter flights, establishing a Sino-Japanese joint venture travel
agency in China, inviting 100 children from Japan’s quake zone to south China’s
Hainan Province for a short vacation, and welcoming Japanese delegations to
promote their tour routes and products.
As seen by the aforementioned examples, China’s outbound tourism is used
as a political-strategic measure and a demonstration of its soft power to convey
sympathy and advance diplomatic relationship with destination countries. In this
sense, increasing numbers of Chinese tourists have acted as unofficial diplomats,
representing China’s pride in helping neighboring countries. By helping neigh-
boring countries when needed, China is building up its tourism-based soft-power
strategies, giving other nations blessings with a sense of benevolence and the
stature of a responsible great power.

Concluding remarks
The political economy approach, intertwined with the “cultural authority” con-
cept, has helped with a deeper understanding of China’s outbound tourism. Chi-
nese tourists, seen as citizen-subjects, are influenced by the cultural control of the
44  Aranya Siriphon and Zhu Jinsheng
hegemonic Chinese state in the revision and implementation of tourism policy
reforms. By applying the “pragmatism” approach since the 1980s in reforming
tourism policies and practices, the Chinese state has been administering regula-
tions controlling mobility under the current mobility regime led by the state.
Regulations during the 40 years of economic reform have shown the cultural
control over Chinese citizens when they travel. As tourists, they are exhorted
to represent “the civilized nation”. They should behave well based on cultural
orders, thus continuing the restrictions from the state mobility regime.
Significantly, the current tourism policy reform (2017 to present) implemented
by the Chinese state is at a crucial stage. The current tourism policy reform marks
the emerging stage of “a cultural turn” of reproducing the Chinese civilization
emphasized in domestic tourism, reflecting a desire of the Chinese state to bal-
ance the in and out of Chinese mobility with reference to the national economy
and global tourism industry. Establishing the new ministry and the “emerging
world tourism governance”, the WTA led by China, is another important effort,
strategically providing the administrative mechanisms nationally and globally. The
strategies are used to balance the momentum of the domestic tourism industry,
which will potentially become a larger share of GDP growth in China, and the
rising influence of China in the global tourism industry. This steady momentum is
reflected in two main situations today and in the future. First, Chinese tourists are
gradually becoming the most significant contributors to the global economy, espe-
cially the global tourism market, as Chinese tourists are desired economically by
destination countries. Second, the planned economy of the Chinese state presents
a well-prepared, and ready actor, to lead the global tourism market under a rising
China. It will coexsit with China’s One Belt, One Road Initiative (OBOR) aiming
to connect 65 countries across three continents, namely, Asia, Africa, and Europe.
In international politics, several examples of the lessons learned by destina-
tion countries have shown how the Chinese state can harness China’s outbound
tourism and its Chinese citizens toward the flow of international traveling when
one nation upsets China. This situation dovetails with the actions of Chinese
tourists themselves. As citizen-subjects, they responded to the political issues
with self-consciousness and collectiveness under the influence of “filial national-
ism”. Young Chinese generations and millennials, who have patriotic loyalty to
the fatherland, desire to defend the discourse of their harmonious and civilized
nation spontaneously as the “land of propriety” (li yi zhi bang) against those
countries which challenge it.
In this sense, Chinese outbound tourism has illustrated the hard work of the
Chinese state in the making of modernity (Ong 1997, 2005). The Chinese state
has attempted to contain the subversive potential of mobility. The tourism poli-
cies from the planned economy and political agenda have shown two aspects of
the balance of power. On the one hand, it showed the relaxed restrictions and less
control over border crossing and international mobility. On the other hand, the
Chinese state simultaneously disciplined its Chinese citizens, creating a spiritual
civilization to regulate disorderly Chinese subjects (Zhang and Shelton 2015)
 Chinese outbound tourists 45
in the modern time, requiring them to be a “modern subject” of “new China”
(Nyiri 2010). This mixture of Chinese state guidance and market mechanisms is
typical in today’s China, denoting what it means to be a “good member” of the
Chinese nation in helping to build a “Modern China”.

Notes
* Acknowledgement: This chapter is part of the research project entitled “New Waves
of Chinese Migrations to Northern Thailand: Their Impacts on the Agricultural
and Tourism Sectors”, supported by NEWTON Fund and Thailand Research Fund
(TRF), and the China-Southeast Asian Studies Center (CSC), Faculty of Social Sci-
ences, Chiang Mai University, Thailand.
1 For details, see https://data.worldbank.org/indicator/ST.INT.DPRT?end=2016&
locations=CN&name_desc=false&start=1995&view=chart&fbclid=IwAR3a
l6d4-2_Qz6IObhc8FS74yHis24gr225X9YMNqakwjuj6KdV2gG2hWyM and
https://worldview.stratfor.com/article/chinas-unlikely-weapon-tourists
(Retrieved 10 November 2018).
2 For more details, see www.forbes.com/sites/profdrwolfganggarlt/2017/02/03/
hong-kong-taiwan-struggle-to-attract-chinese-tourists-in-2016/#678df6987861
(Retrieved 6 February 2018).
3 Data Bank of the World Bank at https://data.worldbank.org/-https://data.world
bank.org/indicator/ST.INT.DPRT?locations=CN (Retrieved 13 November 2018).
4 www.gov.cn 中国政府网 (2018). 8 April, The formal Establishment of the New
Ministry of Culture and Tourism–Combination of Culture and Tourism Enrich-
ing Spiritual Capital 4月8日，新组建的文化和旅游部正式挂牌 – 文化旅游紧牵手
精神食粮更富有. www.gov.cn/xinwen/201804/11/content_5281510.htm; www.
xinhuanet.com 新华网 (2018). Wang Yong: Establishing Ministry of Culture and
Tourism, Replacing the Ministry of Culture and the China National Tourism Admin-
istration. 王勇：组建文化和旅游部 不再保留文化部、国家旅游局 www.xinhuanet.
com/politics/2018lh/2018-03/13/c_137035413.htm (Retrieved 20 November 2018).
5 For more details, see www.wta-web.org/eng/ (Retrieved 12 November 2018).
6 More details are at Coca, Nithin. 2018. Chinese Tourists Are Beijing’s Newest
Economic Weapon. https://foreignpolicy.com/2018/09/26/chinese-tourists-
are-beijings-newest-economic-weapon/ (Retrieved 8 October 2018), and Lyons,
Kate. 2018. “Palau Against China! The Tiny Island Standing Up to a Giant”.
www.theguardian.com/global-development/2018/sep/08/palau-against-
china-the-tiny-island-defying-the-worlds-biggest-country (Retrieved 8 October
2018).

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Tse, T. and Hobson, J. S. 2008. “The Forces Shaping China’s Outbound Tourism”. Jour-
nal of China Tourism Research 4 (2): 136–155. doi: 10.1080/19388160802279459.
Tse, T. and Tse, Q. T. 2015. “The Legal Aspects of ‘Zero-Fare’ Tour in Shopping
Tourism: A Case of Chinese Visitors in Hong Kong”. Journal of China Tourism
Research 11 (3): 297–314. doi: 10.1080/19388160.2015.1086709.
Urry, J. 2000. Sociology Beyond Societies. London: Sage.
Wang, C. 2017. “Approaches to the Study of Pragmatism in Today’s China”. Educa-
tional Philosophy and Theory 49 (10): 1038–1044.
WTO (World Tourism Organization). 2017. Penetrating the Chinese Outbound Tour-
ism Market – Successful Practices and Solutions. Madrid: UNWTO.
WTTC (World Travel and Tourism Council). 2018. “Travel & Tourism Economic Impact
2018 China”. www.wttc.org/-/media/files/reports/economic-impact-2018/china
2018.pdf.
48  Aranya Siriphon and Zhu Jinsheng
www.gov.cn 中国政府网. 2018. 8 April, the formal Establishment of the New Min-
istry of Culture and Tourism – Combination of Culture and Tourism Enriching
Spiritual Capital 4月8日，新组建的文化和旅游部正式挂牌 – 文化旅游紧牵手 精
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xinhuanet.com/politics/2018lh/2018-03/13/c_137035413.htm.
Xin Jing Bao. 新京报网. 2018. 文化部、国家旅游局合并为“文化和旅游部 “Merging
Ministry of Culture and China National Tourism Administration into Ministry of
Culture and Tourism”. www.bjnews.com.cn/news/2018/03/13/478791.html.
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Power”. Journal of Policy Research in Tourism, Leisure, and Events. doi: 10.1080/
19407963.2018.1505105.
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https://eng.yidaiyilu.gov.cn/home/rolling/28005.htm.
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Outbound Travel Market and Its Implications for Tourism Marketing”. Journal of
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Chinese Outbound Tourists as New Zealand Seeks to Become China Ready”. Tour-
ism Analysis 20: 343–353.
3 Toward an “Asian Century”
Can China and Japan cooperate?1
Masaya Sakuragawa

Introduction
The world economic centre of gravity is shifting from the West to the East. Today,
Asia is home to about 60% of the world’s population and produces nearly 40% of
the world’s gross domestic product (GDP). Asia is growing rapidly, and accord-
ing to the projection by Kawai (2018), Asia is likely to produce more than half of
global GDP by 2050 if there are no any large economic or political shocks in Asia.
The primary question is whether Asia’s dominance in terms of economic power
could be translated into leadership in technology, institutional quality, or soft
power in the world. Since World Word II, the United States (US) and its West-
ern allies have played a dominant role in the international system by establishing
multilateral arrangements: the United Nations (UN) for the political order, the
World Trade Organization (WTO) and other mechanisms for the trade order,
and the World Bank and the International Monetary Fund (IMF) for the financial
order. The weakness of Asia has lain in its limited ability to create high-quality
institutions, either domestically or internationally.
With an ascending China, Asian countries would have to react to the new
development. China is attempting to expand its economy outside its own border
by integrating neighboring countries into China. The establishment of the Asian
Infrastructure Investment Bank (AIIB) in December 2015 and the Belt and Road
Initiative (BRI) are epoch-making events. China is now establishing an organiza-
tion or a conceptual framework for changing the global order and becoming a
global leader.
Several projections suggest that during the 2020s, China’s GDP will over-
take the US’s GDP, based on the US dollar denomination. China has run trade
surpluses for a long time and has accumulated foreign reserves of more than
three trillion US dollars. The persistent imbalance of the trade account between
the US and China triggered a trade war. The Trump government’s trade policy
reflects the US’s anxiety that China will catch up with the US economically and
politically.
The current trade war between the US and China is a result of the unbalanced
contribution to the supply of international public goods. The US dollar, the
currency of the debtor country, is used for both trade and financial transactions.
50  Masaya Sakuragawa
Under the WTO framework, China has run trade surpluses toward the US by
exporting goods denominated in the US dollar and investing the earned income
in the US dollar–denominated assets. China is completely subject to the US dol-
lar system. If the US owes too much to China, the US can offset its debt obli-
gation by depreciating the US dollar unilaterally, as occurred under the Plaza
Accord 30 years ago. Currency is not a veil but power.
China cannot compete with the US unless China understands the importance
of taking the initiative in the architecture of the international system. The same
is true for Japan. This is the very point on which there is a need for China and
Japan to cooperate and assist in developing and strengthening Asian countries.

Overview of the Japanese and Chinese economies

China and Japan have several common features regarding their developing pro-
cess. Both countries have achieved fast export-led economic growth by running
large trade surpluses, contrary to the prediction of the standard growth model
which argues that developing countries achieve the fast convergence by import-
ing capitals from foreign countries, or put differently, by running the current
account deficit. The large current account surpluses in both countries allowed
their governments to control domestic financial markets and foreign exchange
markets. To finance investments, both have relied more on the bank-based finan-
cial system than the market-based one. The weak linkage between domestic and
foreign financial markets has given rise to the abundance of domestic savings
that resulted in bubbles in the asset markets. They relied on industrial policies to
foster domestic heavy industries. The big difference between the two countries is
regarding technological adoption. Japan achieved the technological update and
innovation by its domestic firms, but China relied on foreign technologies and
accepted foreign direct investments.
The possibility that China’s economic success may end abruptly and that the
country may fall into a middle-income trap is a subject of widespread speculation.
Many developing economies are thrown off their high-growth trajectories as they
approach 25% to 30% of the world technological frontier.
How close to or far away a country is from the technological frontier is defined
by the distance between its per capita GDP and that of the US. Figure 3.1 shows
how Japan and China have been closer to the technological frontier over time.
Japan experienced fast economic growth through the 1960s to the 1980s, and
its per capita GDP approached 86% of that of the US at its peak in 1991. But
since then the growth rate has slowed down. As of 2016, Japan’s per capita GDP
is about 70% of that of the US. China is approaching the technological fron-
tier over time. As of 2016, its per capital GDP approaches 27% of that of the
US, which suggests that China may have reached a critical juncture. As of 2016,
China’s per capital GDP approaches 38% of Japan’s GDP.
Since the 1980s, China’s GDP has been rapidly converging to OECD countries.
The convergence accelerated during the first decade of the twenty-first century.
 0
10
20
30
40
50
60
70
80
90
100

1960
1961
1962
1963
1964
Source: World Bank.

1965
1966
1967
1968
1969
1970
1971
1972
1973
1974
1975
Figure 3.1 Distance to technological frontier

1976
1977
1978
1979
1980
1981
1982
1983
China 1984
1985
1986
1987
1988
1989
1990

Japan
1991
1992
1993
1994
1995
1996
1997
Distance to technological froner

1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
Toward an “Asian Century” 51
 -15
-10
-5
0
5
10
15
20
25

1961
1962
1963
1964
1965
1966
1967
1968
Source: Penn World Table 10.

1969
1970
1971
1972
1973
1974
1975
1976
Figure 3.2 TFP, GDP, capital growth in Japan

1977
1978
1979
TFP growth

1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990

Capital growth
1991
1992
1993
1994
1995
1996
1997
1998
1999

GDP growth
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
52  Masaya Sakuragawa
 Toward an “Asian Century” 53
China’s current stage of development is comparable to that of Japan in the 1960s,
when its per capita GDP rose to about 30% of the US.
Figure 3.2 illustrates the growth rates of GDP, capital, and total factor produc-
tivity (TFP) in Japan over the period from the 1960s to 2014, including the rapid
growth decades of the 1960s and the 1970s, when Japan grew at annual rates
close to 10%. As the figure indicates, we find a typical story in line with conver-
gence and growth. Interestingly, the fast GDP growth is accompanied by a faster
capital accumulation rather than TFP growth.
Figure 3.3 illustrates China’s growth during the corresponding period. China
grew at unprecedented annual rates close to 10% during the first decade of
the twenty-first century. Its rapid GDP growth is accompanied by both capital
and TFP growth. However, since 2011, China has run a declining trend in
GDP growth, which was accompanied by a decline in the TFP growth. During
2000–2008, China’s TFP growth was more than 6%, but it has fallen to 2%
since 2011.

Problems
This section reviews several problems to overcome in order to attain coopera-
tion between China and Japan, including the technological slowdown, financial
market instability, currency dependence, and lack of leadership. The first three are
regarding China, and the last is regarding China and Japan.

Slowdown in technological progress

Following its defeat in the Opium War, China experienced a dark age over
more than 100 years, during which China was semi-colonized by the West-
ern powers and invaded by Japan. In 1949, at the end of the Sino-Japanese
war, the Communist Party took over the country and established the People’s
Republic of China. However, during Mao’s regime, the inefficiencies of the
socialist planning economy meant that China was one of the poorest countries
in the world. After Mao’s death in 1976, Deng Xiaoping gained control over
the Communist Party. He repudiated the Cultural Revolution and in 1978
launched a program of economic reforms to increase agricultural productivity
and launch industrialization. The revival of China began in the early 1980s.
China has achieved fast economic growth since the early 1990s, surpassing
Japan in the early 2000s and the US in 2014 in terms of the level of purchasing
power parity (PPP)–adjusted GDP.
As indicated by an official report showing a growth rate of 6.7% in 2016,
China’s present-day convergence rate remains high. Nevertheless, the speed of
convergence has subsided since 2011, and the declining trend in growth rates is
forecast to persist in the coming years. In part, this slowdown is to be expected,
in line with the prediction of standard theories of growth and convergence. How-
ever, China has also experienced a sharp drop in TFP growth, which suggests
 -10
-5
0
5
10
15
20

1962
1963
1964
1965
1966
1967
1968
Source: Penn World Table 10.

1969
1970
1971
1972
1973
1974
1975
1976
1977
Figure 3.3 TFP, GDP, capital growth in China

1978
1979
1980
1981
1982
1983
1984
TFP growth 1985
1986
1987
1988
1989
1990
1991

Capital growth
1992
1993
1994
1995
1996
1997

GDP growth
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
54  Masaya Sakuragawa
 Toward an “Asian Century” 55
that there may be deeper problems.2 After years of rapidly building up its capital
stock, today China faces severe excess capacity issues in heavy industries, such as
the cement and steel sectors.
Song et al. (2011) emphasize that the reallocation of capital and labor from the
public sector dominated by state-owned enterprises (SOEs) to the private sector
played a dominant role in achieving high TFP growth, rather than innovation or
endogenous technological change. The turning point was the economic reform
that started in 1997, which promoted a shift from the SOE-dominated regime
to the regime of competition between SOEs and private firms. While exposed to
competition from private firms, SOEs continued to have easier access to external
financing, via bank loans granted by large state-owned banks. Private entrepreneurs
were heavily constrained financially and had to rely on retained earnings or credit
from families and friends to finance their investments. As private firms are on the
average more productive, the reallocation triggered a massive productivity growth.
As entrepreneurs grew richer, they could invest in their growing businesses, giving
rise to a progressive shift of labor and capital from the shrinking less-productive
SOEs to the more productive private firms. The effects of the reallocation pro-
cess were dramatic. Notably, between 1998 and 2008, the employment share of
domestic private firms in manufacturing rose from around 5% to 60%.
Song et al. (2011) calibrate a macroeconomic model that incorporates the
reallocation of inputs from less productive to productive sectors. They predict an
annual TFP growth rate of 5.9% for 1998–2005, and subsequently decompose
that TFP growth rate into a component driven by technological adoption and the
other to reallocation. They find that about 70% of the TFP growth was driven
by the reallocation from old, inefficient SOEs to new, efficient private firms. The
finding predicts that when the privatization of SOEs is interrupted, China’s TFP
growth and thus the GDP growth will slow down.
The process of technological and income convergence of emerging economies
occurs in two distinct stages. In the first stage, when the economy is far from the
technological frontier, the main growth engines are physical capital investments,
the imitation of more productive foreign technologies, and the reallocation of
resources from less productive to more productive activities. At this stage, eco-
nomic growth may be assisted by government interventions and other industrial
policies. Currently, China lies at this stage. However, as an economy approaches
the world technological frontier, the focus on physical capital gives way to the
importance of human capital and innovation. Zilibotti (2017) argues that new
policies and institutions are called for to level the playing fields for competition
and promote entry and creative destruction.
What China has chosen is a growth strategy that is different from the market-
based one. The Chinese government released a plan of “Made in China 2025”,
that pushes for leadership in robotics, information technology, and clean energy,
among other sectors. Justin Lin (2012) argues that sustainable growth in devel-
oping countries requires a process of continuous technological innovation and
structural transformation, and the government should play an active role in facili-
tating structural changes in addition to an effective market mechanism.
56  Masaya Sakuragawa
Credit expansion and housing bubbles
The dramatic and persistent rise in Chinese housing prices has been a subject
of great concern among economists and policymakers. For more than a dec-
ade, housing prices continued to rise except for short intervals. The question is
whether the persistent rise in housing prices is sustainable.
The macroeconomic literature on bubbles suggests that bubbles are sustainable
when bubbles grow at a rate no higher than GDP because the growing aggregate
savings then can absorb the demand for appreciating bubbles (see e.g. Tirole 1985).
Figure 3.4 illustrates the time series of three price indices. Housing prices grow
faster or slower than GDP, depending on the price indices. The “Average Sell-
ing Price of Commercialized Buildings (ASP)” that is published by the National
Bureau of Statistics of China (NBSC) indicates a slower growth rate than GDP,
but two indices published by the private sector, the “Chinese Residential Land
Price Index (LPCITY)” and the “Chinese Quality-Controlled Housing Price
Index (HPCITY)” indicate a faster growth than GDP.
Credit expansion fuels the asset price boom. Following the seminal work of
Kindleberger (1978), a huge empirical literature has provided evidence support-
ing the prediction that a credit expansion is followed by the subsequent collapse
of asset bubbles and the occurrence of financial crises.

500

450

400 LPCITY (national)

HPCITY (eight cities)

350
HP_Housing (national)
300
GDP (national)
250

200

150

100

50

Figure 3.4 Housing price indices in major cities and GDP

Source: NBSC, LPCITY (Chinese Residential Land Price Index) (12 Cities), Beijing, Hang
Lung Center for Real Estate, Tsinghua University and HPCITY (Chinese Quality-Controlled
Housing Price Index) (8 Cities) (newly built commercial housing), Beijing, Hang Lung Center
for Real Estate, Tsinghua University.
 Toward an “Asian Century” 57
Figure 3.5 shows the simple averages of the growth rates of bank credit and
GDP for 21 bubble episodes (for 19 countries) that have occurred since the
1980s. It provides evidence that credit expansion is followed subsequently by
credit contraction.3
In the figure, the period 0 indicates the year when bubbles collapsed. The
period from −5 through −1 shows the interval for the asset price boom, while
the period from 1 to 5 shows the interval for the recession after the bubbles col-
lapsed. During the period when bubbles expand, the bank credit exhibits a higher
growth rate than GDP, but once the bubbles burst, the bank credit shrinks drasti-
cally, showing negative values for several years. The average GDP growth rate for
five years before the collapse of bubbles is 4.4%, while the average credit growth
rate amounts to 11%.
Figure 3.6 shows the trend of credit expansion in China, indicating that the
growth rate of bank credit is persistently higher than that of GDP. The observed
credit expansion would imply the allocation of credit to unproductive sectors,
such as real estate and constructions. This suggests that a warning is warranted
against the sustainability of credit expansion. When credit expansion does not
seem to be sustainable, the rise in housing prices may not be sustainable if the
housing price boom is driven by credit expansion.
Sakuragawa et al. (2018) conduct an empirical analysis to uncover determinants
of the Chinese housing price using the panel data on 31 provincial-level regions
for 2000–2015. The empirical analysis reveals that bank credit is the primary

16

14

12

10

0
-5 -4 -3 -2 -1 0 1 2 3 4 5
-2

-4

-6
GDP Bank credit

Figure 3.5 Bank credit growth during boom and recession

Source: BIS and World Bank.
58  Masaya Sakuragawa

35

30

25

20

15

10

0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Real GDP (% change from year ago)
Bank credit to non-financial private sector (% change from year ago)

Figure 3.6 China’s credit expansion

Source: IMF.

determinant of housing prices. That finding, combined with the observed credit
expansion, suggests that there is a high probability that Chinese housing bubbles
are not sustainable.

Trade war and the strong US dollar

The imbalance of current accounts among major countries, the so-called global
imbalances, ended in the global financial crisis. The origin of the crisis was the
US, but the US dollar depreciated very little. The other common currency (euro)
that was supposedly the challenger to the US dollar was ranked down in its posi-
tion as the international currency. As a result, the era for dominance of the US
dollar has persisted.
The persistent imbalance of the trade account between the US and China trig-
gered a trade war. Trump’s trade policy reflects the anxiety that China is catching
up with the US. China’s GDP growth rate declines gradually, but several projec-
tions suggest that during the 2020s China will overtake the US in terms of the
US dollar–denominated GDP. China has run trade surpluses for a long time and
accumulated foreign reserves of more than USD three trillion.
When a conflict arises between a creditor and a debtor, it would seem that
the creditor should win over the debtor, but this is not true when the debtor’s
 Toward an “Asian Century” 59
currency is used. China runs trade surpluses toward the US by exporting goods
denominated in the US dollar and invests the earned income in US dollar–
denominated assets. The US dollar, the currency of the debtor country, is used
for both trade and financial transactions. As noted earlier, China is completely
subject to the US dollar system. If the US owes much to China, the US can offset
their debt obligation by depreciating the US dollar unilaterally, as occurred under
the Plaza Accord 30 years ago. It should be reiterated that currency is not a veil
but power.
To take advantage of its creditor status in the trade war, China could poten-
tially bargain with the US by threatening to sell US Treasuries, but China
would find it difficult to use this card. China enjoys the advantage of a cheap
domestic currency by pegging its own currency to the US dollar. China has
supported the strong US dollar by investing its earned trade surplus in US
Treasuries and other dollar assets and has reaped the benefits of export-driven
economic growth. If China sells its US Treasuries in the market, the US will
incur economic damages from a rising long-term interest rate, but at the same
time China will incur the cost of an appreciation of its own currency, losing
the advantages that China has derived from having a cheap currency. China
is trapped by the currency system that is dependent on the US dollar system.
China cannot prevail over the trade war by making use of the advantageous
position of a “big creditor”.
The history of international currency starkly illustrates the strength of the US
dollar. Since the gold-dollar parity was abandoned in 1971, several events have
challenged the credibility of the US dollar, including the 1985 Plaza Accord,
the establishment of the euro in 1999, global imbalances, and the subsequent
financial crisis. China and Japan have emerged as the world’s largest creditors,
whereas the US has become the world’s largest debtor in terms of net foreign
assets. Nevertheless, the US dollar has maintained its dominant role as the vehicle
of international settlements and reserve currency.
Table 3.1 illustrates the strength of the US dollar. The first row, “International
transaction”, shows the composition of currencies that is used in the foreign
exchange markets, covering all banks and financial institutions, as a measure of
international settlement (BIS 2016). The second row, “Foreign reserves”, shows
the composition of currencies that is held by governments as foreign reserves,
providing a measure of international store of value (IMF 2016). Comparing the
currency share with the world GDP composition (World Bank 2016), the euro,
the Japanese yen, the British pound, as well as the US dollar have higher shares

Table 3.1 Compositions of currency and GDP

Japanese yen USD Euro British pound Chinese yuan

International transaction (%) 9.5 42.4 19.5 6.4 –

Foreign reserves (%) 4.2 64 19.7 4.4 1.1
GDP (%) 4.4 15.5 15 2.3 17.8
Sources: BIS, IMF, World Bank.
60  Masaya Sakuragawa
of currency than GDP. Although the global financial crisis was a turning point
when the gravity of the global economic power started to shift from advanced to
emerging countries, the currency composition has remained almost unchanged.
In 2015, the Chinese yuan was ranked as one of the currencies that consti-
tuted the special drawing right (SDR), an international reserve asset created by
the IMF. But China’s share of foreign reserves is just over 1%. China has already
surpassed the US in terms of the volume of exports, but the Chinese yuan has not
been recognized as one of the reserve currencies.
Right after the eruption of the financial crisis in 2007–2008, the US dollar
appreciated rather than depreciated, showing that the US dollar remains the
dominant currency globally. In contrast, the two major Asian currencies, the Jap-
anese yen and the Chinese yuan, play a small role in the world economy.
If the gold standard could prevail, the Japanese yen and the Chinese yuan
would naturally be two major international currencies because their large net
foreign assets would enable both to hold large gold reserves. However, since the
gold-dollar parity was abandoned in 1971, the “rule of the game” has changed.
The currency of a country that has sound and liquid capital markets is used as the
international currency.
The Chinese government attempted to promote the internationalization of the
Chinese yuan for some years after the global financial crisis but had to pause its
efforts. The collapse of the Shanghai stock market in June 2015 was a turning
point, after which the government directed the policy inwards. The following year,
a massive capital flight occurred, and the People’s Bank of China had to impose
tighter capital controls to prevent the further depreciation of the Chinese yuan.
Housing bubbles complicated the situation. Strengthening capital control pre-
vents abundant domestic savings from flowing out abroad. This in turn acceler-
ated domestic bubbles, the reason for the housing price appreciation during the
period from 2015–2016. China is confronted with financial risk on two sides,
namely, appreciating housing bubbles and a depreciating Chinese yuan. The Peo-
ple’s Bank of China would find it difficult to solve these issues using only instru-
ments of the central bank.

Lack of leadership
Japan was largely isolated from the world until the West forced the opening of
major ports in the middle of the nineteenth century. Following the Meiji Res-
toration, Japan ascended to become an industrialized country. Until its defeat
in World War II, Japan attempted to establish hegemony in Asia. After the war,
Japan concentrated its resources on economic activities under the political con-
straint imposed by the US. Japan became the first country in Asia to succeed in
industrialization. Japan attained the second highest position of GDP in 1965 and
maintained its position until Japan was overtaken by China in the twenty-first
century. Japan is rich, socially stable, and culturally mature.
Nevertheless, Japan faces constraints in taking a leadership role in Asia. Asian
countries are not assured that Japan is politically independent of the US. If
Japan’s decision-making is controlled by the US, other Asian countries may not
 Toward an “Asian Century” 61
trust Japan as a leader. Therefore, the greatest challenge for Japan is to become
a “normal country”, which makes all its decisions independently for its own
interests.
Following its defeat in the Opium War, China was semi-colonized by the West-
ern powers and then invaded by Japan. China has achieved unprecedented fast
economic growth since the 1990s and stepped up to become a world leader.
In 2013, China’s President Xi Jinping unveiled China’s new national strategy
known as the Belt and Road Initiative (BRI), a key component of the country’s
“going-out” strategy. China is seeking to implement its core-periphery relation-
ship with neighboring countries and regions. China also faces constraints in tak-
ing a leadership role in Asia. The style and rationale of China’s ascendance today
are not compatible with the value system of freedom, human rights, and democ-
racy (see Huang 2018).
ASEAN countries are confronted by China’s outward policy and its bilateral
approach as well as China’s core interests in its territorial claims and sovereignty
in the region.
Their lack of historical experiences in managing an equal partnership is a major
obstacle for both China and Japan in assuming joint leadership. Although Japan’s
approach toward Asia and regional integration has shifted from bilateral to mul-
tilateral engagement, China’s approach remains essentially bilateral.
The emergence of the Trump administration is expected to become a turning
point. The rejection of the Trans-Pacific Partnership (TPP) by Trump may draw
China and Japan closer together in their common interests.

Policy proposals
This section proposes several policies that could promote cooperation between
China and Japan. These include trade policy, international rule making, invest-
ment in infrastructure, ASEAN cooperation, and establishing currency autonomy.

Supporting free trade

The principle of comparative advantage justifies free trade. Each country will
increase its overall consumption by exporting the good in which it has a compara-
tive advantage in production while importing other goods. Free trade is expected
to raise production and consumption and boost economic growth.
However, the re-allocation of production factors necessary to exploit com-
parative advantage can expand the exporting sector and contract the importing
sector. Trade liberalization is associated with job creation and destruction. In the
long run, the efficiency gains caused by trade liberalization are expected to lead to
positive employment effects, but whether the net employment effects are positive
or negative in the short run depends on country-specific labor market conditions.
Therefore, combined with frictions in the labor market, trade liberalization can
become a potential source of political conflict.
Over the past three decades, trade liberalization has been accompanied by
growth and convergence in per capita income across countries. However, the
62  Masaya Sakuragawa
history of trade liberalization has also been the history of the trade imbalance.
Japan in the 1980s and China in the first decade of the twenty-first century have
benefited considerably by adopting an export-oriented strategy, as Figure 3.7
illustrates. The first round of the trade war occurred in the early 1980s between
the US and Japan and West Germany when the trade imbalance was large. The
second round of the trade war occurred between the US and China when Donald
Trump became president of the US.
The progress of trade liberalization is threatened and may even be interrupted
or reversed. Trump’s anti–free trade position is obviously contrary to the predic-
tion of the trade theory advocating free trade. Trump prefers to pursue bilateral
trade relations, which is a step backward in terms of the trend of multilateral trade
agreements at the global level.
The EU and Japan finalized a trade agreement, covering one third of the global
GDP. Eleven countries in Asian and Pacific areas agreed on the TPP, a compre-
hensive and effective free trade agreement. With its withdrawal from the TPP,
the US is likely to lag behind on globalization, losing its share of the global trade
from Asia, the fastest growing region in the coming decades.
The Asia-Pacific region will benefit if China and Japan can assume a leadership
role to promote regional economic integration and defend the global trading sys-
tem. Multilateral trade agreements would accelerate the development of regional
supply chains and boost the flow of trade and investment in the region. China
is ready to launch a less comprehensive trade agreement such as the Regional
Comprehensive Economic Partnership (RCEP). Japan is obviously one of the
leaders protecting free trade, but whether China will catch up with Japan in this
regard remains questionable. China advocates and would like to be a protector
of free trade but has found it difficult to join comprehensive trade agreements
such as the TPP.
The TPP involves the concept of fair competition, including disciplines against
SOEs subsidized by the government and other government involvements. If pri-
vate firms and SOEs compete in bidding for a foreign infrastructure project, the
SOEs may win the bid although they have poor ability to manage it.
China should understand that SOEs subsidized by the government can dis-
tort the efficient allocation of infrastructure in Asia. A competitive and fair mar-
ket–based environment is necessary to achieve high-quality infrastructure and
develop global value chains in Asia (see Kimura 2018).
The success of the BRI and Eurasian development depends on whether China
can accept institutional procedures, structures, and rules. The BRI should not be
regarded merely as a means for China to export its overproduction. To fulfill the
BRI vision and goals, China has to gain the trust of Eurasian countries and reas-
sure them that it will not force them into the trap in debt.

Competition or cooperation
Since its establishment in 1966, the Asian Development Bank (ADB), the leading
shareholders of which are Japan and the US, has had a significant role in financing
 -8
-6
-4
-2
0
2
4
6
8
10

1960
1961
1962
1963
1964
Source: World Bank.

1965
1966
1967
1968
1969
1970
1971
1972
1973
1974
1975
1976
1977
1978
1979
1980
1981
China

1982
1983
Figure 3.7 Trade balance/GDP in China, Japan, and the US
1984
1985
1986
1987

Japan
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997

United States
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
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2011
2012
2013
2014
2015
2016
2017
Toward an “Asian Century” 63
64  Masaya Sakuragawa
and developing infrastructure investment in Asia. The establishment of the AIIB
was a challenge to this existing framework. A key question is whether the ADB
and the AIIB will compete or cooperate in infrastructure development.
Today, the ADB and the AIIB are rivals in financing infrastructure investment.
The ADB views China’s opaque governance and strong decision-making power as
major obstacles to cooperation. Conversely, the AIIB criticizes the ADB’s inabil-
ity to respond to an ever-increasing demand for infrastructure investment in Asia.
Whereas the ADB applies strict loan standards, the AIIB intends to supply loans
with loose standards, which raises concern about potential “over-­investment” in
low-quality projects.
The ADB and the AIIB could supposedly complement each other by pooling
funds to finance infrastructure projects and share the risk of investment. How-
ever, this could end in failure if they cooperate before sharing a common concept
on international rules and governance.
In light of similar interests between China and Japan, how the relationship
between cooperation and competition is defined is important. Both are not nec-
essarily substitutes but are complementary. Blake (2018) addresses the concept
of “cooperative competition” by observing the history of China and Japan in
competing for leadership in Asia. Both attempted to supply greater resources
than the other, enhancing development and cooperation in the ASEAN countries
subsequently. This is akin to the situation of the resource allocation under the
Bertrand competition. When two firms compete in terms of the price in the same
market, the price is bid down to the level of perfect competition, and the overall
gain goes to consumers who enjoy the low price.
An alternative approach is to understand that cooperation and competition
between the two banks is likely to evolve over time. Competition will provide
the AIIB with incentives to use more flexible and innovative rules to develop
high-quality projects and to become more transparent in their governance struc-
ture. In the future, the AIIB is expected to continue to develop its expertise,
knowledge, project management, and operations by learning from the good track
record of the ADB. Thus, although they compete with each other, both banks
have similarities in several dimensions, which will facilitate cooperation over time.

ASEAN as a bloc
China and Japan have played a foundational role in institutional development and
facilitating regional integration, but the rationale and style of China and Japan
differ. The difference may have significant implications for the ASEAN countries
going forward. While Japan’s approach toward ASEAN and regional integration
has shifted from bilateral to multilateral engagement, China’s approach remains
essentially bilateral.
The Sino-Japanese rivalry has benefitted the ASEAN countries. It helped spur
the development of the Chiang Mai Initiative Multilateralization (CMIM). In
setting up the new CMIM, the members agreed that 80% of the funds would
come from China, Japan, and South Korea, with the remaining 20% coming from
the ASEAN countries.
 Toward an “Asian Century” 65
In 2015, Japanese Prime Minister Shinzo Abe announced that Japan and the
ADB would be providing USD 110 billion in infrastructure funding over the next
five years under his new Partnership for Quality Infrastructure initiative. This is
Japan’s direct response to the AIIB and the BRI. In 2016, the AIIB began sign-
ing framework agreements and memorandums of understanding with the World
Bank and the ADB.
The ASEAN members are diverse and often disagree over issues. They need
to cooperate to obtain assistance from China and Japan. Otherwise, China may
seek to implement its core-periphery relationship with its neighboring countries.
Cooperation with the ASEAN members will bolster regional integration and con-
tribute to the emergence of one of the fastest-growing regions in the world in
the coming decades.

Currency autonomy
Let us recall the trade imbalance history of the early 1980s. The US, Japan,
and West Germany reached a resolution regarding the imbalance. The G5 gov-
ernments promised to commit to expansionary monetary and fiscal policies to
appreciate the exchange rates of the Japanese yen and the German mark relative
to the US dollar. Within one year, the Japanese yen appreciated from 250 yen/
dollar to 150 yen/dollar.
The reactions of Japan and West Germany differed regarding the agreed-on
international cooperation, which represented a turning point to influence the
subsequent history of global currency. Japan followed the de facto US dollar sys-
tem, suffering from the repeated and persistent appreciations of the Japanese yen,
followed by the flight of domestic firms abroad, and finally fell into stagnation
for two decades. In contrast, Germany, in the face of the collapse of the Berlin
Wall, promoted European unification, and established the euro as a common cur-
rency. Germany, as a leader of the European Community, revived by obtaining
the “cheap mark”.
Unless China escapes the trap of the US dollar system, the Chinese economy
will fall into stagnation sooner or later, as suggested by the history of Japan. The
two trade wars, the first one between the US and Japan, and the second one
between the US and China, suggest that a growth strategy is not sustainable
when a country exploits the US dollar system by promoting exports and forcing
the US to be a debtor. Recall additionally that the Asian financial crisis occurred
when Asian countries were heavily dependent on the US dollar system.
China and Japan, as mature creditors, can attain sustainable economic growth
with balanced trade if they both build an independent currency system in Asia.
As the establishment of the common currency, euro, required the cooperation
between Germany and France, independence from the US dollar system will
require cooperation between China and Japan.
The first policy is to build a multi-currency clearing system in Asia. Doing
so would eliminate the settlement risk for securities and currencies, clear each
currency on a payment-versus-payment basis, and facilitate financial transactions
among Asian countries. The settlement risk arises when there is a time difference
66  Masaya Sakuragawa
in settlement between the two parties, and the transfers of sell-and-buy currencies
are made separately by the settlement system of each of the two countries.
The current multi-currency clearing system, the Continuous Linked Settle-
ment (CLS), is based on the Western countries. CLS covers 14 major currencies,
four of which are Asian currencies: the Japanese yen, the Hong Kong dollar,
the Singapore dollar, and the Korean won. It does not cover other Asian cur-
rencies, such as the Thai baht, the Indonesian rupiah, and the Chinese yuan. As
Sakuragawa (2018) argues, the creation of an autonomous settlement system is a
precondition for Asia to be independent from the US dollar system.
The next policy is to supply safe assets denominated in currencies issued by
Asian countries. The first step is for China and Japan to hold each other’s govern-
ment bonds mutually as foreign reserves. Both countries need to make efforts to
improve the international credibility of their own government bonds. China has
to move toward a more transparent exchange rate regime, away from the current
de facto US dollar–pegged regime. Japan has to improve its fiscal soundness by
decreasing its outstanding government bonds that amount to more than 200%
of its GDP.
The portfolio of reserves has been skewed toward holding excessive US Treas-
uries. Rebalancing the portfolio would mitigate the global shortage of safe assets
and eliminate the concentration to the US dollar–denominated assets. At the
same time, it would promote the establishment of the Asian bond market and
eventually monetary integration in Asia. The adjustment involving rebalancing of
the reserve portfolio would appreciate the Chinese yuan and depreciate the US
dollar, thereby contributing to mitigating the trade imbalance. The decline in the
share of the US dollar–denominated assets would strengthen China’s bargaining
with the US and would contribute to cooling down the heated trade war.
The third policy is to combine currency autonomy with regional development.
The BRI addresses the need for a systematic network of high-quality infrastruc-
ture in Asia, but it requires superior technology, skill, and knowledge to manage
it, all of which could be acquired by cooperating with Japan. In return for the
cooperation, a common currency region centered on Japan and China could be
built. This would also lessen the anxiety of the neighboring countries that China
is attempting to force those countries into the “trap in debt”.
The fourth policy regards the payment system. Electronic payments are devel-
oping in today’s world. Chinese firms such as Baidu, Alibaba, and Tencent are
giants in this field and are trying to expand their operation overseas. As Kaji
(2019) points out, we need to be concerned for security in the payment system
when adopting electronic payment systems operated by foreign private firms.

Conclusion
China cannot compete with the US alone, and the same is true for Japan. Histori-
cal issues have prevented China and Japan from cooperating with each other, but
both countries should look to the future rather than the past. If China and Japan
cooperate, they can compete with the US. This will be the precondition for Asia
 Toward an “Asian Century” 67
to take leadership economically, politically, and militarily. If future historians call
the twenty-first century the “Asian Century”, it will be when China and Japan
cooperate with each other.

Notes
1 I am very thankful to Sahoko Kaji, Lee Lai To, Yuki Sato, and the audience that partic-
ipated in the symposium on “China’s Reforms in the New Era: Implications for East
Asia” at Sirindhorn Chinese Language and Culture Center at Mae Fah Luang Univer-
sity. This research was supported by Keio Gijuku Academic Development Funds.
2 TFP growth is interpreted as the growth rate of technological progress. It is calcu-
lated as the residual, called the “Solow residual”, which is the difference between
the GDP growth rate and the weighted sum of the capital and labor growth rates.
3 Data source: Bank for International Settlements. Selected 21 episodes are Norway,
Finland, Sweden, Japan (the 1980s), Hong Kong, Korea, Singapore, Indonesia,
Malaysia, Thailand (the 1990s), Spain, France, United Kingdom, Ireland, New
Zealand, the US, Belgium, Canada, Denmark, Norway, and Sweden (the 2000s).

References
Berger, Blake H, “Advancing the ASEAN Economic Community: The Role of China
and Japan in Supporting ASEAN’s Regional Integration”, Chapter 8, China and
Japan in the Global Economy, Abingdon, Routledge, edited by Kikuchi and Sakura-
gawa, 2018.
Huang, Jing, “Geopolitics in East Asia”, Chapter 3, China and Japan in the Global
Economy, Abingdon, Routledge, edited by Kikuchi and Sakuragawa, 2018.
Kaji, Sahoko, “Mobile Apps, Electronic Currencies and Financial Regulation”, Chap-
ter 13, Financial Cooperation in East Asia, Singapore, S. Rajaratnam School of
International Studies, edited by Kikuchi and Sakuragawa, 2019.
Kawai, Masahiro, “Global Perspective”, Chapter 2, China and Japan in the Global
Economy, Abingdon, Routledge, edited by Kikuchi and Sakuragawa, 2018.
Kimura, Fukunari, “Infrastructure and Development in Asia: The Quality of Infra-
structure and Project Implementation”, Chapter 6, China and Japan in the Global
Economy, Abingdon, Routledge, edited by Kikuchi and Sakuragawa, 2018.
Kindleberger, C, P, Manias, Panics, and Crashes, a History of Financial Crises, Lon-
don, Macmillan, 1978.
Lin, Justin Yifu, New Structural Economics: A Framework for Rethinking Develop-
ment and Policy, World Bank eLibrary, 2012.
Sakuragawa, Masaya, “Prospect for a Multicurrency Clearing System in Asia”, Chap-
ter 10, China and Japan in the Global Economy, Abingdon, Routledge, edited by
Kikuchi and Sakuragawa, 2018.
Sakuragawa, Masaya, Satoshi Tobe, and Mengyuan Zhou, “Chinese Housing Market
and Bank Credit”, presented in APEA Conference, Ros Angels, 2018.
Song, Zheng, Kjetil Storesletten, and Fabrizio Zilibotti, “Growing Like China”,
American Economic Review 101, 196–233, 2011.
Tirole, Jean, “Asset Bubbles and Overlapping Generations”, Econometrica 53 (6),
1499–1528, 1985.
Zilibotti, Fabrizio, “Growing and Slowing Down Like China”, Journal of European
Economic Association 15, 943–988, 2017.
4 Transboundary river
cooperation between
North Korea and China
The Yalu and Tumen rivers
Seungho Lee

Introduction
This chapter evaluates the development of transboundary river cooperation
between North Korea and China with regard to the Yalu River and the Tumen
River. Particular attention is paid to the period from the early 1960s, when the
two countries signed an agreement on the borderline along the two rivers, to
the present. The Yalu and Tumen rivers are international border rivers and have
represented cooperation between the two communist countries in terms of trade,
security, and natural resources management.
The significance of the study lies in unlocking the close ties for utilization
of the Yalu River, mainly for hydropower, and the different strategies of North
Korea and China to access benefits derived from use of the Tumen River. Primary
findings from the two case studies suggest a unique pattern of China’s engage-
ment in international rivers, a cooperative and approachable mode rather than
a hegemonic and unilateral mode of water resources development as seen from
the other transboundary cases for China, including the Lancang/Mekong River.
In the past few years, a détente mood in the Korean Peninsula has induced a
plethora of socio-economic and security discourses on the reunification of the
two Koreas. In 2014, South Korea announced the Eurasia Initiative, which was
aimed at linking Asia with Europe based on regional cooperation in East Asia.
China has recently promoted international border trade with North Korea and
Russia, particularly spearheaded by the Jilin, Liaoning, and Heilongjiang prov-
inces and created the Changchun-Jilin-Tumen Development Plan. Since 2017,
the denuclearization process of North Korea has been a hopeful sign for peace
and prosperity in Northeast Asia, even though nothing is certain for the future.
The Yalu River serves as the border between North Korea and China, whereas
there are three riparian countries in the Tumen River Basin, that is, North Korea,
China, and Russia. Hydropower development is the focus for the Yalu River,
and trade and investment, energy, and tourism for the Tumen River. Careful
approaches would be necessary to enhance the shared basket of benefits in the
two transboundary river basins. The close tie between North Korea and China has
been cemented through the long-lasting cooperation over the hydropower dams
in the Yalu River. The case of the Tumen River demonstrates the complexity of
 Transboundary river cooperation 69
relationships for promoting trade and investment, tourism, energy, and the envi-
ronment since the early 1990s between the three riparian countries and South
Korea, Mongolia, and Japan.
The first part of this chapter sheds light on the patterns of transboundary water
cooperation between the two countries. Particular attention is paid to China’s
attitude towards more than a dozen transboundary rivers, especially not only for
the Yalu and Tumen rivers but also for the Lancang/Mekong River. The second
part discusses the information and overview of transboundary water management
of the two rivers between North Korea, China, and Russia. The third part inves-
tigates the development of cooperation on the Yalu and Tumen rivers. Hydro-
power development has been a primary topic with regard to the Yalu River based
on bilateral cooperation, whereas the Tumen River has illustrated different phases
of multilateral cooperation among North Korea, China, and Russia together with
South Korea, Japan, and Mongolia. Achievements and challenges are explored in
the section dealing with policy implications.

Patterns of transboundary water cooperation

Before delving into exploring the two rivers, it is worth taking a closer look at the
patterns of transboundary water cooperation between North Korea and China.
North Korea shares borders with China and Russia through the two rivers, and
therefore the study appraises the extent to which North Korea has been commit-
ted to cooperation regarding the transboundary rivers with the country’s own
perspectives or vested interests.
The case of China is somewhat different, because of 263 transboundary rivers
in the world, approximately 40 of them flow through China. The country has 15
transboundary rivers along its borders, and 12 of them originate in China. There
are 14 neighboring countries, including North Korea, Russia, Mongolia, Kazakh-
stan, Kyrgyzstan, Tajikistan, Bhutan, Myanmar, Laos, Nepal, Pakistan, Afghani-
stan, India, and Vietnam. China’s transboundary rivers are located primarily in
northeast China, northwest China, and southwest China (Chen 2012, 2017).
China has kept its unique stance towards 15 transboundary rivers and the
neighboring countries. The country has been regarded as the “Upstream Super-
power”, because of the 15 transboundary rivers, China is the upstream hegemon
except for three rivers, namely, the Yalu, the Tumen, and the Amur/Heilong riv-
ers. China appears to be unaware of the need to have continuous dialogue with
the other riparian countries, since its largest river basins are located within its own
territory, and almost three quarters of China’s runoff (2,000 out of 2,700 km3)
stay within its national boundary (Chen 2012; Nickum 2008).
Whereas there is no agreement or treaty related to the Amur/Heilong River
with Russia and Mongolia, China has been engaged with its riparian neighbours
in the forms of agreement and treaties with regard to the Yalu and the Tumen riv-
ers as discussed later in this chapter (Chen 2012; Nickum 2008). The case of the
Yalu River shows harmonious cooperation between North Korea and China, par-
ticularly regarding hydropower development and management, based on bilateral
70  Seungho Lee
border treaties. Several countries are involved in the Tumen River Basin, such as
South Korea, Mongolia, and Japan (observer) although the riparian countries
are North Korea, China, and Russia. Multilateral cooperative mechanisms, the
Tumen River Area Development Program (TRADP; later the Greater Tumen
Initiative, GTI), have been established based on the Memorandum of Under-
standing and the agreement, both signed in 1995.1
Chen (2012) argues that Chinese diplomatic practices regarding transbound-
ary rivers demonstrate the preference of the country for bilateral treaties or agree-
ments, that is, the Yalu River rather than multilateral engagement as seen from
the case of the Tumen River because most of the transboundary rivers for China
originate from its own territory. Nevertheless, there is a growing recognition that
China has increasingly become cooperative with its neighboring countries and
shown commitment to participating in multi-level cooperative frameworks. The
TRADP and the GTI of the Tumen River Basin well illustrate patient approaches
by China to the utilization of such an enigmatic multilateral cooperative mecha-
nism in Northeast Asia.
By analogy, there is another useful example in the Lancang/Mekong River
Basin in investigating the patterns of China’s involvement in multilateral coop-
erative mechanisms in the Asia-Pacific Region. China’s continuous commitment
to the Greater Mekong Subregion (GMS) Program, which was initiated in 1992
by the Asian Development Bank (ADB), is a good example in which the active
engagement of China has been prevalent in the transport and energy sectors,
particularly hydropower development and power trade (Lee 2015).
An interesting similarity from the Tumen River and the Lancang/Mekong
River is that China has demonstrated its willingness to take full advantage of
regional cooperative mechanisms in order to maximize benefits, particularly,
socio-economic, security, and energy benefits. Even though active regional coop-
eration projects in the Tumen River still await the final breakthrough of peace
talks among North Korea, South Korea, and the US as of early 2019, the thawing
mood in Northeast Asia can pave the way for the countries involved in the Yalu
and Tumen river basins to consider various projects in sustainable development in
due course. With regard to the Lancang/Mekong River Basin, China has gained
socio-economic and security benefits, and therefore, it appears that China will
continue to be actively involved in the program’s projects (Lee 2015).
While appreciating the similarities and patterns of China’s involvement in
transboundary rivers from the cases of the three rivers, it is worth pondering
over the implications of the cases from the perspective of China’s global develop-
ment strategy, the Belt and Road Initiative (Eder 2018; Chen 2017). Figure 4.1
explicitly illustrates the geopolitical significance of the three rivers. The Yalu and
Tumen rivers are the starting points of the Northeastern Belt, while the Lan-
cang/Mekong River is either a starting point of the Maritime Road or a connect-
ing route between Mainland Southeast Asia and Southwest China. In addition,
it is significant to note that the border areas of the Yalu, Tumen, and Lancang/
Mekong river basins have not been spotlighted by the central government of
China since the onset of the open door policy until recently, and therefore, these
 Transboundary river cooperation 71

Figure 4.1 The Belt and Road Initiative map

Source: Eder (2018).

areas can become possible candidates for rejuvenating China’s sluggish economic
growth and beefing up China’s political influence in next decades (Eder 2018).

Transboundary rivers: the Yalu and Tumen rivers

The transboundary rivers between North Korea and its neighboring countries
(China and Russia) are the Yalu and the Tumen rivers. North Korea is bordered
with China on the Yalu River, whereas the Tumen River flows through the border
with North Korea, China, and Russia. Although the two rivers have served as the
natural border among the three countries, the current borderline was eventually
determined in the early 1960s, especially for the Yalu River. These border areas
have been instrumental for not only local livelihoods but also ecosystems along
the rivers for centuries.

Overview of the Yalu River

Water resources and the environment

The Yalu River runs approximately 800 km and stems from the Heavenly Lake
at the peak of the Changbai Mountain towards the Yellow Sea. The size of the
72  Seungho Lee
river basin is 64,739 km2 (32,557.2 km2 for North Korea and 32,181.8 km2 for
China), and an annual runoff of the river is as large as 32.76 billion m3, which is
affected by snow melting every spring.
Snow-melt water accounts for approximately 14% of the overall water resources
of the river; rainfall, 78%; and groundwater, 8% (Ahn 2009; Li 2018; Yang
2012). The annual average precipitation in the river basin reaches approximately
900 mm, and the range of the temperature is vast, from minus 22 to 22 degrees
Celsius (Kim et al. 2013; Yang 2012) (Figure 4.2).
The river is suitable for hydropower generation, because the geography from
upstream to downstream shows a 2,400-meter drop in altitude. North Korea and
China have jointly constructed and operated the four hydropower dams since the
1950s and will complete the construction of two more dams soon (Lee 2016;
Yang 2012).
The river basin is full of many flora and fauna species because of abundant rainfall
and thick forests. Biodiversity has seriously been destroyed by human activities in
the past few decades. Wild animals, such as wild boars, wolves, tigers, jaguars, foxes,
ptarmigans, and pheasants, were active previously but not anymore (Yang 2012).

Figure 4.2 Yalu River Basin

Source: Modified based on Kmusser – own work using Digital Chart of the World and GTOPO
data, CC BY-SA 3.0 https://commons.wikimedia.org/w/index.php?curid=6345365 (accessed
19 August 2018).
 Transboundary river cooperation 73
Topsoil and sedimentation along the river have been lost or damaged because
of deforestation and mediocre riparian zone management. This phenomenon
has engendered the reduction of water retention and filtering capacity and has
decreased soil moisture and retarded groundwater recharge. Droughts can crip-
ple water supply for industries, agriculture, and households (DPRK and UNEP
2012; Kim 2017).

Water quality
The Environmental Bulletin of the Jilin Province, China, in 2017 reported that
more than 90% of the river sections showed a good level of water quality, Class II
according to the Environmental Standard for Surface Water in China (Feng and
He 2009; Jilin Environmental Protection Bureau 2017).2 In 2016, the Environ-
mental Bulletin of the Liaoning Province, China, stated that the water quality of
the lower reaches of the river was regarded as Class II (Liaoning Environmental
Protection Bureau 2016). Such a result implies that strict law enforcement activi-
ties of environmental authorities in the provinces have paid off (MK News 2013).
However, situations on the North Korean side of the river appear to be dif-
ferent. According to North Korean refugees, the water quality of the river has
deteriorated thanks to large amounts of industrial and domestic wastewater being
discharged without adequate treatment in riverine cities. A typical treatment rate
of domestic wastewater in North Korea is approximately 13%, which represents
only urban areas. The water quality of the North Korean side of the river is worse
than Class III, which is inadequate for drinking water (Bae 2018; Lee et al. 2006;
Myung 2017).

Floods
Floods on the river frequently are a detriment to the people living along the river,
and the causes of the events are not only associated with hydrological and climate
elements such as typhoons and torrential rainfalls, but also the outcomes from
interactions between human and natural elements, that is, sedimentation, bank
collapses, and course shifts. In addition to summer floods, spring floods wreak
havoc on local residents. The North Korean side of the river seems to be particu-
larly vulnerable to flood events since many green spaces in the country have been
denuded thanks to deforestation during the energy and food shortages of the past
two decades (Lee et al. 2006).
A lack of investment for flood prevention infrastructure is another fundamental
challenge together with the unsystematic responses of North Korean authori-
ties against flood events. Although large-scale dams in terms of storage capacity
are built on the river, such as the Shuifeng (14.7 billion m3) and the Yunfeng
(3.9 billion m3) dams, they are primarily operated for a single purpose: hydro-
power generation (Kim 2017; Watts 2010).
In April 2011, North Korean and Chinese authorities reached a cooperative
agreement on management of the river, especially for preventing flood damage.
74  Seungho Lee
In the agreement, both countries pledged to undertake joint patrols and rescue
the affected on the river (Yang 2012). To alleviate flood risks on the river, North
Korea and China decided to renovate flood control facilities in the Shuifeng Dam
in August 2012. China was committed to providing necessary funding, whereas
the implementation program was jointly decided by both countries (Li 2018).

Socio-economic situations
The border areas along the river include the Pyongan North and Jagang prov-
inces, North Korea, and the Liaoning and Jilin provinces, China. The border
areas have been a primary route for bilateral cooperation in many aspects, par-
ticularly border trade and the development of economic zones in the past few
decades. As for North Korea, these areas are also vital for channeling essential
products from China, such as petroleum and food, in violation of international
sanctions that have been imposed by the UN (Scobell 2017).
The relationship between North Korea and China has been positive despite
North Korea’s nuclear tests, although China appears to think that North Korea
is a difficult neighbor to deal with (Glaser and Sun 2015; Scobell 2017). Acting
against the international sanctions on North Korea, the Chinese central govern-
ment recently decided to modify its policy towards the country, encouraging local
governments to lead economic cooperation, especially the northeast provinces,
including the Liaoning and Jilin provinces. Vast amounts of investment from the
Chinese side have been made to a wide range of sectors, including infrastructure
(road, railway, and bridge), trade, tourism, movement of labor, and special eco-
nomic zones (Park and Kim 2018).
The North Korean side would like to accelerate the development of special
economic zones, promote tourism industries, and export labor forces in China.
The needs of both sides can be matched well, and therefore, cooperation on eco-
nomic and infrastructure development in the border areas will be boosted (Park
et al. 2015).

Overview of the Tumen River

Water resources and the environment

The length of the Tumen River is 521 km, and the river serves as the border
among North Korea, China, and Russia. The river originates from the Changbai
Mountain and is discharged into the East Sea. Most of the riverine areas (504 km)
form the border between North Korea and China, whereas only 17 km of the
river serve as the border between North Korea and Russia. There are more than
250 tributaries, and the width of the river ranges between 240 and 250 m and
between 400 and 20,000 m during the flood season (Figure 4.3) (Koo et al. 2011;
Liu 2014).
The total size of the Tumen River Basin is 33,168 km2. About 70% of the
river basin belongs to Yanbian Korean Autonomous Prefecture, China; 29% to
 Transboundary river cooperation 75

Figure 4.3 The North Korea, China, and Russia border region

Source: Pomfret (1997).

Hamgyong Province, North Korea; and 1% to Khasan Wetlands in Primorsky

Territory, Russia. There are more than 2.2 million people in the river basin, and
75% of them live in Yanbian Prefecture, China (Lee et al. 2011; White 2010).
Average temperatures of the river basin range between 2 and 6 degrees Celsius.
The highest temperature reaches 36–38 degrees Celsius in summer, whereas the
lowest is minus 35–40 in winter. The average rainfall of the river basin is about
570 mm per annum, and large amounts of rainfall are concentrated in the period
between June and September (KOWACO 2004; Lee et al. 2011).
A variety of natural resources – oil, gas, and minerals – abound in the river
basin. There are huge potential markets, including South Korea, Japan, China,
and Mongolia. Natural resources and adequate infrastructure can accelerate
regional economic growth. Therefore, there had been a long-waited call for mul-
tilateral cooperation over resource management and infrastructure development
before the onset of the UNDP Regional Program for the Tumen River Basin in
1991 (Marsden 2010).
The river basin boasts numerous animal and plant families and species. Biodi-
versity and ecosystems have been under threat owing to three major phenom-
ena – loss (land use change and reclamation), fragmentation (increase of built
environments and urbanization), and environmental degradation (pollution and
disturbance). Vast areas of forest (525,506 km2) and grassland (91,200 km2) have
disappeared, and the number of animals has diminished (Cai 2014).
76  Seungho Lee
The primary functions of the river are to supply water for the agricultural sec-
tor and industrial development and to preserve biodiversity in the Tumen Delta.
Such functionality of the river has seriously been hampered by water pollution,
especially exacerbated by the rampant discharge of industrial sewage from paper
and pulp mills in Longjing, Jilin Province, China, and tailings from Musan mines
in North Korea. Water pollution even worsens in winter because of less rainfall
(DPRK and UNEP 2012).
In 2012, the six Chinese monitoring stations along the river showed that water
quality at three stations was regarded as Class III, two stations as Class IV, and
one station as Class V, demonstrating that the water quality of the river, at least
within the Chinese section, has been well managed (Jilin Environmental Protec-
tion Bureau 2013).

Socio-political and economic situations

The Tumen River Basin has been one of the hot spots in East Asia in terms of pol-
itics, economy, the environment, energy, and security. Historically, regional coop-
eration or conflict has continued to occur between South Korea, North Korea,
China, Russia, Mongolia, and Japan. Each country was committed to launching
its own plan or strategy for developing the river basin before the Tumen River
Area Development Program (TRADP) of UNDP in 1991, which has been trans-
formed into the Greater Tumen Initiative (GTI) since 2005.
The study introduces an overview of political and socio-economic situations of
the countries involved in regional development of the Tumen River Basin. First,
South Korea is one of the founding members for the TRADP and has played a
leading role in policy setting, technology development, and financing. The sig-
nificance of the river basin for South Korea is threefold. The river basin abounds
in natural resources and energy, such as oil, natural gas, and minerals, and will
serve as a gateway for the country to have access to Northeast Asia and Europe by
railway. In addition, sea routes towards the East Sea will lead to increased export
volumes of South Korea’s manufactured products.
Another important aspect is that regional cooperation will be instrumental in
creating an environment in which South and North Korea continue to commu-
nicate. Such a channel of conversation between the two Koreas can bring about
positive political and economic outcomes in due course. The cooperative mecha-
nism can serve as a foundation for the amelioration of political tensions between
the two Koreas and peaceful reunification (GTI 2011, 2018; Koo 2018).
What North Korea would like to achieve through the TRADP and the GTI is
to promote border trade, invite more investment, and develop tourism industries
for acquiring more hard currency. However, the slow progress of the TRADP
disappointed North Korea, and the country’s nuclear missile tests triggered severe
sanctions from the West, Japan, and South Korea, which resulted in North Korea’s
withdrawal from the GTI in November 2009 (Shin 2014; Yi and Woo 2014).
China has been actively participating in the TRADP to beef up economic growth
in Northeast China. Recently, the Changchun-Jilin-Tumen Area Development
 Transboundary river cooperation 77
Plan was initiated by the central government. It is interesting to observe whether
such a development initiative will help to reactivate the GTI, and if China will
play a leading role in its future (GTI 2011; Lu and Jin 2011; Park 2014).
The Maritime Province of Siberia and East Siberia have been less developed
compared with the western part of Russia, and therefore, regional development
projects in the Tumen River Basin have drawn the close attention of Russia.
Projects related to natural gas and an electricity grid are associated with Russia’s
ambition to strengthen positional power as an energy supplier and hub for East
Asia, Asia, and the Pacific (Jeon 2006; Park 2014; Shin 2014). These represent
not only Russia’s commitment to promoting economic growth in the Far East
and East Siberia, but also to containing China’s influence in the region. Never-
theless, the policies and projects of Russia appear to be less systematic and practi-
cal compared with those of China (Park 2014).
Mongolia has been an active member in the TRADP and the GTI because of
an urgency for more investment, technology transfer, and foreign aid. Mongolia
is a landlocked and less developed country and would like to eradicate poverty
and achieve a good level of socio-economic development. The detailed action
plans of Mongolia regarding the GTI encompass the exploitation of under-
ground resources, facilitation of international trade, and promotion of tourism
industries (Park 2014).
Japan has been reluctant to join the cooperation mechanism. The reason the
central government of Japan has not joined the TRADP and the GTI is linked
to pressure from the United States and tensions with North Korea in terms of
political, military, and diplomatic matters. However, local governments (Nii-
gata and Tottori prefectures), civil groups, and companies located along the
east seashore of Japan have continued to express their interest in the Tumen
River cooperation mechanism. If Japan participated in the program, then acces-
sibility would be improved from the Tumen Delta to vast markets in Northeast
China, and logistical accessibility from Asia to Europe would be enhanced via
long-distance railways, such as the Trans-Siberian Railway (GTI 2011; Yi and
Woo 2014).

Patterns of cooperation in the Yalu and Tumen rivers

Cooperation for hydropower dams on the Yalu River

Early cooperation
The first bilateral cooperation on hydropower in the river was the joint operation
of the Shuifeng Dam, which was built from 1937 to 1944 by the Japanese. The
Shuifeng Dam eventually paved the way for North Korea and China to establish
a cooperation mechanism in which the countries agreed to set up the North
Korea-China Hydropower Corporation. North Korea was in charge of produc-
tion management, and the power generated by the dam would be evenly shared
between the countries.
78  Seungho Lee
Three more hydropower plants have been constructed on the river. These
dams reflect a similar pattern of bilateral cooperation over the Shuifeng Hydro-
power Dam, which encompasses joint ownership under nominal management
of the joint corporation and generates and shares the power equally under the
operational management of the North Korean side (Nickum 2008).

North Korea-China agreements in the Yalu River Basin

The early cooperation between the countries was launched related to the clarifica-
tion of the border along the Yalu and Tumen rivers, and both of the rivers stem
from the Changbai Mountain. A total of nine treaties have been signed between
North Korea and China on the two rivers since the early 1960s. The list of the
treaties is given in chronological order in Table 4.1 (Chen 2012; Chen et al.
2013; Lee 2007).
The 1962 and 1964 treaties embrace specific articles linked to transboundary
water issues. In the 1962 treaty, the two countries officially confirmed the bor-
derline ranging over 1,200 km and the Yalu and Tumen rivers as the boundary
rivers for the first time (Lee 2007; Li 2018). Article 3 of the 1962 Border Treaty
states that the utilities of the two rivers will be jointly owned, managed, and used
by the two countries. The use of water embraces navigation, fishing, and hydro-
power in the treaty (Chen 2012; Chen et al. 2013).
Article 17 of the 1964 Protocol on Border Management states that any
attempts to change the navigation channel or build any structure in the bound-
ary rivers, thereby altering water flow and affecting the other riverbank, should

Table 4.1 A list of treaties between North Korea and China since the 1960s

No Treaty Year

1 The Agreement on Cooperation on Navigation and Shipping in 1960

Boundary Rivers between North Korea and China
2 The Border Treaty between North Korea and China 1962
3 The Protocol on Border Management between North Korea and 1964
China
4 Cooperation Agreement on Hydrologic Work of the Yalu River and 1978
the Tumen River
5 Rules for Vessels Navigating on the Border Rivers 1982
6 The Protocol on Cooperation on Navigation and Shipping in 2002
Boundary Rivers between North Korea and China
7 Agreement on the Joint Construction, Management, and 2010
Maintenance of the Border-River Road Bridge on the Yalu River
8 Cooperation Agreement on Maritime Administration of the Yalu 2011
Water Area
9 Agreement on the Joint Construction, Management, and 2012
Maintenance of the Jian-Manpu Border-River Road Bridge on
the Yalu River
Source: Compiled from Chen (2012), Chen et al. (2013), and Lee (2007).
 Transboundary river cooperation 79
be approved by the other country (Chen 2012). The camaraderie between North
Korea and China is neatly reflected in the treaties, showing mutual understanding
and benefit sharing (Chen et al. 2013; Park et al. 2015).

Development of hydropower dams

Hydropower development in the river has been and will be the most salient issue
for transboundary water management between the two countries. The contribu-
tion of hydropower on the river is negligible for the energy profile of Liaoning
and Jilin provinces, China. The magnitude of hydropower in the energy profile
of North Korea is immense (Huang and Yan, 2009).
According to statistics on the total volume of power generation of North
Korea in 2015, hydropower was the largest contributor, accounting for 62.9%,
which is equivalent to 13.9 billion kWh. The rest was contributed by thermal
power plants, which accounted for 37.1%, 8.2 billion kWh. In addition, potential
for a maximum level of hydropower generation in the country will be as large
as 9.6 million kW, and if the level is set at 8.8 million kW, 57% of hydropower
potential (5 million kW) has been developed so far (Ham 2016; Hwang et al.
2016; Kim 2015).
A total amount of hydropower potential on the river can be 2.5 million kW,
or 10 billion kWh per annum. The total capacity of the four dams on the river is
equivalent to about 7.15–7.69 billion kWh, and if half of the generated power is
available for North Korea, the total volume of hydropower for the country will be
approximately 3.85 billion kWh per annum. Recognizing only 57% of the maxi-
mum hydropower potential being developed, North Korea and China are likely
to collaborate to build more hydropower dams on mainstream and tributaries
(Hydropower Knowledge Network 2018; Lee 2017).
North Korea and China have so far jointly constructed and operated the four
hydropower dams since the 1950s and are soon to complete the construction of
two more dams. The dams in operation are Yunfeng, Weiyuan, Shuifeng, and
Taipingwan (Figure 4.4 and Table 4.2).
The construction of two hydropower dams was to be completed in 2013 but,
after some postponements, still have not been completed as of 2019 (K-water
2016; Lee 2017; Li 2018; Yang 2012). Table 4.3 indicates the specifications of
these dams.

Cooperation for sustainable development on the Tumen River

Phase 1 (preparation): 1991–1996

UNDP embarked on the TRADP in 1991 as an intergovernmental cooperation
project to promote socio-economic development in the river basin. The aim of
the program was to reduce tensions in riverine border areas and develop interna-
tional trade with the initial budget plan of USD 30 billion for 20 years (increased
to USD 80 billion later) (GTI 2011; Liu 2014).
80  Seungho Lee

Figure 4.4 The four hydropower dams along the Yalu River

Source: Modified based on K-water (2016).

There were three phases to the program: (1) the preparation phase: 1991–
1996; (2) the middle phase: 1997–2000; and (3) the final phase: 2001–2004. As
an intergovernmental cooperation project, the member countries of the TRADP
were South Korea, North Korea, China, Russia, and Mongolia, together with
Japan as an observer.
UNDP initially suggested two major economic zones. The first one was the
Tumen River Economics Zone with a total area of 1,000 km2 of the small-scale
Tumen Delta that connects Hunchun, China, and Rajin and Sunbong, North
Korea, with Posiet and Zarubino, Russia. The second zone was called the Tumen
River Economic Development Area with a total area of 10,000 km2 of the large-
scale Tumen Delta that links Yanji, China, and Chungjin, North Korea, with
Nakhodka, Russia.
However, the two economic zones did not take off. UNDP stepped down as a
supporting agency, and the member countries decided to take the lead. In 1995,
the member countries decided to build a new governance structure and related
regulations together with the establishment of the secretariat in Beijing (Cho and
Kim 2010; Chung-Ang University 2010; Shin 2014).
Table 4.2 Cascade hydropower dams in operation on the Yalu River

Name Location Year of Installed Average annual Construction par ty Cascade Maintenance and operation
construction capacity electricity output order
(kW) (million kWh)

Yunfeng Jian City 1958–1965 400,000 1,350 China and Nor th Korea First China
Weiyuan Jian City 1980–1988 390,000 1,200 China and Nor th Korea Second Nor th Korea
Shuifeng Kyuandian City 1937–1943 630,000 3,680 Japan  Nor th Korea Third Nor th Korea and China
Taipingwan Kuandian City 1978–1986 1,900 720 China and Nor th Korea Four th China
Source: Yang (2012).
Transboundary river cooperation
81
 82  Seungho Lee

Table 4.3 Hydropower dams under construction on the Yalu River

Name Location Year of Installed Average annual electricity Construction Investment Maintenance
construction capacity (kW) output (million kWh) par ty (million USD) and Operation

Wangjianglou Jian City 2010–2019 40,000 150 China 88 China

Wenyue Jian City 2010–2019 40,000 154 Nor th Korea 73 Nor th Korea
Source: Kim et al. (2013), Shinhwa Network (2010), and Yang (2012).
 Transboundary river cooperation 83
Phase 2 (TRADP first stage): 1997–2000
The ten-year plan for regional development (1996–2005) in the Tumen River
Basin was established in late 1995. The member countries decided to focus on
five top-priority areas: (1) trade and investment, (2) transport, (3) environment
and energy, (4) tourism, and (5) telecommunications, and created a working
group in each area to facilitate relevant policies and projects. To speed up pro-
gress, each member country was in charge of a specific area – China for trade and
investment, North Korea for transport, Russia for tourism and energy, South
Korea for tourism, and Mongolia for telecommunications (Cho and Kim 2010;
Chung-Ang University 2010; Shin 2014).

Phase 3 (TRADP second stage): 2001–2004

More emphasis was placed on how to consolidate and expand multilateral coop-
eration among countries in East Asia by drawing the attention of each coun-
try’s central government to the program. The member countries of the TRADP
intended to enlarge the geographical scope of projects into South Korea, Mon-
golia, and Japan and began to set up and operate projects of the TRADP and
planned to invite the Asian Development Bank (ADB) for additional financing
(Cho and Kim 2010; Chung-Ang University 2010; Shin 2014).
Despite continuous calls from the TRADP, Japan has postponed joining the
program, and the ADB showed no interest in the program. There are three rea-
sons why Japan has not been committed to the program. First, Japan and North
Korea had not reached an agreement about the matter of Japanese kidnapped by
North Korea. Second, various projects of the program had little feasibility because
of the lack of infrastructure, and third, there was political pressure from the US
not to participate in the program (Jeon 2006; Shin 2014; Yi and Woo 2014).
One of the most challenging issues in this phase was budget constraints in
tandem with the stalemate in project implementation. The program was con-
fronted with a major budget constraint because UNDP’s capital contribution to
the program diminished from 100% in 2001 to 32% in 2003 and 0% in 2006.
Although South Korea and China managed to fill the budget gap, the budget
constraint triggered the suspension of some meetings of the working group (GTI
2017). Confronted with diverse challenges, the member countries held meet-
ings in 2004 and 2005 in Changchun, China, and concluded that the TRADP
agreement would continue to be valid until 2015, and the TRADP would be
transformed into the Greater Tumen Initiative (GTI) (Cho and Kim 2010; Koo
et al. 2011; Shin 2014; Wang 2014).

Phase 4 (GTI first stage): 2005–2009

The GTI aims to actively promote regional cooperation for socio-economic
development in the Greater Tumen River Basin and Northeast Asia, following
the legacy of the TRADP. The GTI member countries agreed to establish the
84  Seungho Lee
Strategic Action Program (2005–2015) and to closely collaborate in the five pri-
ority areas: (1) transport, (2) trade and investment, (3) tourism, (4) energy, and
(5) the environment. Additional new initiatives were introduced, including the
empowerment of local governments in regional cooperation and the expansion of
geographical scope into landlocked and under-developed areas (Figure 4.5) (Cho
and Kim 2010; Koo et al. 2011; Liu 2014; Shin 2014).
Councils, boards, and projects of the five priority areas were decided in 2006.
The councils and boards included the Energy Board, the Tourism Council, the
Business Advisory Council, and the Cooperation Framework on Environment
together with major projects in accordance with the five priority areas. The GTI
established the Business Advisory Council and advocated private-sector participa-
tion in projects. Additionally, the GTI has encouraged multilateral cooperation
and allowed bilateral cooperation in project planning and implementation for the
areas having good investment potential (Shin 2014).
A new challenge for the GTI emerged in November 2009, with North Korea’s
withdrawal from the initiative. Such a move undermined the legitimacy of the
operation and implementation of projects in the GTI, and the absence of North
Korea remains one of the critical huddles embedded in the GTI (Cho and Kim
2010; Koo et al. 2011).
Although there was no official announcement from the country on the reason for
its withdrawal, there are several possibilities. North Korea withdrew because of its

Figure 4.5 Greater Tumen Initiative Area and countries

Source: GTI (2011).
 Transboundary river cooperation 85
disappointment with the slow progress of the TRADP and the GTI. Also, the coun-
try is wary of possible side effects of its active engagement with other countries,
which can culminate in posing a threat to the stability of its regime (Park 2015).

Phase 5 (GTI second stage): 2010–2015

Since 2010, the GTI has succeeded in implementing various projects, and
smoother progress has been made regarding discussions and cooperation among
the four member countries. One conspicuous change after 2010 was China’s
proactive move to develop its border areas in the Tumen River Basin, especially
through the Changchun-Jilin-Tumen Area Development Plan 2009.
The Chang-Ji-Tu Development Plan will build advanced logistics bases and
Northeast Asian business centers by connecting Changchun with the Tumen
River and will transform the project areas into a major logistics hub in the future.
A total of RMB 280 billion (USD 47 billion) will be invested in the project.
A prerequisite for its success is economic cooperation with North Korea and Rus-
sia (Cho and Kim 2010; Lu and Jin 2011; Shin 2014; Yi and Woo 2014).
Competition has intensified between China and Russia over securing access
to Rajin and Sunbong ports, North Korea. China and Russia are committed to
securing exclusive rights to use the ports for sea routes towards the East Sea.
The two ports will enable China or Russia to increase economic benefits through
investment and trade and to gain security benefits from using the ports for mili-
tary purposes (Shin 2013, 2014; Yi and Woo 2014).

Phase 6 (post-GTI): 2016 to the present

An array of discussions on the future of the GTI was conducted through meetings
from 2008 to 2014 and, in 2014, the countries approved a legal concept note
for transforming the GTI into an independent intergovernmental organization in
the 15th General Assembly (Ministry of Strategy and Finance 2014; Park 2014).
The concept note encompasses the purposes of the post-GTI, areas of coop-
eration, and types of organizations pertaining to cooperation activities. The
post-GTI will be an intergovernmental organization for achieving economic
cooperation in Northeast Asia and be dedicated to ensuring mutual cooperation
and achieving sustainable development for the countries of the region.
The Strategic Action Plan 2017–2020 sheds light on the five priority areas plus
the agricultural sector. With regard to transport, the post-GTI will focus on the
enhancement of transport infrastructure in Northeast Asia and the consolidation
of the interconnectivity among regions. The elimination of red tape is essential in
the area of trade and investment, and cross-border ecotourism and relevant ser-
vices will be important for tourism industries. More projects are urgently needed
in the energy sector for leveling energy use efficiency, and ecosystem and biodi-
versity conservation are emphasized. The agricultural sector will focus on rural
economic development, trade facilitation, and food safety and security in the
region (GTI 2017).
86  Seungho Lee

Achievements and challenges

The Yalu River: hydropower development cooperation

Challenges
Challenges exist in terms of transboundary water management in the Yalu River,
especially for North Korea. First, the facilities of the four cascade dams need
serious repairs, especially for the Shuifeng Hydropower Dam that was first built
in the 1940s. The conditions of the other three dams are not necessarily sound,
because the Yunfeng has been in operation for more than 40 years whereas the
Taipingwan and the Weiyuan dams have been in operation for more than 20 years
(Kim 2017).
Specific challenges exist for the hydropower dams of North Korea. Most of the
hydropower dams in the country face immense technical challenges, including
the lack of essential components for power generation and daily operation of rel-
evant facilities, which results in damaging hydropower dam facilities as a whole.
First, problems with North Korea’s national economy have resulted in a chain
effect of difficulty for hydropower dam operation and maintenance. A dearth of
necessary components for hydropower dams has exacerbated a low efficiency rate
of hydropower generation and has had a far-reaching effect on other industries.
Serious retrofitting works are necessary in order to appraise the current condi-
tions of the dams, particularly hydropower-generating facilities (Kim 2017).
Second, the dams along the river are designed for a single purpose, hydro-
power generation, and do not help to prevent floods or supply water to the
agricultural sector. These dams would be more useful if they were redesigned to
serve multiple purposes.
Third, floods threaten local livelihoods and the growth of urban areas in the
borderlands, including Shinuiju City, North Korea, and Dandong City, China.
Floods have occurred as a result of natural and anthropogenic factors, includ-
ing the policy of expansion of arable land in mountainous areas along the river
(DPRK and UNEP 2012; Kim 2017; Lee et al. 2012).
Fourth, it is sensible to envisage the construction of additional hydropower
dams for energy-hungry Northeast China and North Korea. However, it is nec-
essary to take into account possible negative effects triggered by the dams, espe-
cially on ecosystems and the livelihood of local people. North Korea and China
together with South Korea should discuss sustainability issues and envisage rel-
evant policies and projects in the river basin, including transboundary Environ-
ment Impact Assessment (EIA).

Achievements and the way forward

North Korea strove to promote two special economic zones downstream along
the river (near Shinuiju and Hwanggeumpyong Island) in recent years, but the
attempts were unsuccessful (K-water 2016). North Korea has opted for its own
 Transboundary river cooperation 87
version of an “open door policy” in collaboration with China focusing on the
border cities downstream along the river. Harnessing water resources is one of
the prerequisites to bolster Northeast China’s border trade and economic growth
and to facilitate North Korea’s leapfrogging for socio-economic development
and modernization.
Trilateral cooperation among South Korea, North Korea, and China is instru-
mental for various fields of water resources management in the river basin. First,
as an initial step, South Korea should provide technical support for outdated and
ill-maintained hydropower dams, such as the Shuifeng and Yunfeng dams. This
could be possible through South Korea’s participation in meetings of the board
of directors of the North Korea-China Hydropower Corporation (K-water 2016).
Flood prevention measures should urgently be introduced. Such measures
encompass structural and non-structural ones. Levees along the river have to
be carefully examined and adequately repaired, and short- and long-term plans
must be established for protecting local people, major infrastructure, and agricul-
tural fields near the river. Joint monitoring and research through conferences and
expert exchanges should be undertaken for measuring flow regime and frequency
of flood events (Kim et al. 2013; K-water 2005).
Second, the three countries should collaborate and establish a transbound-
ary cooperative mechanism and undertake various joint projects for sustainable
water resources management. Projects should also be associated with plans for
special economic zone development in the estuary of the river, ensuring the
removal of flood risk and the steady supply of water and electricity to the special
economic zones.
Third, it is wise to consider partnering with the World Bank, the Asian Devel-
opment Bank (ADB), and the newly born Asian Infrastructure Investment Bank
(AIIB) in water resources management, especially for hydropower generation
and renovation. In particular, the China-led AIIB could play a vital role in financ-
ing large amounts of infrastructure funding for dam retrofitting projects and the
establishment of special economic zones downstream (Lee 2016).
Fourth, a good level of transboundary river basin governance should be cre-
ated. North Korea, China, and South Korea can set up the so-called Yalu River
Basin Development Committee in which representatives from the countries can
deal with water issues and matters for socio-economic development and ecosys-
tem conservation (Kim et al. 2013; Lee 2016).

The Tumen River: a litmus test for peace and prosperity

in Northeast Asia

Challenges
According to an evaluation by UNDP, the TRADP has not necessarily been an
overall success but still has potential despite its sluggish development. The pro-
gram can be considered an “incomplete success” (Shin 2014). The challenges
and limitations of the GTI are addressed next.
88  Seungho Lee
The main obstacle facing the development of the Tumen River Basin is the lack
of a sense of responsibility and ownership in the program. In 2005, the leader-
ship of this collaboration was transferred from UNDP to its member nations,
but the modifications and levels of participation of the member nations have not
been incorporated into the GTI management structure. The GTI suffers from a
noticeable lack of general and specific long-term plans to address economic col-
laboration and other pending issues (Liu 2014).
Second, one of the difficulties of the GTI is meager financial resources, which
has hampered the management and development of programs. Since the begin-
ning of the TRADP, the program has been financially unstable. The GTI has held
trade investment expositions and has attempted to secure loans from the ADB,
but these efforts have mostly been unsuccessful. The establishment of independ-
ent development banks and investment corporations has also been met with little
success (Shin 2014).
Third, the differences between the political and economic systems of the mem-
ber nations are another factor retarding the development of the GTI programs.
North Korea, which has a top-down governance system, collaborates with neigh-
boring countries, but this relationship has proven to be an obstacle. Because of
North Korea’s planned economic system, China and Russia’s planned-to-liberal
transitional economic system, and South Korea’s liberal economic system, these
diverse economic systems have faced a variety of difficulties developing the five
priority programs.
Fourth, the membership status of North Korea, which withdrew in 2009, and
Japan, which is hesitating about becoming a member, is not determined yet.
The re-entry of North Korea with the participation of all the basin countries
would provide a start for a basin community and give the community greater
legitimacy. The entry of Japan, which occupies an important political and eco-
nomic position in Northeast Asia, would play a pivotal role in developing the
GTI programs.

Achievements and the way forward

The 2011 Strategic Review points out the future direction of the GTI based its
successful legacy. First, regarding the lack of the sense of ownership, each country
should have a representative from the ministerial level or higher and further stress
political and policy motivations.
Second, regarding the continued problem of financing, the member nations
should expand the budget for industries and the secretariat management, and
they should also work closely with international organizations besides UNDP,
that is, ADB, World Bank, UN Economic and Social Council for Asia and the
Pacific (UNESCAP), Japan International Cooperation Agency (JICA), and
Korea International Cooperation Agency (KOICA), to develop programs. Also,
the Northeast Asia Export and Import (EXIM) Bank Association, which was
agreed upon by the GTI member nations in 2012, should be empowered as a
major funding vehicle (GTI 2017).
 Transboundary river cooperation 89
Third, regarding North Korea’s return to the initiative, local governments
should join the initiative by sharing knowledge and supporting its efforts. Once
trust is built and industries have been developed, a politically appropriate moment
for North Korea’s return can be materialized. The region covered by the GTI
must reach the Eastern Sea Rim, and the GTI must provide Japan with more
incentives to join (GTI 2011).
Fourth, to reach a shared level of sustainable development among South Korea,
North Korea, China, Russia, and Mongolia, cross-border cooperation must be
strengthened. Programs in the four fields should be developed: (1) transport, (2)
development of the Rajin-Sunbong International Industry Complex or Special
Economic Zone, (3) the international tourism belt, and (4) international coop-
eration on the environment (Kim et al. 2013).
The success of the GTI is likely to be contingent upon the development of
China’s northeastern region. However, although the development resulting from
China’s Changchun-Jilin-Tumen Plan will support the GTI, the success of the
GTI depends upon cooperation among its member nations, and especially North
Korea. If its closed economic systems and uncertain foreign policies continue and
China is unable to make easy use of Rajin and Sunbong ports, that is, the exit
way to the East Sea, then China’s development program and the GTI face an
uncertain future (Lu and Jin 2011; Shin 2014).

Conclusion
This chapter has evaluated the current circumstances, challenges, and oppor-
tunities in the transboundary rivers between North Korea and China together
with Russia and other countries in Northeast Asia. Main issues in the Yalu and
Tumen rivers are somewhat different. Whereas more focus has been on hydro-
power development for energy security in the Yalu River, more emphasis has
been placed on the extent to which the member countries of the GTI can achieve
socio-economic prosperity in the Tumen River Basin.
Hydropower development has been a primary topic in the Yalu River Basin
between North Korea and China in addition to concerns about flooding and
ecosystems. The bilateral cooperation between North Korea and China has been
noted for maximizing hydropower potential since the 1950s, and such mutual
development seems to continue through building dams. China has regarded the
case of the joint hydropower generation on the Yalu River in collaboration with
North Korea as a good practice for benefit sharing based on mutual agreements.
However, it is worth having a closer look at what has been done with the agree-
ments between North Korea and China and ensure the even share of benefits
accrued from utilization of the Yalu River.
Attention is paid to the promotion of trade and investment, energy, and tourism
in the Tumen River Basin coupled with water quality improvement and ecosystem
protection. The overall picture of the river basin appears to be more complicated
than that of the Yalu River based on multilateral cooperation. The future of GTI
is not set yet. Considering the ongoing discussion of denuclearization of North
90  Seungho Lee
Korea, the GTI can serve as a useful platform to rejuvenate international coopera-
tion on sustainable development in Northeast Asia beyond political uncertainties.
Another implication from the two case studies are neatly connected with Chi-
na’s continuous engagement with another multilateral cooperative mechanism
in the Lancang/Mekong River Basin. The Greater Mekong Subregion (GMS)
Program has been successful in bringing China back to the negotiation table and
encouraging it to cooperate with the other riparian countries, which is similar to
what happened in the case of the trajectory of cooperation in the Tumen River
Basin. The new initiative in the Lancang/Mekong River Basin, the Lancang-­
Mekong Cooperation (LMC), is the brainchild of China’s new diplomatic strat-
egy towards Mainland Southeast Asia and can have a far-reaching impact on
transboundary river relationships in due course.
It is important to argue that socio-economic and security benefits for all the
riparian countries with transboundary rivers can be a driving force to eventually
enlarge the basket of benefits from the cases of the Yalu, Tumen and Lancan/
Mekong river basins. This would be one of the most fundamental and salient
virtues China should seek for the success of its global development strategy, the
Belt and Road Initiative.
Peace and prosperity in Northeast Asia may come true. The practices of coop-
eration centered on the Yalu and Tumen rivers highlight the potential of multilat-
eral cooperation for collective peace and prosperity. No one can predict what kind
of future lies ahead in Northeast Asia; however, it is plausible to maintain that
continuous dialogues among the countries in the region can culminate in creat-
ing an enlarged basket of political, economic, social, and environmental benefits.

Notes
1 These are the Memorandum of Understanding on Environmental Principles Gov-
erning the Tumen River Economic Development Area and Northeast Asia and the
Agreement on the Establishment of the Consultative Commission for the Develop-
ment of the Tumen River Economic Development Area and Northeast Asia.
2 Water bodies classified as Class I and II are suitable for drinking, whereas those clas-
sified as Class III and IV are accepted for agricultural use. Those classified as Class
V or worse are not recommended for human consumption directly or indirectly.

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5 China–ASEAN natural rubber
trade relationship
Policy redesign for mutual
competitive advantage
Montchai Pinitjitsamut

World’s natural rubber

The world’s natural rubber production output reached 13.56 million tons in
2017, with an annual average growth rate of 3.4%. The main natural rubber-
producing countries are ASEAN members such as Thailand, Malaysia, Vietnam,
and Indonesia, the four top export countries. The plantation areas in the world
were 12.917 million hectares in 2017, with an annual average growth rate of
2.16%. The world’s production outputs of natural rubber were 13.56 million
tons in 2017, with an annual average growth rate of 3.13%. The growing rate of
global demand was greater than that of supply, reflecting the price increase in the
early period, especially in 2011. The manufacturing clusters in the Asia-Pacific
region are the largest users and have the highest demand for natural rubber, with
their consumption accounting for 73% of that of the world and their tire industry
consumption accounting for nearly 70% (Venugopal 2017).
However, in the period from 2011 to 2015, the natural rubber demand gradu-
ally shrank an average of 2.4% annually, and the supply growth rate at 3.42%
continued to exceed the demand growth rate. After that, there was an increase
in market demand, and consumer demand was improved in 2016. It should
be noted that in early 2016, the price of natural rubber was too low, and the
supply growth rate was subsequently low. As the economy recovered, rubber
prices began to rise in September 2016, and the consumption demand rose to
12.67 million tons, indicating that production failed to meet demand, causing
prices to increase significantly (Venugopal 2017). The global natural rubber con-
sumption and production between 2008 and 2017 is shown in Table 5.1.
The global natural rubber price increased during the period of 2009–2011 and
decreased afterward until 2016. Subsequently, the price improved from 2016
(Q4) to 2017 (Q1) (Figure 5.1). These changes followed the global demand and
supply trends as previously mentioned. However, a detailed investigation shows
that the price of global natural rubber was led by the Shanghai Future Exchange
(SHFE) future contract price. Figure 5.2 shows the movement of rubber smoked
sheet #3 (RSS#3) prices in the following three markets: (1) the reference price
in the derivatives market at SHFE (solid black line usually at the top); (2) the
market price of natural rubber exported (FOB price) (light grey line usually in
the middle from Thailand to China), with weighted average price of each type of
 China–ASEAN rubber trade relationship 95
Table 5.1 Global natural rubber demand and supply (metric tons), 2008–2017

Global demand Global supply

Amount % Growth Amount % Growth

2008 10,187.1 10,097.1

2009 9,289.6 −8.81 9,723 −3.71
2010 10,791.8 16.17 10,393 6.89
2011 11,033.7 2.24 11,239 8.14
2012 11,046 0.11 11,658 3.73
2013 11,430 3.48 12,282 5.35
2014 12,181 6.57 12,142 −1.14
2015 12,134 −0.39 12,264 1
2016 12,670 4.42 12,604 2.77
2017 13,222 4.36 13,559 7.58
Average 3.13 3.4

16,000

14,000

12,000
Prices of Rubber

10,000
Sum demand
8,000 Sum supply
PNR
6,000

4,000

2,000

0
1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Figure 5.1 Global natural rubber price, world demand and supply, 2008–2017

rubber; and (3) the latex price at the Thailand local market (farm gate price) (gray
line usually at the bottom). The question is whether these three prices have a
long-term relationship and whether they affect one another. The analysis of price
transmission illustrates that the price is initiated and led by SHFE, affecting the
export market and local natural rubber market (Montchai Pinitjitsamut 2015).

ASEAN – the major natural rubber–producing countries

Natural rubber is the most important economic crop of ASEAN since most of the
member countries are the world’s largest exporters. Thailand, Indonesia, Malaysia,
and Vietnam are the four largest producers and exporters of rubber in the world.
 100
120
140
160
180
200

20
40
60
80

38718
38777
38838
38899
38961
39022
39083
39142
39203
39264
39326
39387
39448
39508
39569
39630
39692
39753
39814
39873
39934
39995
40057
40118
40179
40238
40299
40360
40422
40483
40544
40603
40664

Figure 5.2 RSS#3 SHFE monthly reference price, Thailand local price, and RSS#3 export price
40725
40787
40848
40909
40969
41030
41091
41153
41214
41275
41334
41395
THB per kg
41456
41518

Price in THB per kg

41579

RSS#3 Contract in SHFE in

41640

ORRAF Local Market Latex

Monthly Reference Price of
41699
96  Montchai Pinitjitsamut
 China–ASEAN rubber trade relationship 97
In addition, over the past ten years, ASEAN member countries have increased
rubber production. Rubber plantations have been expanded without much con-
trol. In particular, the expansion of new plantations has increased dramatically. As
the third largest producer of rubber in the world, Vietnam has more than one mil-
lion tons of rubber per year, with a growth rate of 8.84%. Also, Myanmar has a
high growth rate of 12.49%. Details of ASEAN natural rubber production, major
natural rubber–planted areas in the world, and ASEAN exports to China and the
world are given in Tables 5.2 through 5.4.
The proportion of natural rubber produced in ASEAN is no less than 75%
of the world’s production. It represents the importance of ASEAN as a major
producer of rubber with growing plantation areas. Most of the natural rubber in
the basic form is exported to China. The share of natural rubber export to China
increased from 21.29% in 2000–2005 to 34.39% in 2017. This reflects the close
relationship of natural rubber trade between two economic areas.
ASEAN–China natural rubber trade continues to expand because of the
increasing demand of China, the world’s largest rubber user in light of its rapid
economic growth. China’s rubber trade center is based in Qingdao. China’s
development policy is to create a sustainable rubber research center in Qingdao,
such as the establishment of an eco-rubber development model. It would like to
create a Free Trade Area for the development of the rubber industry and become
a future rubber fundraising hub. It is expected to be the center of global rubber
purchase. However, China has insufficient rubber production in the market, and
most of it is imported from ASEAN countries, especially from Thailand.

China’s natural rubber consumption and production

In the past ten years, China’s natural rubber consumption has continued to
increase substantially, along with economic growth, from 2.947 million tons in
2008 to 5.301 million tons in 2017. Therefore, China’s demand for natural rub-
ber has increased 6.86% annually, although it has decreased in recent years, with
6.45% in 2016 and 6.4% in 2017. The demand is still high. Most of China’s
imported rubber is used as the raw material for automobile tires in China. In
2016, the natural rubber import volume from four major ASEAN countries,
namely, Thailand, Malaysia, Indonesia, and Vietnam, accounted for 93.2% of
China’s total natural rubber imported volume (Huide Huang et al. 2017a).
Data from the China Rubber Industry Association (CRIA) (Table 5.5) show
that the major natural rubber users are the automobile and rubber industries.
China’s automobile industry grew at 14.8% annually in 2013 and expects to grow
at 12.5% to 15.7% annually in the future. Moreover, the growth of the export of
car tires in China rebounded in late 2015 and 2016 and is expected to continue to
grow between 2017 and 2020. This is in line with the expansion of Chinese domes-
tic tire production and the escalation of natural and synthetic rubber utilization.
Table 5.5 shows that the growth rate of bias rubber tends to decrease. In
contrast, the production of radial tires is increasing, signifying that the demand
for natural rubber for automobile tires will increase. Growth of the automobile
Table 5.2 ASEAN natural rubber production (metric tons): 2008–2016
98  Montchai Pinitjitsamut

Year Thailand Indonesia Malaysia Vietnam Myanmar Cambodia Philippines

2008 3,166,910 2,751,286 1,072,373 660,000 91,800 31,676 411,044

2009 3,090,280 2,440,347 857,286 711,300 110,300 37,380 390,962
2010 3,051,781 2,734,900 939,244 751,700 126,200 41,591 395,237
2011 3,348,897 2,990,200 996,337 789,635 147,300 24,956 425,705
2012 4,139,403 3,012,254 923,020 877,111 161,800 22,169 442,998
2013 4,305,069 3,107,544 826,424 946,865 174,100 20,072 444,818
2014 4,566,260 3,153,186 668,613 961,104 194,900 18,433 453,052
2015 4,466,063 3,145,398 722,122 1,012,750 208,741 17,141 398,137
2016 4,476,636 3,157,780 673,513 1,035,333 221,670 16,112 362,626

Growth 4.5% 4.98% −1.35% 8.44% 12.49% −3.34% 3.63%

Source: From FAOSTAT and modified by Montchai Pinitjitsamut 2015.
Table 5.3 Natural rubber–planted areas in major producing countries and the world: 2008–2017 (million hectares)

Indonesia Malaysia Thailand Vietnam China India Cambodia Philippines World

2008 3,424 1,247 2,985 632 850 662 0.0816 0.1104 10,681
2009 3,435 1,028 3,136 678 873 687 0.1088 0.1232 10,825
2010 3,445 1,020 2,895 749 919 712 0.1296 0.128 10,855
2011 3,456 1,027 3,002 802 965 735 0.1808 0.1392 11,208
2012 3,506 1,041 3,519 918 1,021 758 0.2128 0.1616 12,116
2013 3,556 1,057 3,735 959 1,031 778 0.28 0.176 12,570
2014 3,606 1,066 3,773 979 1,045 795 n.a. n.a. 12,818
2015 3,621 1,075 3,770 986 1,048 811 n.a. n.a. 12,915
2016 3,639 1,078 3,734 974 1,053 822 n.a. n.a. 12,956
2017 3,659 1,082 3,658 972 1,050 826 n.a. n.a. 12,917
Source: Data from ANRPC, IRco, and recalculated by author.
China–ASEAN rubber trade relationship 99
 100  Montchai Pinitjitsamut

Table 5.4 Natural rubber export from ASEAN to China and the world: 2000–2018 (million tons)

2000–2005 2006–2010 2011–2015 2016 2017

ASEAN expor t to China 6,266,517 22,278,740 34,719,866 3,252,154 4,795,381

China’s impor ts from the world 5,821,310 19,070,995 31,451,097 3,354,598 4,916,975
ASEAN expor t to the world 29,430,778 76,382,653 101,873,895 10,050,568 13,944,320
Share of natural rubber expor t to China 21.29% 29.17% 34.08% 32.36% 34.39%
 China–ASEAN rubber trade relationship 101
Table 5.5 Tire production in China, 2013 and 2014

Item Description Volume Growth rate (%)

(million tires)

2013 2014* 2013 2014*

1 Normal tire 5.29 2.7 12.5 11.3

2 Radial tire 4.76 2.44 14.9 12.2
3 Tire for commercial car 1.07 0.61 12.6 7.5
4 Tire for bus 3.69 1.87 15.7 13.8
5 Bias tire 0.53 n.a. −5.4 n.a.
Source: China Rubber Industry Association (CRIA) in Montchai Pinitjitsamut 2015.
*January–August 2014

industry is higher than the overall economic growth. As a result, imports of natu-
ral rubber tend to increase. Even if the growth rate is less than in the past, CRIA
predicts that China’s long-term tire production will continue to grow at the rate
of 10%, and the demand for synthetic and natural rubber will be 10% to 11%. It
is estimated that China’s tire exports are still on the rise but probably at a lower
growth rate (Macquarie Research 2017).
It should be noted that China’s tire exports continued to rise during the period
of 2009–2018 (Figure 5.3), with an average growth rate of 7.88% (in value)
and 12.23% (in quantity) (Table 5.6). The growth rate declined from 13.08% in
2014 to −3.35% in 2015, but expanded to 6.37% in 2016 and 2.69% in 2017,
respectively.
It should also be noted that China is not only the world’s largest natural rub-
ber consumer, but also a natural rubber–producing country (Figure 5.4). China’s
natural rubber output is greater than 700 metric tons a year (Table 5.7). China’s
domestic production of natural rubber, however, accounts for only a fraction of
its demand. China consumed 5.301 million tons of natural rubber in 2017, while
the country’s total natural rubber production came to only 798,000 tons for the
same year.
Natural rubber production in China comes from three main growing areas,
namely, Yunnan, Hainan, and Guangdong. In 2016, the rubber planting areas
were 0.57, 0.53, and 0.20 million hectares in Yunnan, Hainan, and Guangdong,
respectively (Huide Huang et al. 2017b). Xishuangbanna can be considered to
be the rubber capital of Yunnan Province. In Yunnan, growing rubber is a lucra-
tive business, and rubber areas have expanded dramatically over the past two
decades. Besides Yunnan, Hainan, and Guangdong, rubber trees are also planted
in Guangxi and Fujian provinces although in small areas (Venugopal 2017).
The Chinese government aims to increase the natural rubber plantation areas
by using science and technology to overcome the limitations of the unsuitable cli-
mate, prolonged drought, typhoon, and other impediments (Venugopal 2017).
Furthermore, measures to raise natural rubber outputs to meet the high demand
include providing optimal incentives to farmers since 61% of the planted areas
102  Montchai Pinitjitsamut

1,200
1104.4 1119.13

1,000 949.74
928.31 927.9
893.7
835.66 816.4
800 776.12

656.02

600

400

200

0
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Figure 5.3  Tire production in China (million units)

Source: www.statista.com/statistics/279223/tire-production-in-china/

are cultivated by small growers. Because of the huge proportion of small grow-
ers, rubber plantation areas gradually expanded from 850,000 hectares in 2008
to 1,020,000 in 2013 and then increased slowly to 1,050,000 hectares in 2017
(Figure 5.5).
Moreover, recently China started a new policy to strengthen its in-house natu-
ral rubber industry. Previously, the country had imposed a new tariff regulation
on the import of compound rubber, so that only rubber containing 80% natu-
ral rubber was permitted. Otherwise, a higher import tariff would be applied.
The import tariff on natural rubber latex is 10%, or RMB 900 per metric ton
(MT), while the import tariff on rubber smoked sheet (RSS) is 20%, or RMB
1,500 per MT. However, this regulation was modified to protect China’s natural
rubber industry since 61% of rubber farming areas are cultivated by smallhold-
ers as noted earlier. The temporary tariff modification based on volume or price
would give way to normal legal tariffs, levying 10% on natural latex and 20%
on natural RSS and other natural rubber products and compound rubber with
more than 70% of natural rubber mix subject to technical standards and tests
(Zhu Xiuyan 2018). In addition, to strengthen the natural rubber industry, it has
been proposed to the Chinese government to use trade laws and regulations to
resolve issues related to the dumping of natural rubber by some ASEAN produc-
ing countries (Zhu Xiuyan 2018).
At the same time, the price decline from early 2017 stimulated many ASEAN
countries to impose new policies to enlarge the proportion of domestic rub-
ber consumption, initiate several measures to shrink plantation areas, and force
Table 5.6 China’s tire export in value (×USD 1,000) and in quantity (metric tons), 2008–2017

Year World United Mexico United Saudi Australia Germany Others

States Kingdom Arabia

Value Metric tons

(×USD 1,000)

2008 8,060,277 2,193,869 684,067 94,280 80,593 76,694 46,291 61,151 1,150,793
2009 7,684,934 2,935,835 796,467 118,792 34,363 90,727 171,341 61,451 1,662,694
2010 10,387,859 3,673,748 842,221 141,789 84,525 99,719 194,057 83,434 2,228,003
2011 14,762,243 4,020,010 816,340 170,845 148,733 116,530 246,428 94,922 2,426,212
2012 15,883,562 4,405,458 937,761 162,980 163,875 179,986 219,404 119,516 2,621,936
2013 16,152,910 4,993,215 1,167,004 196,536 193,611 188,884 187,023 122,468 2,937,689
2014 16,446,635 5,646,339 1,356,566 215,592 211,777 182,218 165,029 110,088 3,405,069
2015 13,842,691 5,457,264 1,073,183 243,937 217,556 207,474 171,842 117,415 3,425,857
2016 12,893,128 5,804,894 936,676 239,219 234,674 213,283 180,667 131,227 3,869,148
2017 14,162,306 5,961,257 815,228 250,427 230,001 207,511 191,889 157,391 4,108,810
China–ASEAN rubber trade relationship 103
 6,000

5,000

4,000
104  Montchai Pinitjitsamut

QD_…
3,000
QS_…

2,000

1,000

0
1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Figure 5.4 China’s natural rubber demand and supply: 2008–2017 (based on statistics in Table 5.7)
 China–ASEAN rubber trade relationship 105
Table 5.7 China’s natural rubber demand and supply, 2008–2017

Year China demand China supply

×1,000 tons % Growth ×1,000 tons % Growth

2008 2,946.8 560

2009 3,306 12.19 644 15
2010 3,655 10.56 687 6.68
2011 3,638 −0.47 727 5.82
2012 3,890 6.93 802 10.32
2013 4,270 9.77 865 7.86
2014 4,804 12.51 840 −2.89
2015 4,680 −2.58 794 −5.48
2016 4,982 6.45 774 −2.52
2017 5,301 6.4 798 3.1
Average 6.86 4.21

1,200

1,000

800

600

400

200

0
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Figure 5.5 Plantation areas (million hectares) of natural rubber in China: 2008–2017

Source: Venugopal 2017.

farmers to change from natural rubber single-crop to multi-crop agriculture.

These measures were brought about by domestic prices being led by future con-
tract rubber prices and the fact that the government cannot control the price of
natural rubber.

Methodology and analysis

To analyze the possibility of ASEAN–China trade cooperation, the follow-
ing research analysis is carried out by using a conditional cooperation model
(Table 5.8). Subjects play a simultaneous, two-players, one-shot prisoner’s
dilemma game holding A, S, and T constant and varying P (Christoph Engel and
Lilia Zhurakhovska 2016).
106  Montchai Pinitjitsamut
Table 5.8 Conditional cooperation model to analyze possibility of ASEAN–China
trade cooperation

Cooperate Non-cooperate

Cooperate A, A S, T
Non-cooperate T, S P, P

Table 5.9 ASEAN and China trade cooperation in natural rubber and tire industries

China

Cooperate Non-cooperate

ASEAN Cooperate China’s tire industry ASEAN’s natural rubber

production increasing export to China increasing,
ASEAN’s natural rubber but payoff declines
export to China Natural rubber price shrinkage
increasing because of oversupply of
Acceptable natural natural rubber
rubber price China’s tire industry gains from
lower natural rubber price
Non-cooperate ASEAN’s natural rubber Trade situation remains the
domestic consumption same.
increasing China’s tire and ASEAN’s
Acceptable natural natural rubber industry
rubber price growth rates remain the
ASEAN’s natural rubber same as in recent years
export to China Downward trend of natural
increasing rubber prices
Profit loss in China’s tire
industry because of
price increase

This study uses the parameters to test whether cooperativeness is more feasi-
ble if a cooperator has little to lose (small P – S), or if gains from cooperation
are large (large A – P). If S = P, cooperation is “free of charge”, but because
T > A, the defection incentive is present. In contrast, if A = P, there are no
gains from cooperation, but a cooperative move involves risk. Then, gains from
cooperation (2A – P) measure efficiency. The smaller the P (or greater the A),
the more cooperation is efficient. Moreover, since (P − S) is measured as a cost
of cooperation, the greater (P − S) means the lesser possibility for cooperation,
particularly, with high effort cost to cooperation occurring when (P − S) reaches
the value of A.
Therefore, the situation of ASEAN and China on the trade cooperation game
relating to the natural rubber and tire industries can be classified as in Table 5.9.
 China–ASEAN rubber trade relationship 107

Research results
From 2008 to 2017, the expanding cycle of the ASEAN–China natural rubber
trade and China’s tire industry are in the abruptly up-and-down business cycle
every two to three years. The appreciating years of natural rubber trade provided
a growth rate of 10.68%, while the depreciating years saw a growth rate of −3.3%
(contraction period of 2015–2016). From the data, it is possible to estimate that
the growth rate of natural rubber export from ASEAN to China, on the condi-
tion that China relaxes or postpones the imposition of new import tariffs, would
be 6.37%, and the normal trade situation would be a growth rate of 2.09% on
average. Likewise, China’s tire industry has a boom-and-bust cycle as well. The
increasing trend occurred during the period from 2008 to 2017, with an aver-
age growth of 12.2%. The estimated trade growth, based on China’s strategy
to cooperate but ASEAN’s strategy to non-cooperate, equals −6.6% because of
ASEAN’s natural rubber domestic consumption and price increase. Conversely,
the estimated growth based on ASEAN’s strategy to cooperate and China’s strat-
egy to non-cooperate, equals 6.04% because of increases in ASEAN’s natural rub-
ber exports but with declining payoffs, price shrinkage caused by oversupply, and
gains of China’s tire industry from lower natural rubber prices. Lastly, the normal
situation of China’s tire industry would be a growth rate of 2.69% on average.
The estimated growth rate is shown in Table 5.10.
The results show two equilibria in the ASEAN–China cooperation game. From
the perspective of China, it will gain from the natural rubber trade cooperation
through the expansion of the tire industry and the acceptable price of natural
rubber for its domestic natural rubber industry. The gains can be calculated as
(2A − P) = [(2 × 12.2%) − 2.69%] = 21.71%. It means that the tire industry will
have an accumulated growth of 21.71%. Moreover, since T (6.04%) is less than
A (12.2%), it illustrates the existence of the cooperation incentive. However, by
comparing (P − S) with (A − P), the cooperativeness seems to be unclear since the
gains from cooperation (P − S), 9.29%, are nearly equal to the cost of cooperation
(A − P), 9.51%. These results show that the feasibility of cooperation still needs
some reinforcement from government policies.
Similarly, from the perspective of ASEAN, it will gain from natural rubber trade
cooperation through natural rubber export increase with an acceptable price.

Table 5.10 Estimated growth rates for ASEAN-China cooperation in natural rubber

and tire industries

China

Cooperate Non-cooperate

ASEAN Cooperate ↑ 10.68%, 12.2% ← −3.3%, 6.04%

Non-cooperate 6.37%, −6.6% ↓ 2.09%, 2.69% →
108  Montchai Pinitjitsamut
The gains can be calculated as (2A − P) = [(2 × 10.68%) − 2.09%] = 19.27%. It
means that ASEAN natural rubber industry will have an accumulated growth
of 19.27%. Moreover, since T (6.37%) is less than A (10.68%), it illustrates
the existence of the cooperation incentive but not as much as that of China’s.
However, by comparing (P − S) with (A − P), the cooperativeness seems to be
unclear since the gains from cooperation (P − S), 5.39%, is less than the cost
of cooperation (A − P), 8.59%. This shows that ASEAN may be reluctant to
promote trade cooperation as transcending into cooperation may create risk
exposure for ASEAN.
From the research findings, both ASEAN and China’s protection measures
may create unnecessary costs to natural rubber and initiate new risks to the tire
industry or downstream rubber industry. ASEAN and China have a great linkage
on the natural rubber trade because of the mutual interdependence. ASEAN nat-
ural rubber products depend considerably on China’s imports. Similarly, China’s
tire industry, especially in the production of radial tires, depends substantially on
low-cost natural rubber products from ASEAN. The development of the trade
relationship between ASEAN and China is necessary and should be initiated,
and new policy redesign should be drafted to encourage mutual collaboration.
Such encouragement will bring about and strengthen the competitive advantage,
reduce production costs, and realize eventual sustainable development through
the concept of the global supply chain of natural rubber.

Concluding remarks and policy implications

The natural rubber trade relationship between ASEAN and China is strong and
growing, with China’s annual consumption increasing at 4.6%. ASEAN countries
are the world’s top natural rubber producers, contributing greater than 80% to
the global total output while China needs to import nearly 40% of that, and most
of it is used in the radial tire industry.
The policy that ASEAN and China should emphasize is to encourage coop-
eration in trade relationship and research, develop the quality of rubber and
upstream rubber as a main raw material, and reduce costs and other impediments.
In addition, policy should focus on the price stability of rubber as well as the fluc-
tuation of price as this might negatively affect both parties in the long term. Last
but not least, policies aiming to protect the domestic rubber industry need to be
redesigned to encourage and strengthen the global supply chain, generating true
competitiveness and integrating cumulated gains for both ASEAN and China.

References
Christoph Engel, and Lilia Zhurakhovska (2016), When Is the Risk of Cooperation
Worth Taking? The Prisoner’S Dilemma as a Game of Multiple Motives, Applied
Economics Letters, 23(16); 1157–1161.
Huide Huang, Jing Liu, and Haolum Huang (2017a), Strategies for Natural Rubber
Production and Development in China, Asian Agricultural Research, 9(17); 15–17.
 China–ASEAN rubber trade relationship 109
Huide Huang, Jing Liu, and Haolum Huang (2017b), Study on China’s Natural
Rubber Import, Asian Agricultural Research, 9(8); 5–9.
Macquarie Research (2017), Equities: Global Petrochemicals, 17 January.
Montchai Pinitjitsamut (2015), Price Relation and Price Transmission of Natural
Rubber Among the Markets in Thailand and China, the 4th Thai-Chinese Strategic
Research Seminar.
P Venugopal (2017), NR Flourishing in China Despite Odds, Rubber Asia.
Zhu Xiuyan (2018), A Report on China’s Natural Rubber Industry, Honorary Chair,
China Natural Rubber Association. www.shfe.com.cn/528_en/yanjiang/zhuxy_
en.pdf (8 December 2018).
www.statista.com/statistics/279223/tire-production-in-china/ (December 2019).
6 Forty years’ reform and
opening-up of Yunnan
and its implications for
the Mekong region
Lei Zhuning and Chen Tiejun

Ever since 1978, Yunnan has made immense progress in transforming itself from
a closed backwater of China to an all-around open front of the country. Review-
ing the history of Yunnan’s 40 years’ reform and opening-up in a holistic way,
we should not only take note of the remarkable achievements, but should also
pay attention to the problems and challenges, as well as the impacts and implica-
tions for neighboring countries. Compared with 40 years ago, the situation and
environment of Yunnan’s opening-up has seen profound changes. In the face of
the New Era, along with the new challenges and new prospects, it is beneficial for
us to first make a historical overview of Yunnan’s opening-up, so as to take stock
of past achievements and experiences objectively and project future development
with well-founded judgment.

The process and characteristics of Yunnan’s

opening-up: with a comparison of the
opening-up of China’s coastal areas
In 40 years’ time, China’s practice of reform and opening-up to the outside
world has been gradually transformed from an experimental arrangement cover-
ing only limited scope, region, and domain to an all-dimensional, multi-tiered,
and wide-ranging one. It has changed from an experiment characterized by ad
hoc policy adjustment to a well-institutionalized scheme under the legal frame-
work of China, from unilateral self-opening of its domestic market to engag-
ing in a common open market between China and World Trade Organization
(WTO) members, from passively accepting the existent international economic
and trade norms to actively supporting them and participating in the formula-
tion of new rules.
While experiencing these general trends together with other parts of China,
Yunnan’s reform and opening-up has shown traits different from those of the
coastal areas in eastern China. It is widely recognized that the opening-up policies
and practices in Yunnan, being a “frontier” and one of the least-developed prov-
inces of China, have been playing a much larger role than the policies and prac-
tices of reform in promoting Yunnan’s socio-economic development, although
the two have been closely intertwined and sometimes hardly distinguishable ever
 Forty years’ reform, opening-up of Yunnan 111
since 1978. Since Yunnan stayed at a relatively lower level of economic deve-
lopment and faced different international environments when Deng Xiaoping
ushered in the era of reform and opening-up, the process, the targeted markets,
the mode, and the tasks of Yunnan’s opening-up were dramatically different from
those of China’s coastal areas.

The beginning of Yunnan’s opening-up

The process of China’s opening-up to the outside world has been advanced step
by step, and in the process it has gradually developed from a “lop-sided opening-
up” to a more balanced one. In the initial stage, the coastal provinces were the
prioritized areas of China’s opening-up, and they still are and will remain so
in the foreseeable future, although the opening-up of border areas has become
increasingly important in China’s overall opening-up scheme.
The opening-up of the coastal areas actually began after the Third Plenary Ses-
sion of the 11th Central Committee of the Communist Party of China, which
was held in Beijing in December 1978, establishing opening-up as a basic state
policy. In 1979, Guangdong and Fujian provinces took the lead in opening-
up and implemented special policies and flexible measures in promoting eco-
nomic cooperation with the outside world. Then, special economic zones began
to be set up along China’s coast in the 1980s. In 1980, the central government
decided to set up special economic areas in Shenzhen, Zhuhai, Shantou, and
Xiamen as pilot demonstration zones. In 1984, 14 more coastal opening cities
were approved, and in 1988, the coastal opening-up was further extended to the
Liaodong Peninsula in northern China.
By comparison, Yunnan’s opening-up had been lagging behind the coastal
areas. Although Yunnan had resumed traditional border trade in the 1980s, it
was not until 1992 that the State Council of the Chinese government decided
to implement policies and measures to open the border areas, and three border
areas in Yunnan, namely Wanding, Ruili, and Hekou, were designated as border
economic zones.

The cooperative partners and outside environment

of Yunnan’s opening-up
Initially, the opening-up of the Chinese coastal area was mainly aimed at devel-
oped countries and newly industrialized countries and regions in the Asia-Pacific
area as these countries and regions could provide China with relatively large mar-
kets, abundant capitals, and advanced technologies. Since the 1980s, developed
countries had begun to shift capital-intensive and labor-intensive industries to
other countries. China’s coastal areas were an ideal destination, and they seized
upon this opportunity and made the most of the comparative advantages they
had, such as low labor costs, to actively attract foreign direct investment (FDI).
As a result, China’s coastal areas became a major recipient of FDI and interna-
tional industrial transfer.
112  Lei Zhuning and Chen Tiejun
Meanwhile, Yunnan’s border opening was aimed at cooperation with neigh-
boring countries in Southeast Asia, which are relatively less developed because of
wars, domestic conflicts, and various other reasons. Therefore, the border open-
ing of Yunnan Province is a typical example of South-South cooperation. For
instance, Cambodia, Laos, and Myanmar were listed as least developed countries
by the United Nations, and not until the 1990s did Cambodia, Laos, Vietnam,
and Myanmar shift the focus of their national policies to economic development.
Economic development in Yunnan’s neighboring countries at that time could
be characterized as “five highs and five lows”: high degree of unbalanced devel-
opment and low level of overall development; high proportion of poverty and
low GDP per capita; high potential for resource development and low level of
economic utilization; high degree of motivation to participate in regional coop-
eration and low degree of openness to the outside world; and high expectation
for benefits from cooperation and low capacity for self-development.

The mode of Yunnan’s opening-up

The coastal opening-up was designed to introduce foreign capital, talents,
advanced technologies, and management knowledge to accelerate the process
of economic modernization. China’s coastal areas were the first to connect with
international markets and participate in international competition and division of
labor, so as to become part of the international markets and the leading region of
China to integrate with the world economic system. It would also create appro-
priate conditions necessary for the modernization and internationalization of the
entire Chinese economy.
In Yunnan’s case, however, border opening-up was mostly carried out in the
form of bilateral and regional cooperation with neighboring countries on the
basis of equality and mutual benefit making use of the comparative advantage in
international division of labor and exchange of goods, promoting the utilization
of rich resources in the region, and accelerating industrial and economic struc-
tural adjustment.

The tasks of Yunnan’s opening-up

In promoting opening-up, Yunnan has a set of tasks different from those of Chi-
na’s coastal areas. Yunnan’s border opening-up intended not only to promote
economic development and poverty reduction, but also to strengthen and ensure
border stability and security, ethnic harmony, and good-neighborliness.
As neighboring countries are Yunnan’s main cooperative partners, the opening-up
of Yunnan’s border areas has been expected to contribute to the common devel-
opment and prosperity of its neighboring countries, and alleviation of poverty in
the region.
In terms of environmental protection and sustainable development, Yunnan
and its neighboring countries share some common concerns and challenges. Yun-
nan is located in the upper streams of the Yangtze, Pearl, Lancang/Mekong,
 Forty years’ reform, opening-up of Yunnan 113
Nu-Salween, Red, and Irrawaddy rivers, among which several are important
international rivers. The ecological environment of Yunnan therefore directly
affects the ecological security of the middle and lower reaches of these rivers. As
Yunnan’s ecology could be critical for Mainland Southeast Asia, it is probably
preferable to slow down the developmental pace a little so as to protect the eco-
logical environment and lessen some resource exploration activities in order to
avoid adverse effects for future development and downstream regions.

Regional cooperation and Yunnan

Since the 1990s, Yunnan has been actively participating in the Greater Mekong
Sub-region (GMS)1 cooperation. In recent years, Yunnan has been playing an
important role in the Belt and Road Initiative (BRI) and the Lancang-Mekong
Cooperation (LMC), and has made considerable progress in regional cooperation.

The GMS and Yunnan

In 1992, the Asian Development Bank (ADB) sponsored and established the
GMS economic cooperation mechanism to strengthen the ties among countries
in the Mekong region, sharpening the overall competitive edge of the GMS, cre-
ating a big family pursuing common prosperity and promoting local economic
and social development.
In more than two decades, the GMS cooperation has evolved from an interim
cooperation framework to a comprehensive cooperation mechanism. GMS coop-
eration has been successful and has become an example of both sub-regional
cooperation and South-South cooperation. By the end of 2013, member nations
of GMS had carried out 260 cooperation projects with a total input of approxi-
mately USD 16.94 billion. More specifically, there were 68 investment projects
with a total investment of USD 16.61 billion (comprising USD 5.98 billion of
ADB loans, USD 4.42 billion of counterpart financing of GMS members, and
USD 6.21 billion of joint financing). There were 192 technical assistance pro-
jects with a total value of approximately USD 330 million (comprising USD
120 million of ADB grants, USD 20.01 million of counterpart financing of GMS
members, and USD 190 million of joint financing) (Chinese Government 2014).
Yunnan has been actively participating in GMS cooperation since 1992, and
the scope of Yunnan’s involvement covers a wide range of areas, including trans-
portation, communications, energy, tourism, environment, human resources
development, trade and investment, and drug control.

The Belt and Road Initiative (BRI) and Yunnan

In September and October 2013, when Chinese President Xi Jinping visited
Central Asia and Southeast Asia, he raised the initiatives of jointly building the
Silk Road Economic Belt and the 21st-Century Maritime Silk Road.2 Since then,
the BRI has attracted attention from all over the world. In the same year, at the
114  Lei Zhuning and Chen Tiejun
China-ASEAN Expo in Nanning, China, Chinese Premier Li Keqiang empha-
sized the need to build the Maritime Silk Road oriented toward ASEAN, and to
create strategic drivers for hinterland development.
In March 2015, with authorization from the state council of the central gov-
ernment, the National Development and Reform Commission, the Ministry of
Foreign Affairs, and the Ministry of Commerce of China jointly issued the Vision
and Actions on Jointly Building Silk Road Economic Belt and 21st-Century Mari-
time Silk Road (hereinafter referred to as the Vision and Actions on BRI), which
offers a detailed explanation of the basic idea of BRI:

The Belt and Road runs through the continents of Asia, Europe and Africa,
connecting the vibrant East Asia economic circle at one end and developed
European economic circle at the other, and encompassing countries with
huge potential for economic development. The Silk Road Economic Belt
focuses on bringing together China, Central Asia, Russia and Europe (the
Baltic); linking China with the Persian Gulf and the Mediterranean Sea
through Central Asia and West Asia; and connecting China with Southeast
Asia, South Asia and the Indian Ocean. The 21st-Century Maritime Silk
Road is designed to go from China’s coast to Europe through the South
China Sea and the Indian Ocean in one route, and from China’s coast
through the South China Sea to the South Pacific in the other.
(Chinese Government 2015)

According to the Vision and Actions on BRI, there are altogether six overland
economic corridors being planned under the BRI framework. They include a new
Eurasian Land Bridge, and the China-Mongolia-Russia, China-Central Asia-West
Asia, and China-Indochina Peninsula economic corridors. In addition, because
the China-Pakistan Economic Corridor and the Bangladesh-China-India-­
Myanmar Economic Corridor (BCIM-EC) are closely related to the BRI, these
two economic corridors have also been incorporated into the BRI framework.
The purpose of the BRI is to “take advantage of international transport routes,
relying on core cities along the Belt and Road and using key economic industrial
parks as cooperation platforms”, so as to

help promote the economic prosperity of the countries along the Belt and
Road and regional economic cooperation, strengthen exchanges and mutual
learning between different civilizations, and promote world peace and devel-
opment. It is a great undertaking that will benefit people around the world,
(Chinese Government 2015)

as stated by the Vision and Actions on BRI. The BRI is closely related to Yunnan
and the Mekong region. Two overland economic corridors pass through Yunnan
and link Yunnan with its neighboring countries, that is, the China-Indochina
Peninsula Economic Corridor and the Bangladesh-China-India-Myanmar Eco-
nomic Corridor (BCIM-EC).
 Forty years’ reform, opening-up of Yunnan 115
Lancang-Mekong Cooperation (LMC) and Yunnan
To further strengthen regional cooperation, the Lancang-Mekong Cooperation
(LMC) was formally established in 2016 at the initiative of both China and Thai-
land. Although LMC is a newly established regional cooperation mechanism, it
has already made great progress in recent years, and Yunnan has been actively
participating in the LMC ever since its inception.
Although there are some differences between GMS and LMC, as shown in
Table 6.1, the two mechanisms actually share many similarities and have some
overlapping priorities and areas. Therefore, they should be and can be coordi-
nated so as to complement each other for better regional cooperation.
From China’s point of view, Yunnan is an important frontier area for China to
open up to South and Southeast Asia and for China to participate in GMS and LMC
cooperation. The Chinese government adheres to the concept of common pros-
perity and prosperity with neighboring countries, attaches great importance to the
development and opening up of its border areas, and supports Yunnan to give full
play to its geographical advantages, creating an example of high-level regional coop-
eration, and making Yunnan into a gateway of China open to the South and South-
east Asian countries under the framework of BRI (Chinese Government 2017).

Major achievements of Yunnan’s participation

in regional cooperation
In recent years, cooperation and exchanges between Yunnan and neighboring coun-
tries in connectivity, energy, agriculture, tourism, finance, industrial cooperation,

Table 6.1 Comparison of GMS and LMC

GMS LMC

Geographical Cambodia, Lao PDR, Myanmar, Cambodia, Lao PDR,

area Thailand, Vietnam, China
(Yunnan and Guangxi)
Focus of Poverty alleviation and
development development of Cambodia,
Lao PDR, Myanmar,
and Vietnam; China and
Thailand are considered to be
“graduated students”; they
mainly participate in technical
assistance (TA) programs
Cooperation Mainly in economic cooperation
areas
Myanmar, Thailand,
Vietnam, China
More investment in
regional connectivity and
international cooperation
on production capacity
(industrial development,
technology transfer,
regional production
chain, etc.)
All-around cooperation,
covering political and
security, economic
development, social
programs, and people-to-
people contacts
116  Lei Zhuning and Chen Tiejun
education, cultural exchanges, and people-to-people connectivity and others have
flourished and yielded fruitful results.

Transportation development and regional connectivity

With regard to road and railway construction, Yunnan has been actively pursuing
infrastructure connections with the Mekong countries. Expressways from Yun-
nan’s capital, Kunming, to Ruili, Mohan, and Hekou – the three Chinese border
ports with Myanmar, Laos, and Vietnam, respectively – have been put into opera-
tion in the past ten years.
As for the railway, construction of the railroad with standard gauge from Kun-
ming to Hekou was completed and put into operation in 2014. The China-Lao
railway which runs from Kunming all the way to Vientiane, the capital of Laos,
is expected to be completed and ready for service by 2022. Construction of the
Kunming-Dali railway had already been finished, and the Dali-Ruili section is
expected to be completed by 2022.
As for high-speed railways, the Kunming-Dali high-speed railway had begun
operation in July 2018, covering a distance of 330 km in two hours. This newly
opened high-speed train service runs every 20 minutes and is hugely popular
among tourists as Dali is a world-famous tourist destination. Because every train
has been fully booked, the service has been making profits from the very begin-
ning of its operation, and travel agencies providing Kunming-Dali bus transporta-
tion for passengers have been forced to lower the price of bus service considerably
to maintain its competitiveness vis-à-vis the more convenient, comfortable, and
much faster high-speed train service (Lei 2017).
Yunnan has also been putting effort into transport and customs facilitation. In
terms of cross-border transportation service, it has so far opened 19 passenger
and cargo transport routes with Laos and Vietnam.
However, progress on regional transport and customs facilitation has been
limited. Although the GMS Cross-border Transportation Agreement (CBTA)
has been signed by all six GMS member countries and has been approved by the
respective parliament or people’s congress of these countries, it has been put into
practice at only a few dry ports in the Mekong region for experimental purpose;
its full implementation is still years away.
In view of the limited progress made on the multilateral front, Yunnan has taken
some unilateral measures to speed up the customs clearance process and facilitate
cross-border transportation. For instance, Yunnan border control authorities have
invested more than RMB 80 million in upgrading border control and inspection
facilities at 90 ports and pathways, unifying the 1,160 immigration inspection
signs and logos and added more than 500 convenience service facilities. Yun-
nan customs authorities have also taken some high-tech measures to facilitate the
entry and exit of people crossing the border (Chinese Government 2014).
In terms of aviation, a total of 38 national flight routes from Yunnan to GMS
countries have been opened, linking Kunming, the capital of Yunnan, with all
capitals, major cities, and famous tourist destinations of the GMS countries. In
 Forty years’ reform, opening-up of Yunnan 117
addition, Xishuangbanna Airport has flights to Bangkok and Luang Prabang.
In 2012, Lijiang Airport opened a direct route to Bangkok, and in early 2019,
Mangshi Airport began to offer direct flight service to Mandalay.
With regard to inland waterway development, the Lancang-Mekong Interna-
tional Waterway has opened for vessels with tonnages of 200 to 300 tons and for
year-long navigation, which was initially suitable for vessels of about 60 tons and
half a year navigation only. And the annual freight shipment through the water-
way has increased from 500 tons to 500,000 tons (Chinese Government 2017).

Power trade and energy cooperation

Yunnan has continued to actively pursue power grid interconnection and power
trade with its neighboring countries, in a bid to optimize energy resources allo-
cation in the Mekong region. From 2011 to 2013, through cross-border power
transmission lines in Yunnan, China sold 10.7 billion kWh of power to Vietnam,
411 million kWh to Laos, and purchased 6.2 billion kWh from Myanmar.
With regard to energy pipelines, the China-Myanmar oil and gas pipeline,
which runs through Myanmar and enters China through Yunnan, was fully com-
pleted and made ready for operation in late 2013 (Chinese Government 2014).

Agricultural cooperation
In agricultural cooperation, Yunnan has provided various supports, including
seeds, fertilizer, technology, animal disease prevention and control techniques,
and training programs to neighboring countries, to help them improve the
quantity, quality, and safety of agricultural products. Yunnan has also established
several China-Lao agricultural science and technology demonstration parks, an
agricultural development demonstration park in Siem Reap, Cambodia, and a
number of other agricultural cooperation parks in the region (Chinese Govern-
ment 2014).

Tourism cooperation
In terms of tourism cooperation, Yunnan and Mekong countries have strength-
ened cooperation in the creation and promotion of featured tourist routes and
jointly promoted a common tourism market by carrying out a series of marketing
activities introducing regional tourist destinations (Chinese Government 2014).

Financial cooperation
Yunnan has gradually opened channels for trade settlement with neighboring
countries through bilateral account opening and set-up of a cross-border finan-
cial service platform for the smooth settlement of bilateral trade.
In January 2014, the Lao China Bank, a joint venture by Yunnan Fudian Bank
and Lao Bank for Foreign Trade, officially opened in Vientiane, Laos. The Lao
118  Lei Zhuning and Chen Tiejun
China Bank has a permanent financial license issued by the Central Bank of Laos
and operates within the scope of business prescribed by the Commercial Banking
Law of Laos.
Yunnan Fudian Bank launched the indexes of direct exchange rates between
Lao kip and RMB, and between Thai baht and RMB in 2011. Fudian Bank signed
the RMB Border Trade Agency Settlement Agreement with relevant branches of
the Vietnam Bank for Agriculture and Rural Development in March 2013. The
Yunnan Branch of China Construction Bank (CCB) launched the cross-border
RMB settlement for common trade with Vietnam. The Yunnan Branch of CCB
is also the first Chinese bank to create the RMB clearing channel with banks of
Myanmar. Its border trade online banking system interfacing with the Myan-
mar Economic Bank was China’s first online banking system open to Myanmar.
The Yunnan Branch of CCB also created the two-way Thai baht/RMB clearing
channel with Thailand. In August 2013, China’s State Administration of For-
eign Exchange approved Fudian Bank’s qualification for cross-border shipment
of foreign banknotes. By the end of May 2014, Fudian Bank completed five
cross-border shipments of Thai baht banknotes amounting to THB 150 million,
and THB 99.3 million of Thai baht banknotes were converted over the counter
(Chinese Government 2014).

Construction of cooperation platforms

In recent years, the China-Lao Mohan-Boten Economic Cooperation Zone has
been formally established, and construction of the China-Vietnam Hekou-Lao
Cai Cross-border Economic Cooperation Zone and the China-Myanmar Ruili-
Muse Cross-border Economic Cooperation Zone are under discussion and are
expected to break through soon. Development of special economic zones in Yun-
nan, including border economic cooperation zones in Ruili, Wanding, Hekou,
and Lincang, and comprehensive bonded zones in Kunming and Honghe, have
been sped up. Moreover, various types of industrial parks have been established to
promote development and opening-up of border areas and strengthen coopera-
tion with the Mekong countries (Chinese Government 2014).

Cultural exchanges and people-to-people connectivity

Yunnan has been on good terms with its neighboring countries. It has been main-
taining not only close economic ties, but also cultural relations with the peoples
in the Mekong region. About 16 minority ethnic groups in Yunnan live across
the borders with neighboring countries. This offers Yunnan a unique advantage
in promoting people-to-people connections with its neighbours.
In recent years, for cultural and sports exchanges, Yunnan has helped in con-
structing a Chinese Cultural Center in Yangon, Myanmar, and has successfully
held an international seminar on the protection and promotion of cultural herit-
ages of the Mekong countries with the adoption of the “Kunming Initiative” for
 Forty years’ reform, opening-up of Yunnan 119
the protection, cooperation and exchange of knowledge of the cultural heritages
in the Mekong region.
Two-way educational and human resource cooperation has been promoted by
Yunnan. Languages of neighboring countries have been taught at almost all of
Yunnan’s universities. A number of institutes of higher education in Yunnan have
opened Confucius institutes and Confucius classrooms in the Mekong countries
in cooperation with their local counterparts. Yunnan has also stepped up efforts
to foster Chinese language training in Mekong countries by sending out volun-
teer Chinese language teachers. Vocational education and professional skills train-
ing have also become an important component in educational cooperation. The
Yunnan government set up the Yunnan Provincial Government Scholarship in
2004 to provide financial support for students from Mekong countries to study
in Yunnan. As of 2013, a total of 214 students from Mekong countries had
received the scholarship (Chinese Government 2014).

The impacts and implications of cross-border economic

activities between Yunnan and the Mekong region
Since Yunnan’s opening to the outside world is mainly in the form of border
opening, its impacts and implications on neighboring countries can be revealed
and explained no better than through its cross-border economic activities with
its neighbours. About ten years ago, we did a comprehensive field investigation
on the cross-border activities along the China-Lao border. And in 2015, we con-
ducted a survey in Xishuangbanna Prefecture in Yunnan together with Chinese
officials and experts from the Asian Development Bank (ADB). Then we moved
on to Vientiane to hold a workshop with some Lao officials and carried out a
Strengths, Weaknesses, Opportunities, Threats (SWOT) analysis on the impacts of
cross-border economic cooperation on both China and Laos. Some of the findings
of the field investigation and the results of the SWOT analyses are shown next.

China-Lao cross-border economic activities and the social and

economic impacts: findings based on a field investigation in 2008
Mohan is situated at the southernmost point of Yunnan, which is the most impor-
tant land port of China opening to Laos. On 3 March 1992, the State Council of
China approved Mohan as a national-level Class I trading port. On 22 December
1993, the Mohan–Boten international ports were formally opened by the Chi-
nese and Lao governments. In August 1994, Mohan port was officially declared
to be open to personnel from a third country. The launching of international
regular bus services and visa services at Mohan port has helped to create a good
environment for the development of Mohan port. In June 2000, the Yunnan
government had designated Mohan port as a border trade zone and accorded it
with some preferential policies. The opening of the Kunming-Bangkok express-
way in 2008 and the progress of the construction of the China-ASEAN Free
120  Lei Zhuning and Chen Tiejun
Trade Area have made the strategic location of Mohan more prominent. After the
establishment of the Mohan Border Trade Area by the Chinese government, the
central government of Laos also set up a free trade area at Boten, which borders
with Mohan.
In the context of the construction of the China-ASEAN Free Trade Area, the
Thailand government had also designated Chiang Khong, Chiang Saen, and Mae
Sai in Chiang Rai Province as the core areas of a special economic region that
would participate in the construction of the China-ASEAN Free Trade Area.

The China-Lao cross-border trade and its impacts

In the beginning of bilateral trade, the goods exported to each other at the
China-Lao trading ports were mostly daily necessities on which people’s every-
day life depended. With the development of economic globalization and regional
economic integration, bilateral trade has been on a fast track of development, and
the type of export goods has developed from solely daily necessities to include
production materials and high-tech products with high added value.
The main trading partner of Mohan port is Laos. The types of trade with
Luang Namtha Province and Oudomxai Province were mainly border small-
amount trade and common trade, and there were also other trading types such
as border bazaar trade and barter trade as defined and explained later. Imports
from Laos included herbal medicine, coffee, spice, timber, mining products, and
other commodities. There were also some imports of commodities and non-
staple foodstuff from Thailand. Exports mainly included construction materials,
daily used goods, cloth, non-staple foodstuff, fruits, diesel engines, communica-
tion equipment, automobiles, motorbikes, etc. Most of the exported goods were
consumed within Laos, with only a small portion of them being sold further to
Thailand and Cambodia. Several types of trade coexisted in Mohan port, with
border small-amount trade as the mainstay, and other types of trade, such as com-
mon trade, border bazaar trade, and trade in drug-substitution projects, playing a
supplementary role. These types of trade together formed a mutually supporting
and supplementing pattern of trade development at Mohan port.
At Mohan port, the groups participating in cross-border trade are mainly
enterprises and border residents. The enterprises are engaged mostly in border
small-amount trade and common trade, while border residents conduct mainly
border bazaar trade. The border bazaar trade, constrained by limited trading
space, scale, and participating personnel, was hard to expand into large-scale busi-
ness. Therefore, the enterprises had gradually taken the lead in the cross-border
trade, and most trade was done in the form of border small-amount trade.

COMMON TRADE

Common trade is defined as trade among countries, carried out by interna-

tional trading enterprises usually by reaching deals through signing contracts,
agreements, correspondence, or face-to-face negotiation. In China, all sorts of
 Forty years’ reform, opening-up of Yunnan 121
companies and enterprises (including the foreign invested enterprises, or FIEs)
have been given the right to engage in international trade in this way. However, at
Mohan port, because of preferential policies enjoyed by the border small-amount
trade, the common trade only accounted for 10% of the total trade volume.

BORDER SMALL-AMOUNT TRADE WITH ENTERPRISES

AS THE MAIN PARTICIPANTS

Border small-amount trade is defined as trade activities that take place at officially
approved open border areas along the borderline. It is carried out by enterprises
or other trading organizations between China and neighboring countries. Except
for those that must be taxed according to government stipulations, imports under
the category of border small-amount trade can enjoy the preferential policy of
being taxed at only 50% of the import tariff and import value-added tax. Exports
under the category of border small-amount trade, whether the trade settlement
is done in US dollars or in RMB, can enjoy export tax refund. At Mohan port,
the border small-amount trade was the major type of trade, accounting for more
than 70% of the total trade volume.
In 1992, the trading ports between China and Laos were opened, and the
Yunnan provincial government stipulated new regulations for promoting border
small-amount trade. Since then, a horde of enterprises has moved to Mohan, and
border small-amount trade has flourished.
The number of enterprises that came to Mohan to engage in border small-
amount trade had been growing, and signs of prosperity in Mohan had become
prominent, with all kinds of shops amassing on the streets of Mohan. A whole-
sale small-commodities market had been set up in Mohan, providing the small
commodities that met the needs of both the Chinese domestic market and the
markets of Mekong countries.
Initially, most of the enterprises engaged in cross-border trade were local ones.
Then the local enterprises gradually dropped out of the competition, and enter-
prises from outside of Mohan began to take the lead. By 2007, enterprises from
outside of Mohan accounted for about 90% of the total number of enterprises in
Mohan.

BORDER BAZAAR TRADE WITH PEOPLE IN BORDER AREAS

AS THE MAIN PARTICIPANTS

Border bazaar trade is defined as commodities exchange activities among people

living in border areas. It is carried out at government-approved open spots or
designated bazaars within the sphere not exceeding 20 km to the borderline. At
the designated border bazaar trade areas, residents living in border areas were
allowed to carry in or carry out commodities with a value of no more than 3,000
RMB3 on a per-person, per-day basis, with goods exempted from the import
tariff and import value-added tax. Border bazaar trade is a special trade type that
shows the preferential treatment the state offers to residents living in border
122  Lei Zhuning and Chen Tiejun
areas. It accounted for about 10% of the total trade volume of Mohan port, hav-
ing become an important supplementary component to overall trade develop-
ment in Mohan.
Because border small-amount trade could enjoy a preferential policy of export
tax refund while border bazaar trade could not, the trade volume of border bazaar
trade had not been considerable. Since 2008, to boost local economic develop-
ment, encourage cross-border visits, and expand the border bazaars, the China-
Lao international bazaar festival has been held monthly, with the Chinese side
mainly selling clothes, foodstuffs, home appliances, and other daily necessities,
while the Lao side mainly sells local specialties, ethnic handicraft, and herbal med-
icines, among other agricultural products. The total number of people participat-
ing in the monthly China-Lao international bazaar festival was estimated to be
15,000 to 20,000, with the average total trade value exceeding RMB 3.5 million.

Other legitimate cross-border activities in the border area

Besides common trade, border small-amount trade, and border bazaar trade,
there existed other legitimate types of cross-border trade, such as compensation
trade, transit trade, barter trade, processing trade, and others in the development
of Mohan port. However, for various reasons, these types of trade did not develop
well to be sustainable. More and more, the main forces supporting these types
of China-Lao cross-border trade had come from trade under drug-­substitution
projects and the trade coming along with Chinese investments.

TRADE UNDER DRUG-SUBSTITUTION PROJECTS

To eradicate drug sources, prohibit the use of drugs, and safeguard the welfare of
the people, China has carried out drug-substitution agricultural cooperation pro-
jects at border areas in cooperation with neighboring countries. In August 2008,
at the four-country, ministerial-level anti-drug cooperation conference held in
Beijing, China, Laos, Myanmar, and Thailand announced the “Beijing Declara-
tion”, which listed the development of drug substitution as an essential measure
in the four-country anti-drug endeavor.
The agricultural products produced by the drug-substitution projects were
allowed to be sold to China, which would enjoy exemption of the import tariff
and import value-added tax. Moreover, the export of production materials such
as seeds and fertilizers that were needed in the drug-substitution projects was also
exempted from export tax. This kind of trade under the title of drug substitution
accounted for about 10% of the total trade volume in Mohan.
Since 1997, there had been 16 local enterprises from Mengla County engaging
in drug-substitution projects in Laos. These included rubber, sugar, tea, herbal
medicine, castor oil plant, corn, and rice plantation projects. Enterprises of Mengla
County had signed a 190,000-mu4 rubber plantation agreement with the provin-
cial government of Oudomxai Province, Laos. They had also signed 60,000-mu
rubber plantation, 25,000-mu corn plantation, and 82,000-mu rice plantation
 Forty years’ reform, opening-up of Yunnan 123
agreements with the provincial government of Luang Namtha Province, Laos, and
had signed a 68,000-mu rubber plantation agreement with the provincial govern-
ment of Phongsali Province, Laos. By the end of 2007, enterprises of Mengla
County in Xishuangbanna Prefecture of Yunnan had engaged in drug-substitution
projects in Laos, with the total area reaching 290,000 mu, including 110,000 mu
of rubber, 136,000 mu of sugar, 35,000 mu of rice, 4,000 mu of corn, 1,800 mu
of herbal medicine, 1,500 mu of castor oil plant, and 800 mu of tea.

TRADE COMING ALONG WITH CHINESE INVESTMENTS IN LAOS

As the China-Lao bilateral trade and economic cooperation deepened, the outward-­
oriented economy of Mengla County grew in strength gradually, with more and
more local enterprises going to Laos to invest in that country. The scope of
bilateral cooperation had expanded from farming to include project contracting,
investment in new factories, and development of the mining industry. Together
with growing cross-border investment, trade in necessary goods for making
investment was also growing.

TRANSIT TRADE WITH THAILAND

Transit trade takes place when transportation of goods between two countries
must pass through a third country because of geographical locations. For the
third country, although it is not directly involved in the trade, the value of the
goods passing through its territory has to be registered with customs and naturally
becomes part of its imports and exports. The international trade of Mohan mainly
targeted at markets of Laos, with the exports of Mohan mostly going to northern
provinces of Laos. The southern part of Laos had little trade with Mohan.
Of the Chinese goods imported by Vientiane and Savannakhet, nearly one
fourth of these, including general merchandise, toys, and clothes, were sold to
the market in northern Thailand. As the Kunming-Bangkok expressway had
been completed, some firms had started to export refrigerated vegetables and
fruits from Mohan to Thailand via Laos. In like manner, products from Thailand,
India, and Japan also entered Mohan port through border trade at Mohan.
Because the China-Lao border trade settled in RMB enjoyed the preferential
policy of export tax refund while China-Thai RMB trade did not, a considerable
part of the China-Thai transit trade had been done in the name of China-Lao
border trade. In such a situation, Chinese goods were first exported to Laos in
the name of border trade and then were transited to Thailand. Usually such trade
deals were settled in RMB.

Informal and illegal cross-border activities

At the China-Lao border areas, there exist some complicated issues, including
some illegal cross-border activities, such as smuggling, drug-trafficking, and ille-
gal trade of endangered animals and plants, that pose non-traditional security
124  Lei Zhuning and Chen Tiejun
risks for both China and Laos. The Chinese and Lao governments had been
cracking down on these illegal activities. While drug trade had always been the
main target of the crackdown, gambling and money laundering had become
more prominent in recent years.

ILLEGAL TRADE

In China-Lao agricultural cooperation, some enterprises and persons engaged in

illegal logging. As well, some enterprises and businessmen deliberately overstated
the scale of the plantation under drug-substitution projects, or took advantage of
the preferential policies of drug substitution on import quotas, import tariff, and
import value-added tax for agriculture products and export quotas for produc-
tion materials. Both the Chinese and Lao governments took strict measures to
deal with these illegal trade activities. However, because of the high profit these
activities offered, some enterprises and people still continued, daring to risk being
harshly punished.

TRADE OF COUNTERFEIT AND INFERIOR GOODS

Because some companies and businessmen paid little attention to the importance
of quality of products and business reputation, and official supervision of the
quality of export goods was not in place in some areas, some counterfeit goods
and goods of poor quality were exported abroad. As a result, the reputation
of Chinese goods was severely damaged. To solve this problem, Mohan port
strengthened the supervision of the quality of export goods, focusing each year
on quality control for one major export product. For example, in 2001, medicine
was the focus of supervision; in 2002, the focus was shifted to motorbikes. By
2003, there were altogether 40 cases of counterfeit and inferior goods in border
trade transactions, with a total value of the goods reaching RMB 2.78 million.
Penalties and confiscated money reached RMB 1.16 million.
Cracking down on counterfeit goods and goods of poor quality did not interfere
with the prosperity of the local economic development in Mohan. On the con-
trary, it boosted the development of the border trade. For example, the market for
motorbikes in Laos did not shrink after supervision was strengthened. In fact, it
actually expanded the market since the quality of goods could be better guaranteed.

Capital flows at border areas

As the trade with Laos, Myanmar, and Thailand grows, cross-border capital flows
also become more and more frequent.

TYPES AND SCALE OF THE CHINA-LAO CROSS-BORDER CAPITAL FLOWS

Because of the lack of financial cooperation between the banking systems of

China and Laos, cross-border financial services between the two countries, such
 Forty years’ reform, opening-up of Yunnan 125
as foreign currency exchange and remittance, were done through informal and
non-governmental ways, usually through shops at border areas acting as financial
agents. No efficient supervision and administration of the cross-border capital
flows was in place on either side of the China-Lao border. The government agen-
cies of both sides actually acquiesced to accepting the free-of-supervision style of
cross-border capital flows.
However, this type of cross-border capital flow could not meet the needs of
development of the ever-growing border trade. In addition, cash settlement, as
an outdated means of doing business, no longer fit the fast pace of development
of border trade. Use of cash in trade settlement was not only risky, but also might
result in inconvenience when the trade value was considerably large. More impor-
tantly, it was hardly an efficient means for the smooth and well-regulated flows of
capitals and hence to some extent hindered the healthy development of border
trade in border areas.

IMPACTS AND EXITING PROBLEMS OF CROSS-BORDER CAPITAL FLOWS

Generally speaking, cross-border capital flows facilitate cross-border trade and

contribute to economic development in border areas. However, there are some
negative impacts of cross-border capital flows through “street-booth banks”.
With a long border and countless border pathways, Xishuangbanna Prefecture
had been confronted with a difficult job to manage cross-border capital flows.
Capital flows, especially RMB inflows and outflows in border areas, had
become extremely frequent, with a large volume of RMB cash deposited out of
China. Because these capital flows then were outside of banking system super-
vision, a “vacuum” free from any supervision resulted, offering easy channels
for money laundering, gambling, smuggling, drug trafficking, and other illegal
activities. This made the supervision of cross-border capital flows and the anti
money-laundering work very difficult and posed a threat to social stability and
financial security in border areas.

The SWOT 5 analysis on the China-Laos cross-border cooperation

in 2015: the difficulties and challenges of regional cooperation
For further promoting the construction of GMS economic corridors, the Asian
Development Bank (ADB) carried out a field study in September 2015 on the
China-Laos border areas and then held a seminar in Vientiane, Laos, to conduct
SWOT analyses on both sides of the China-Laos border with the participation
of officials and scholars from both China and Laos as well as experts from ADB.
The SWOT analyses were conducted along three lines: (1) economic drivers
and competitive industries, (2) spatial planning, and (3) environment and infra-
structure. The results of the SWOT analyses on economic drivers and competitive
industries on both sides of the China-Lao border are shown in Tables 6.2 and 6.3.
By comparing the SWOT analyses of both Laos and PRC, we found that there
were huge complementarities existing, especially in industrial development, and
126  Lei Zhuning and Chen Tiejun
Table 6.2 SWOT analysis of economic drivers and competitive industries in Lao PDR
(Luang Namtha)

Strengths Weaknesses Opportunities Threats

Tourism Poor/inadequate Logistics Low product

Agriculture infrastructure development quality
Strategically Lack of labor force Tourism has large Reliance on foreign
located GMS Lack of capital potential labor
gateway and Lack of experience Increased GDP Illegal migration
logistics hub in international and revenues Road damage
and regional Increased domestic caused by
integration foreign direct unregulated
Weak law investment environment
enforcement (FDI) Opportunities
Little coordination Increased for agriculture
between special agricultural will result in
economic zones exports and increased use of
(SEZs) technology insecticides and
Tourism products and knowledge land grabbing
negatively transfer Limited capacity
impacted by and involvement
non-compatible in value chains
economic activities
Source: ADB.

Table 6.3 SWOT analysis on economic drivers and competitive industries in PRC
(Xishuangbanna)

Strengths Weaknesses Opportunities Threats

Strategic location Far from PRC’s “One Belt, One Economic

Good transportation main growth Road” initiative growth
network centers Recently signed based on
High-tech and human Relatively low agreement for consumption
resources, including economic Mohan-Boten of natural
bio-industry, development Border Economic resources
agricultural, and along the Zone Difficult to
food production border areas Series of preferential attract and
Stable border area Limited space for investment retain talent
with shared ethnic development at policies for this Mohan Valley
heritage the border area region topography
Regional hub airport Low efficiency Good private-sector limits future
at Kunming gateway at the border involvement growth
Rapid economic crossing Investment in
growth training for skilled
Good regional labor
cooperation Many areas
Several areas of of mutual
complementary competitiveness
competiveness
Source: ADB.
 Forty years’ reform, opening-up of Yunnan 127
both Laos and China face some common problems and challenges, such as poor
infrastructure at border areas, lack of skilled labor, and others. There are also
notable differences between the two countries. Quality of Chinese products, low
value-added of local products, decent job opportunities, environmental protec-
tion, and illegal immigration were the major concerns on the Lao side, while
infrastructure development and cross-border transport facilitation seemed to be
the main concerns on the Chinese side (Lei 2015).
The SWOT analyses tell us that cooperation both at bilateral and regional
levels was very promising because of the growing complementarities between the
two countries. At the same time, because countries in the region had different
concerns and priorities, it had become necessary to take a more comprehensive
approach other than just a mere economic one to cater to increasingly diversified
requirements and concerns of the countries and peoples in the region.

The importance of inclusive growth: a case study in benefit-sharing

Inclusive growth – how ordinary people can actually benefit from the economic
cooperation – has become an important issue of concern on both sides of the
border. According to our survey at the China-Lao border areas, local people at
China’s border areas hoped to receive adequate land compensation for economic
development projects in time. And they expressed the wish that road conditions
could be improved so that more trading routes could be open to public use, and
people in border areas could benefit and improve their livelihood by participating
in booming economic activities.
On the other side of the border, people in Laos were mostly worried about
their lack of skills and the difficulties in finding decent jobs. It was also their
concern that Laos had low value-added in its products and could only get limited
benefits from cross-border economic cooperation.
Particularly, we noticed that the agricultural cooperation in border areas,
including the drug-substitution programs, had been developing rapidly and
would become a key area of cooperation in coming years. But there were doubts
that farmers were really benefiting from the cooperation, and there were also
concerns that the agricultural cooperation with China might increase the debt
burden of the peasants.
A Myanmar scholar recently conducted a field investigation on maize cultiva-
tion in Shan State, Myanmar. The following is what he found:

The local agrarian economy can be summed up in one word: maize. It has
become a money-spinner for the growers as well as for the whole value
chain – warehousing, transport and mechanized agriculture. There is no
more ploughing with oxen or buffaloes, and no more bullock carts. Hand
tillers have given way to full-size tractors. Some years back, a western scholar-
friend did a small survey in both northern and southern Shan State and his
finding was that hybrid maize had got many local farmers into debt. I men-
tioned this twice on a recent visit and the reply was: no, in fact maize had got
128  Lei Zhuning and Chen Tiejun
farmers out of debt. At Namlan in central Shan State I remarked on the good
power supply and asked where it came from. The reply was that it was from
the Shweli hydropower project on the China-Myanmar border.
(Khin Zaw Win 2018)

According to the Myanmar scholar, the proposed China-Myanmar Economic

Corridor is in reality already under construction regardless of bilateral official
agreement, as people living along the corridor had already been engaged in all
sorts of cross-border cooperation and deriving benefits from it.
This pertinent case tells us that the success of bilateral and regional cooperation
not only depends on infrastructure projects sponsored by government agencies,
but also on the people who participate in the cooperation and the “invisible
hand” – the force of the market. The government can provide some necessary
guidance and support to promote regional cooperation, but the true success
of cooperation eventually depends on whether the common people – the most
important stakeholder in regional cooperation – can really benefit from it or not.
It also reminds us that to truly understand the impacts of Yunnan’s opening-up
and its cooperation with the Mekong region, we need to conduct in-depth field
research to draw an objective and fair conclusion.

The way forward

Under the framework of BRI, China has reiterated its firm stance to support an
open market and multilateralism and has promised that it will further open up
its domestic market to the outside world. Yunnan will take this opportunity to
continue and upgrade its opening-up. Cooperation between Yunnan and neigh-
boring countries is expected to increase in coming years since Yunnan is fully
aware that its economic and social development in a large part depends on its
cooperation with South and Southeast Asian countries – countries in the Mekong
region in particular.
From the foregoing studies and analyses, we have tried to show a com-
plex picture of cross-border interactions and exchanges between Yunnan and
the Mekong region and the profound implications brought about by Yun-
nan’s border opening-up. From our observation, it is fair to say that Yunnan’s
opening-up is beneficial to all stakeholders in the region, but whether the ben-
efits are fairly distributed remains a moot question, and it is widely expected
that more attention is being paid to issues of inclusive growth and sustainable
development.
Meanwhile, Yunnan also faces many difficulties and challenges in further open-
ing up itself and participating in regional cooperation, especially in the areas of
non-traditional security issues, policy coordination, and people-to-people con-
nectivity, that is, the “software” part of regional cooperation.
Based on this judgment, we can see three trends that may show the general
direction of Yunnan’s opening-up and cooperation with neighboring countries
in the coming years.
 Forty years’ reform, opening-up of Yunnan 129
First, it seems that it is necessary to combine economic development more
closely with poverty alleviation and environmental protection. Particularly, it has
become ever more important to combine large-scale infrastructure projects under
the BRI framework with the benefit of the common people, especially the com-
munities directly influenced by these projects.
Chinese leaders apparently have taken note of this necessity. In August 2018,
at the symposium on the fifth anniversary of the commencement of BRI, Chinese
President Xi Jinping pointed out that, in the past five years, the BRI had com-
pleted the overall layout, and in the future, focus should be placed on key points
and meticulous efforts should be made to draw a finer and more “delicate paint-
ing”. And China should work hard and pay attention to the provision of timely
assistance, cater to the urgent needs of the cooperative partners, and make sure
that BRI projects can benefit local people’s livelihood. The president then called
on Chinese enterprises to standardize their investment and operational behaviours,
operate in accordance with laws and regulations of the host countries, pay atten-
tion to environmental protection, fulfill their social responsibilities, and become
the “image ambassador” of China for jointly building the One Belt, One Road
(Xi 2018).
Second, policy coordination, institutional construction, and people-to-people
connectivity should be given more attention for better cooperation with coun-
tries in the Mekong region. Multilateral regional cooperation mechanisms such
as GMS and LMC require more coordination on various development plans and
policies, and it is necessary to develop mechanisms and institutions for better
sharing of benefits among participants and stakeholders in regional cooperation.
China has also realized the importance of strengthening people-to-people con-
nectivity to enhance mutual trust and understanding among the peoples in the
region, serving as the very basis for closer all-round cooperation.
Last but not least, among other difficulties and challenges, there are still
many non-traditional security problems or risks in border areas constituting a
grave hindrance to healthy economic development and regional cooperation. In
the process of further opening up, these problems may do harm to the socio-
economic development of Yunnan and neighboring countries. However, while
severe measures to crack down on illegal activities are necessary and indispensa-
ble, increased efforts to develop border trade and promote overall economic and
social development of the border areas, to allow ordinary people to participate
in the development process extensively and enjoy the dividends of prosperity, are
ever more urgently needed. Only through comprehensive measures can these
long-standing problems be mitigated gradually and solved in the long run.
All in all, Yunnan attaches great importance to its opening-up and coopera-
tion with countries in the Mekong region and is trying to take an even more
active role in regional cooperation at all levels and in all fields. Yunnan, with the
support of the central government of China, stands ready to work more closely
with neighboring countries to jointly take regional cooperation to new heights
and contribute more to the improvement of the livelihood and well-being of the
peoples in the Mekong region.
130  Lei Zhuning and Chen Tiejun

Notes
1 The Greater Mekong Sub-region (GMS) cooperation mechanism was initiated
in 1992 and comprises Cambodia, the People’s Republic of China, Lao People’s
Democratic Republic, Myanmar, Thailand, and Vietnam. Originally, Yunnan Prov-
ince was the only area inside China participating in the GMS cooperation. The
Guangxi Ethnic Zhuang Autonomous Region of China later joined the framework
of GMS cooperation in 2005. The GMS covers an area of approximately 2.5 mil-
lion km2 and had a total population of more than 300 million after Guangxi joined
in in 2005.
2 “The Silk Road Economic Belt and the 21st-Century Maritime Silk Road” was ini-
tially referred to in a shortened form as “One Belt, One Road” (OBOR) but later
was officially christened as “The Belt and Road Initiative” (BRI).
3 Since 2008, the daily duty-free limit of border bazaar trade at Yunnan’s border
areas has been raised to RMB 8,000 per person per day.
4 Mu is a Chinese unit of area, which equals one 15th of a hectare.
5 As explained earlier, SWOT is a method for analyzing four aspects, that is, strengths,
weaknesses, opportunities, and threats, of a project or program to determine what
the good and bad features are.

References
Chen, Tiejun. 2015. 30-year’s Border Opening-up of Yunnan: The History, Achieve-
ments and Experiences, Social Sciences Academic Press (China), Beijing, China.
Chen, Tiejun. 2018. A Review of Yunnan’s 40-year History of Opening Up to the Out-
side World, paper submitted to the Theoretical Seminar to Celebrate the 40th Anni-
versary of Reform and Opening-up, December, Beijing, China.
Chinese Government. 2011. “Country Report on GMS Cooperation”, Beijing, China.
Chinese Government. 2014. “Country Report on GMS Cooperation”, Beijing, China.
Chinese Government. 2015. “Vision and Actions on Jointly Building Silk Road Eco-
nomic Belt and 21st-Century Maritime Silk Road”, Beijing, China.
Chinese Government. 2017. “Country Report on GMS Cooperation”, Beijing, China.
Cronin, Richard and Weatherby, Courtney. 2014. Letters from the Mekong – Obstacles
to Equitable Hydropower Development Planning in the Lower Mekong Basin, Stimson
Center, Sept. 2014, Washington DC.
Khin Zaw Win. 2018. “The China-Myanmar Economic Corridor: An Inaugural
Assessment”, paper submitted to the Chinese Academy of Social Sciences Forum
2018: Sub-Regional Cooperation and Opening of China’s Southwest Frontier,
25 October 2018, Kunming, China.
Lei, Zhuning. 2010a. “Greater Mekong Subregion Cooperation in Hydropower
Development and Power Interconnection: Potentials, Challenges and Progress”,
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Snelder and Noboru Ishikawa, Published in 2010 by Earthscan, London and Wash-
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Lei, Zhuning. 2010b. “Sharing the Benefits from Transportation Linkages and Logis-
tics Improvements in the GMS: A Study of the East-West and North-South Cor-
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Thailand Development Research Institute (TDRI), 2010, Bangkok, Thailand.
Lei, Zhuning. 2015. “SWOT Analysis on the GMS North-South Economic Corridor
Luang Namtha-Jinghong Section”, paper submitted to the First Lancang-Mekong
 Forty years’ reform, opening-up of Yunnan 131
River Basin Development Forum, Dec. 2015, Jinghong, Xishuangbanna prefec-
ture, Yunnan province, China.
Lei, Zhuning. 2017. “China’s Connectivity with Mainland ASEAN: The Strategy,
Progress and Prospect – with a focus on Myanmar”, paper submitted to the “Chi-
na’s Rising Influence in Mainland ASEAN Workshop” at ASEAN Studies Center,
Chulalongkorn University, 27 June, Bangkok, Thailand.
Thailand Development Research Institute (TDRI). 2010. “Sharing the Benefits from
Transportation Linkages and Logistics Improvements in the GMS: A Study of the
East-West and North-South Corridors”, Bangkok, Thailand.
Webster, Douglas. 2014. “Presentation at the Workshop on Awareness Raising of
Potentials”, Risks, & Costs of Regional Economic & Trade Integration Processes,
Mar. 3–5, 2014, ADB headquarters, Manila, Philippines.
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Belt and One Road”, Construction, Beijing, China.
7 Rethinking diplomatic
discourse with Chinese
characteristics
The brotherhood discourse1
Kornphanat Tungkeunkunt
and Kanya Phuphakdi 2

Introduction
During the 19th National Congress of the Communist Party of China (CPC)
in 2018, President Xi Jinping hosted the first meeting of the Central Foreign
Affairs Committee. Xi emphasized that China must take a path of major coun-
try diplomacy with Chinese characteristics in the New Era3 (Xinhuanet 2018c).
Accordingly, the term “major country diplomacy with Chinese characteristics”
(zhongguo tese daguo waijiao) has become a discourse widely discussed among
Chinese leaders, scholars, and the international media. Meanwhile, Minister of
Foreign Affairs Wang Yi also remarked throughout 2018 that China has made
great progress in building a new type of this very diplomacy (ZYRMZF 2019).
In other words, China will continue to open for a new approach to engage in
state-to-state relations and international cooperation.
In addition to Chinese leaders, Chinese scholars have long emphasized the sig-
nificance of diplomatic discourse in explaining China’s international relations. As
Jin (1999) notes, diplomatic discourse is the language used in a diplomatic realm
to “express its international strategy and foreign policies in a certain historical
period”, usually in official documents, including the remarks of leaders. Yang
(2016) further argues that diplomatic discourse is “an expression of basic official
positions”, which reflects the nation’s cultural heritage, ideology, vital interests,
strategic directions, and policy initiatives. While exploring the discourse’s theo-
ries, frameworks, constructions, interpretations, and practices, Chinese scholars
have also observed the weakness of China’s public diplomacy and its diplomatic
discourse nonetheless (Ye 2012; Zhao 2015). Undoubtedly, this weakness sig-
nals the growing need for research in this field for academic as well as political
purposes.4
Over the past few years, a trend has begun to study Chinese diplomatic dis-
course among scholars who contemplate the use of dominant approaches in
international relations (IR) based on the use of material tools.5 For instance, by
examining Xi Jinping’s speeches and statements on the “Chinese dream” (zhong-
guo meng), Sørensen (2015) finds this Chinese official discourse has become a
new approach in China’s foreign policy strategy. In this sense, the use of the
 Rethinking diplomatic discourse 133
discourse indicates transformations in the way China engages with the interna-
tional system. At the same time, Solé-Farràs (2016) argues that China can be
treated as a discourse, and the discourse called China constitutes the discursive
space of the PRC’s foreign policy and diplomacy. Also, he demonstrates that
China’s diplomatic discourse is deeply rooted in its traditional principled back-
ground, for example, Confucianism. However, Lai (2018) has noted the self-
contradiction of Chinese diplomatic discourse. According to Lai, unlike Western
countries that use sanctions and other forms of economic coercion, China claims
that it rejects such policies while silently enforcing them, especially on selected
issues with some neighbours. Notably, contrary to its “peaceful rise” discourse,
this use of economic statecraft by China could be regarded as unacknowledged
“coercive diplomacy”.
It may be argued that the study on the diplomatic discourse of China is either
realistically to develop the country’s strategic agenda or academically to structure
the issues based on its own terms. Despite a rising number of Chinese scholar-
ships on the diplomatic discourse, earlier works largely explain characteristics of
the Chinese discourse primarily embedded in Chinese philosophy and traditional
culture, for example, Confucianism. As such, they tend to neglect other material
and practical diplomatic tools, including economic and military measures. On
the other hand, while Western scholarship opts for exploring China’s diplomatic
discourse as material tools to meet its diplomatic goals, little attention has been
paid to thoughts and values of the diplomatic discourse used in Chinese foreign
policy. These limitations reflect the lack of versatility when analyzing the diplo-
matic discourse in Chinese and global contexts.
Obviously, there is still room for discussion about how China has formed and
used diplomatic discourse to explain its relations with other countries. Notably,
diplomatic discourse that reveals types of China’s bilateral relations is understud-
ied. In fact, some discourses play an important role in explaining the dynamics of
the relationship, such as brotherhood discourse, particularly used in describing
China’s relations with neighboring countries. This chapter, therefore, attempts
to examine Chinese diplomatic discourse from a historical perspective, focusing
on brotherhood discourse in the realm of diplomacy with Chinese characteris-
tics. It uses archival documents as well as other primary sources, such as Chi-
nese remarks, speeches, and interviews, to analyze the historical context in which
the diplomatic discourse was constructed. Bilateral relations between China and
some neighboring countries, identified in terms of the brotherhood bond, is
a focal analytical point in the discursive space of foreign policy and diplomacy.
Sino-Thai relations is then given as a case study to examine how the brotherhood
discourse was applied in their diplomatic history.
This chapter is divided into four sections. The first section situates the dis-
course in the context of China’s diplomacy of socialism with Chinese character-
istics. It demonstrates rhetorical discourse as the crucial means by which China
explains its foreign policy to the world. The second section explores diplomatic
discourse in terms of its Chinese characteristics, especially China’s bilateral rela-
tions with neighboring countries presented in the concept of brotherhood. The
134  Kornphanat Tungkeunkunt and Kanya Phuphakdi
third section revisits the brotherhood discourse known as “China and Thailand
are brothers”, a phrase commonly used to describe Sino-Thai relations as a case
study. Finally, it suggests a rethinking of the diplomatic discourse in terms of its
Chinese characteristics to better understand relationships with China in the New
Era. In accordance with the definition provided by Heracleous (2006), the term
discourse employed in this article refers to treatments or themes from collections
of texts, whether oral or written, such as speeches of political leaders, newspaper
articles, interviews, reports, and historical events.

Chinese thoughts on diplomacy of socialism

“with Chinese characteristics”
As briefly stated in the introduction, China has placed its diplomacy in conjunc-
tion with Chinese characteristics. The formation of the concept “with Chinese
characteristics” (zhongguo tese) can be traced back to the reform and opening-up
process initiated by Deng Xiaoping in the late 1970s. It was usually expressed as
“Socialism with Chinese Characteristics”, shortened as you zhongguo tese shehui
zhuyi during the 1980s–1990s, and as zhongguo tese shehui zhuyi in the twenty-first
century.6 This concept has become a fundamental theory that can be explained
as the socialist path with Chinese characteristics, that is, to follow the leadership
of the party, to commit to the reform and opening up, to consolidate social-
ist institutions, and to construct a socialist market economy (ZYRMZF 2012).
President Hu Jintao also reinforced in his report to the 18th National Congress
of the CCP in 2012 that the concept of socialism with Chinese characteristics
would be the action guide for fundamental systems, including China’s diplomacy
(ZYRMZF 2012).
Historically, China struggled to gain recognition from the free world during
the Cold War, when its communist ideology was considered a threat. Since the
end of the Cold War, which was characterized by drastic political shifts, China has
undergone radical economic reforms and opening-up policies (gaige kaifang),
leading to the country’s unprecedented transformations. From the late 1980s to
the early 1990s, Deng Xiaoping gave many important speeches on the sudden
changes in this international situation, demanding that the party should calmly
observe and cope with it. He reiterated that China must adhere to what can be
coined tao guang yang hui – to keep a low profile and bide its time, as the basic
guiding ideology of China’s foreign policy (CPC News 2011).
However, China’s diplomacy is beginning to change its tone and dynamics,
when it has been on the rise. As a global major power in the twenty-first century,
China is undergoing tremendous adjustments in its foreign policy. To keep a low
profile (tao guang yang hui), once the core strategy of Chinese diplomacy since
the end of the Cold War, is replaced by fen fa you wei – to strive for achievement,
giving rise to a ground break in China’s diplomatic strategy. In October 2013, Xi
Jinping proposed that China must strive for more achievement in a symposium
on Chinese diplomacy with neighboring countries (Xinhuanet 2013b). As Yang
(2016) points out, this event marks the main tone of Chinese diplomacy that has
 Rethinking diplomatic discourse 135
been adjusted to striving for achievement (fen fa you wei), which clearly becomes
a prominent discourse of Xi Jinping’s diplomatic thoughts on China. In light of
this notion, Chinese State Councilor and Director of the Office of the Central
Foreign Affairs Yang Jiechi notes China’s new diplomatic initiatives, new strategic
ideas, and innovations of diplomatic theory and practice under Xi Jinping who
finally developed these into “the theory of major country diplomacy with Chi-
nese characteristics” (zhongguo tese daguo waijiao lilun) (Xinhuanet 2013a; ZYR-
MZF 2017)7 as the country’s strategic agenda in theoretical and practical terms.
Yet, China’s increasing prominence on the world stage has attracted scrutiny
and skepticism. Perhaps what irritates current Chinese officials most is the idea
of the so-called China threats (zhongguo weixie lun). There is a general fear that
China intends to be a new hegemon – a threat to the norms and values that
were established by its Western counterparts after World War II (Mearsheimer
2001; Broomfield 2003). This bothers China because the country is still consid-
ered a threat, even though its communist ideology is no longer a global menace.
Thus, Chinese leaders have insisted on the five principles of peaceful coexistence
(FMPRC 2000) and continue to project the nation’s benign image to raise its
international profile, for example, by exerting influence through soft-power poli-
cies. The “peaceful rise/development” (heping jueqi/fazhan) is known as a dis-
course that China claims to be its objective and value (Zheng 2005).
On the one hand, it is evident that Xi’s diplomatic thought with Chinese
characteristics is a vigorous attempt to readjust Chinese diplomacy, with Chi-
na’s increasingly higher status and influence in dealing with global affairs. In so
doing, different types of China’s relations with other countries have been framed.
Moreover, the Chinese government carefully generates diplomatic discourse to
define or reflect a certain kind of that relationship to highlight a “new type” (xin
xing) of international relations. Based on important speeches by Chinese leaders,
the discourse that reflects China’s aim of diplomacy can be classified as follows
(Renmin wang 2016; Xinhuanet 2018a; China Daily 2019):
First, relations with major countries (such as the United States and European
nations) is a key (daguo shi guanjian) that China is putting effort into “coordi-
nation and cooperation” (xietiao, hezuo); second, relations with neighbours is
priority (zhoubian shi shouyao), in that China attempts to strengthen “mutual
trust and practical cooperation” (huxin, wushi hezuo); third, relations with other
developing countries (such as in Africa, Latin America, and the Caribbean and
Arab nations) is foundational (fazhan zhong guojia shi jichu), which can further
advance to “partnerships” (huoban) with more substance; finally, multilateral-
ism is an important stage (duobian shi zhongyao wutai) of diplomacy. For inter-
national organizations or global networks of partnerships (such as the United
Nations), China proposes to build “a community with a shared future for man-
kind” (renlei mingyun gongtongti), as it claims to avoid the zero-sum or winner-
takes-all practice.
On the other hand, it should be noted that China also exercises other mecha-
nisms to achieve its goal in addition to the discourse. Although the discourse
serves as a powerful tool to set a country’s agenda or interest, it may have little
136  Kornphanat Tungkeunkunt and Kanya Phuphakdi
relevancy to the real world as the rationalist approach claims (Ripley 2017). As
such, a concrete institution can be used to support the discourse, as it helps
identify the value of the discourse more clearly. Thus, the Chinese government
has initiated the establishment of economic and financial institutions to reinforce
its diplomatic discourse. For instance, the Belt and Road Initiative, or BRI (yi
dai yi lu), is said to be China’s biggest platform for international cooperation
today. Also, the Asian Infrastructure Investment Bank (AIIB) is a multilateral
development bank initiated by China to support the building of infrastructure
in Asia. The Lancang-Mekong Cooperation (LMC) becomes a mechanism that
China claims as a new pattern of international cooperation for promoting stra-
tegic partnerships. As Yang (2016) argues, the theory and practice of socialism
with Chinese characteristics have introduced new content into China’s diplo-
matic thinking, while reinforcing the interaction between domestic reforms and
global developments. In many ways, by strengthening cooperation among devel-
oping countries, China can combine its own agenda with the needs of developing
countries, thus translating its discourse of the time to more concrete terms.
China’s diplomatic framework does not just derive from current political lead-
ership’s own thinking. There is evidence that Chinese foreign policy is influenced
by its traditional culture, which has a direct impact on its diplomatic means, ways,
and styles (You 2012). Chinese tradition has a great influence in shaping China’s
diplomacy, at the same time providing insights into the conceptualization of Chi-
na’s bilateral relations. This is clearly seen in the relationships between China and
its neighboring countries, which is discussed in the next section.

The brotherhood among neighbours: “same same,

but different”8
This section provides examples of how China has framed its relationships through
certain rhetorical tropes. In other words, China uses discourse to define and rein-
force the perception of its relations with other countries. Through brotherhood
discourse, the Chinese government has set normative principles with Southeast
Asian countries, implying its expectations and their shared history.
As part of its soft-power policy, much of China’s diplomatic discourse draws
upon Chinese cultural traditions as well as philosophy and literature. For exam-
ple, the phrase “deeper than the deepest sea, higher than the Himalayas, and
sweeter than honey” (bi hai shen, bi shan gao, bi mi tian) is generally used to
highlight the extent of the closeness and intimacy of China-Pakistan relations,
despite racial, cultural, and ideological differences. As Pakistani Prime Minister
Syed Yousuf Raza Gilani noted, “We call China a true friend and a time-tested
and all-weather friend” (ZYRMZF 2011).
Other examples can be found, such as phrases like “separated only by a strip
of water” (yi yi dai shui), indicating that Sino-Japanese relations remain com-
plicated (China Daily 2008), and “connected by mountains and rivers” (shan
shui xiang lian) and “as close as lips and teeth” (chun chi xiang yi), expressing
 Rethinking diplomatic discourse 137
the traditional relationship between China and North Korea (Xinhuanet 2018b),
while the improvement in China–South Korea relations has been upgraded to a
“strategic partnership” (zhanlüe hezuo huoban) (FMPRC 2013a).
It can be argued that the rhetoric of describing relationships is how one can dis-
tinguish a nation’s place in China’s foreign policy discourse. Certainly, the choice
of words reflects a certain kind of bilateral relationship. Therefore, only through
comprehension of the discourses Chinese leaders articulate in their speeches can
the value of these statements be truly understood.
As the old proverb states, “Distant relatives are not as good as neighbors”.
Inevitably, China places neighboring countries as the top priority in its foreign
policy. Its aim is to build friendships and partnerships with them (yu lin wei shan,
yi lin wei ban) to ensure peace, stability, and development in the region (CPC
News 2015). In doing so, the Chinese government has forged close ties with
Southeast Asian nations. A metaphorical discourse of family and kinship is used
to describe some relationships between China and Southeast Asian countries.
For instance, China-Myanmar relations can be described as pauk-phaw (kins-
folk) friendship. A good example is the following official statement: “Over the
past 66 years . . . China-Myanmar relations have as always maintained steady
development, attributed to the abiding by the Five Principles of Peaceful Coexist-
ence and Pauk-Phaw friendship between the two peoples” (Xinhuanet 2016a).
China and Cambodia are said to be devoted friends (gan dan xiang zhao) or
neighbours who share a bond of brotherhood (qing tong shou zu), supporting
each other as exemplified by the following statement: “The two countries have
supported each other in improving the livelihoods of their respective people”
(Xinhuanet 2016b).
For China-Thailand relations, which is discussed in the next section, Chinese
Premier Li Keqiang stated that “people in both countries know about Jeen Thai
Phee Nong Gan [“China and Thailand are brothers” in colloquial Thai, or zhong
tai yi jia qin in Chinese]. This belief, which has taken deep roots in the hearts
of our people, is a true reflection of the profound friendship between our two
countries” (FMPRC 2013b).
Besides Thailand, when visiting Vietnam in 2015 to celebrate the 65th anni-
versary of Sino-Vietnamese relations, Xi Jinping emphasized that “China and
Vietnam are brothers” (zhong yue yi jia qin) as well as “comrades” (tongzhi)
(China Daily 2017). Chinese official media claimed that this visit not only pro-
motes the friendly development of Sino-Vietnamese relations, but also reflects Xi
Jinping’s personal concern and attention to the traditional friendship between
the CCP and the Communist Party of Vietnam.
In light of the nature of the family structure and hierarchies, brotherhood dis-
course actually exhibits an asymmetric relationship – particularly the characteris-
tics of the relationship between strong and weak states. Nonetheless, perceptions
toward the discourse can vary, depending on the country’s historical background
and its current foreign policy with China. Especially in a global context that
is witnessing greater increases in Chinese power and influence, the question of
138  Kornphanat Tungkeunkunt and Kanya Phuphakdi
whether China’s rise will be a threat depends on different factors within the coun-
try. As Liang (2018, 280) notes:

Each state has come up with its own narratives of “China’s Rise” that speak
to its own national interests. Seeing the rise of China through the eyes of
each individual state is different, not homogenous; “China’s rise” constitutes
a specific set of meanings to each state. Their “Rise of China” narratives are
therefore contextually specific, and subject to domestic political changes in
individual countries.

Arguably, the brotherhood relationships between China and Southeast Asia are
“same same, but different”. To put this into an Orwellian grammar, all countries
are brotherly, but some are more brotherly. Unlike other Southeast Asian coun-
tries, Thailand has neither territorial disputes nor historical burdens with China.
Although Thailand had no diplomatic relations with China during the Cold War,
the brotherhood narrative displays the notion that both countries have deep ties.
However, the perception of Vietnam toward China is far more complicated. Bit-
terness and resentment sometimes linger as a result of China’s invasion of Viet-
nam in 1979 and history even though the two had so much in common because
of geographical proximity (Nguyen 2017). China will always represent a strategic
challenge and opportunity that Vietnam must face inescapably (Do 2018).
In the past decade, President Xi Jinping has indicated his commitment to
amity, sincerity, mutual benefit, and inclusiveness (qin, cheng, hui, rong) to set
the concepts of China’s diplomacy toward Southeast Asian countries. He uses
another four terms – sincerity, real results, friendship, and good faith (zhen, shi,
qin, cheng) – to denote China’s approach toward Africa (163 News 2013). How-
ever, for Sino-Southeast Asian relations, they begin with qin, which refers to
intimateness or kinship, then cheng, hui, and finally rong as the highest level of
the relationship. The nuances of the word order should be noticed. Qin, the first
level of Sino-Southeast Asian relations, becomes the third level for Sino-African
relations, while cheng, the second level of the former, becomes the highest level
for the latter.
The discrepancy between Sino-Southeast Asian relations and Sino-African rela-
tions can be explained by China’s longer shared history with its neighbours. China
has higher expectations when conducting its neighborhood diplomacy, as well as
a deeper tradition on which to draw from. As President Xi said: “China shares
close cultural bonds with all countries in Southeast Asia. We have a recorded his-
tory of interactions for more than 2,000 years” (Xinhuanet 2015). The Chinese
concept of family or kinship reflects the essence of Confucianism. Familial ties
and blood connections are significant and highly esteemed by Chinese people.
As a Chinese proverb states, “A peaceful family will prosper” (jia he wan shi
xing) (Zhang 2013). Although it is possible to wonder whether China’s fram-
ing of its relations with Southeast Asian countries in Confucian terms hearkens
to hierarchical relations rather than egalitarian principles of the five principles of
peaceful coexistence, peaceful neighboring states are considered vital for China’s
 Rethinking diplomatic discourse 139
prosperity and stability. To attain this goal, China must also bear in mind that its
actions will prove the truth of its words. As Confucius said, “All within the four
seas will be his brothers” (si hai zhi nei jie xiong di) only when “the superior man
never fails reverentially to order his own conduct, and let him be respectful to
others and observant of propriety” (junzi jing erwu shi, yu ren gong er you li).

Blood is thicker than water: the brotherhood

discourse in Sino-Thai relations
Following China’s relations with its neighbours, this section examines Thailand
as a case study to articulate how discourse was applied in the diplomatic history of
both countries. For Sino-Thai relations, it is usually said that zhong tai yi jia qin,
or Jeen Thai Phee Nong Gan (“China and Thailand are brothers” in colloquial
Thai). This phrase has become the diplomatic discourse that both Thailand and
China commonly use to describe their friendly relations historically and today.
Therefore, this section elaborates on brotherhood discourse in the context of
Sino-Thai relations.
China and Thailand have a long history of close economic and cultural ties.
Both Chinese and Thai officials usually refer to hundreds or even thousands of
years of friendship, despite a formal, contemporary diplomatic relationship that
began only in 1975. Since large-scale migration of Chinese to Thailand beginning
in the late nineteenth and early twentieth centuries, Siam, as it was then known,
had been transforming itself into a modern nation-state. Undeniably, Chinese
immigrants became the largest minority in Thailand and the focus of political
controversy over their loyalty to the state. To strengthen state power, the Thai
government determined that it would push forward the complete assimilation of
immigrant Chinese into Thai society. In addition to the state’s pro-assimilationist
policies, the depiction of Chinese as members of Thailand’s family was aimed at
encouraging the Chinese toward national integration.
On many other occasions, Thai King Rama VII described the relationship
between the Thais and the Chinese as that of relatives. He perhaps realized that
persuasion was a means to integrate the Chinese into society and thus argued that
the Thai government should win the hearts and minds of the Chinese rather than
alienate them and describe them as the “other”. This narrative of brotherhood,
one that sought to include immigrant Chinese for national integration, extended
to the succeeding government.
However, after the founding of the PRC in 1949, communist influences inten-
sified Thailand’s fear of the Chinese as a national threat. Hence, the Thai gov-
ernment, as an ally of the United States, pursued anti-communist policies. Some
Thai political elites, however, realized the importance of China to Thailand’s
national security, resulting in the dispatch of a top-secret diplomatic mission to
Beijing in 1955 to maintain ties with China. Afterward, people-to-people diplo-
macy between Thailand and China developed vigorously. A group visit to Beijing
by Thai members of the performing arts in 1957 showed that both countries
used brotherhood discourse to spread the seeds of friendship, thereby laying the
140  Kornphanat Tungkeunkunt and Kanya Phuphakdi
groundwork for the future normalization of Sino-Thai relations. Since Sino-US
rapprochement in the 1970s, the Thai government shifted its policy and encour-
aged discourse to shape its changing foreign policy toward China.
During the process of Sino-Thai normalization, the rhetoric of “China and
Thailand are brothers” became the diplomatic discourse widely used to justify
to the public the shift in foreign policy. When the Thai state ended hostility and
moved toward peace with China, and thus needed to explain the transformation
of Thailand’s foreign policy to the public, it reasonably turned to brotherhood
discourse as a replacement for the legacy of hostility caused by Chinese involve-
ment during the turbulent years of internal war against the Communist Party of
Thailand (CPT).9 In light of ideological and political conflicts between China
and Thailand, the use of this discourse, therefore, was deemed to be the most
appropriate tool that both countries had in common to get connected by blood,
shared history, and culture.
In 1979, just a few years after normalization, China and Thailand had to
grapple with the Cambodian crisis. Both countries cooperated to manage Viet-
nam’s invasion of Cambodia, which was a direct threat to Thailand’s national
security. China wanted Thailand to be an ally against Vietnam. Meanwhile,
Thailand would have China’s backup in defense against Vietnam as well as in
negotiations with the CPT. This emerging dynamics laid a solid foundation for
Thailand’s perception of China as one of its most trusted friends (Chinwanno
1995, 13–14).
The Cambodian crisis was a substantive event in the post-normalization era.
It became a key point of reference in the positive evolution of Chinese-Thai
relations after normalization. Thailand had a clear understanding that “the PRC
would repeat the ‘lesson’ it taught Hanoi by its punitive war if it attacked Thai-
land” (quoted in Chambers 2005, 615). Such mutual aid at crucial times, as
Eznack (2011) argues, can promote friendly bilateral relations, and the building
of a common emotional history together can lead to the establishment of shared
meaning and trust between the countries (Oatley and Jenkins 1996, 181). The
Cambodian crisis enriched and validated the brotherhood discourse in the eyes
of Thailand.
Again, a series of oil shocks in the 1970s and 1980s gave China an opportu-
nity to show its sincerity in helping Thailand during the crisis. China offered to
export oil at a “friendly price”, in exchange for the import of Thai rice. This was
an example of “friendship” deals that led Sino-Thai bilateral trade to grow. Then
in 1985, both countries signed an agreement to establish the Chinese-Thai Joint
Economic Cooperation Committee and to enhance mutual investment protec-
tion (Hewison 2018).
Following the Asian financial crisis in 1997 that led to a drastic depreciation of
the Thai baht, Thailand was forced to follow the IMF’s economic program, such
as restrictions on its monetary policy and financial system. During this economic
catastrophe, China claimed to have mapped out its supportive policies to alleviate
financial problems in Thailand and other Asian countries. For example, it did not
devalue its renminbi for the interests of maintaining stability and development
 Rethinking diplomatic discourse 141
in the region. It also provided considerable financial aid within the framework
of IMF or through bilateral channels (FMPRC n.d.). These policies became sig-
nificant indicators demonstrating China’s changing economic relationship with
Thailand, resulting in Thailand’s perception that China is a reliable economic
friend (Hewison 2018).
Since the coup in 2014, Thailand has been ruled by a military junta, draw-
ing widespread international criticism. Forging a closer relationship with China,
therefore, became an answer to Thailand’s diplomatic isolation. The Chinese
government did not comment on the coup, whereas the West was critical. Thai
Prime Minister General Prayut has highlighted his view that China has confi-
dence in the political situation in Thailand and emphasized Thailand’s strong
commitment to promoting good relations with China (MGR Online 2015). It
can be argued that brotherhood discourse displays an aspect of what Felix Beren-
skoetter (2012) called a shared past and a shared future that involves a common
vision of shared prosperity. Although it is difficult to know whether Chinese and
Thai leaders sincerely believe in the discourse, it can be asserted that this brother-
hood discourse will be necessary for the Thai military regime to show the world
that it is not alone.
In 2018, the Phuket boat accident in which 47 Chinese tourists died forced the
Thai government to return to brotherhood discourse again. Despite the death
and grief, Deputy Prime Minister Prawit Wongsuwan blamed the accident on
Chinese tour operators for passenger overloading and not respecting weather
warnings. His tactless statement infuriated Chinese netizens for Thailand’s lack
of responsibility in handling the accident. The anger in China led Thai Prime
Minister Prayut to step up and make a serious apology. Afterward, Deputy Prime
Minister Prawit initiated the “We Care About You” (Women zaihu ni) project in
January 2019 by inviting approximately 10,000 Chinese tourists to eat 4.5 tons
of mango sticky rice in Thailand. During this special event, he confirmed to the
Chinese media that “China and Thailand are brothers”; therefore, the Thai gov-
ernment will ensure the safety of Chinese tourists. As such, Chinese tourists can
visit Thailand feeling at ease (Matichon 2019). To some degree, the statement
reflects the Thai government’s desire to treat the Chinese resentment as a family
issue, although it is unfortunate that the Thai government exploited brother-
hood discourse as a trump card to atone for its wrong.

Reflection and conclusion

To conclude, this article explains the diplomatic discourse in terms of Chinese
characteristics. First, at the top level, it demonstrates that discourse cannot be dis-
sociated from the transformation of China’s diplomatic strategy from tao guang
yang hui (to keep a low profile) under Deng Xiaoping since the late 1970s to
fen fa you wei (to strive for achievement) under Xi Jinping in the twenty-first
century. In fact, China uses discourse to frame its foreign policy and types of
relationships with other countries in its own terms, especially for bilateral ties.
Second, at the secondary level, this article explores brotherhood discourse as
142  Kornphanat Tungkeunkunt and Kanya Phuphakdi
used to describe China’s relations with neighboring countries, with implications
for China’s norms and expectations from those relations. Finally, at the bilateral
level, it examines the brotherhood discourse commonly used in Sino-Thai rela-
tions, known as zhong tai yi jia qin (China and Thailand are brothers) in their
diplomatic history. It finds that discourse plays an important role in shaping the
relationship between China and Thailand today.
Although it is common for states to initiate other mechanisms together with
its diplomatic discourse in achieving foreign policy goals, China’s use of this dip-
lomatic means has been arguably undergoing increasing scrutiny and skepticism.
Is it because Chinese diplomatic discourse seems unusual and unexpected with
regard to the norms in international relations? It is a challenge to think about
what is going to happen when diplomacy with Chinese characteristics leads the
world. This article, therefore, suggests a rethinking of diplomatic discourse in
the realm of Chinese characteristics, so as to understand how China will guide
the world sooner or later.

Notes
1 Part of this chapter was published in “Blood Is Thicker Than Water: A History of
the Diplomatic Discourse ‘China and Thailand Are Brothers’” (co-authored with
Kanya Phuphakdi) Asian Perspective 42, 4 (Oct.–Dec. 2018), 597–621. This article
was presented at the symposium on “China’s Reforms in the New Era: Implica-
tions for East Asia” at Sirindhorn Chinese Language and Culture Center, Mae Fah
Luang University, in December 2018. The authors are grateful to Professor Lee Lai
To for his constructive comments on earlier drafts.
2 The authors are truly indebted to Mitchel Tan for helpful suggestions regarding
this chapter.
3 During the 19th National Congress, Xi Jinping declared the New Era (xin shidai)
as China’s political, economic, and military power rising to a whole new level in the
twenty-first century.
4 It is evident that academic symposiums held in Chinese universities aim to serve
national strategies in addition to building academic exchanges. For example, the
seminar “China’s Public Diplomacy: The Perspective of Discourse Power”, jointly
organized by the Tsinghua-Carnegie Global Policy Center and the Charhar Insti-
tute, aimed to propose countermeasures and suggestions to enhance China’s inter-
national discourse power (Renmin wang 2010). The First National Symposium on
Diplomatic Discourse and Foreign Affairs Translation, held by Zhengzhou Univer-
sity in 2017, aspired to serve the country’s diplomacy and the construction of the
Belt and Road Initiative, by telling the Chinese story, spreading the voice of China,
and promoting the studies of diplomatic discourse and the practice of foreign affairs
translation in China (HHFO 2017).
5 Besides the IR’s approaches, scholars use a linguistic approach to explore Chinese
diplomatic discourse. As such, Tangyuenyong (2018) examines the discourse of
diplomacy in the speeches of Chinese President Xi Jinping by using linguistic strat-
egies. Based on the Critical Discourse Analysis approach, the study finds that the
speeches of President Xi Jinping construct two main discourses, that is, develop-
ment discourse and security discourse.
6 Some Chinese scholars complain that when referring to some phenomena, practice,
and logic unique to or often happening in China, the term Chinese characteristics
usually carries negative connotations.
 Rethinking diplomatic discourse 143
7 Yan (2014, 183–184), however, admits that a strategy following the fen fa you wei
concept is easily mistreated as an aggressive strategy, which could further lead to
military confrontation with some of China’s neighbours, especially Japan.
8 “Same Same, But Different” is an English phrase used commonly throughout
Southeast Asia, including Thailand, Vietnam, and Cambodia (Janine and Ryan
2017). It refers to something that seems similar, but different in one way or another.
9 Despite the lack of international support, the CPT continued its resistance against
the Thai state until the promulgation of Order 66/2523 issued by the Office of
Prime Minister in 1980 to convince CPT members to leave guerrilla warfare, which
led to the fall of the CPT.

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8 Disturbing the inequality of
PRC influence on the position
of ethnic Chinese in Thailand
in the New Era
Wasana Wongsurawat

Thailand officially recognized the People’s Republic of China (PRC) and estab-
lished formal diplomatic relations in 1975 – four years after the PRC replaced the
Republic of China in the UN, three years after the historic Nixon-Mao meeting,
and four years before the US itself established formal diplomatic relations with
China. Thailand also happened to be the first destination on Deng Xiaoping’s
itinerary of his first trip overseas since the “opening” of China in 1978. If we are
to define China’s New Era as the period starting with Deng’s reform policies,
then it is both highly intriguing and evident that the birth of PRC-Thai diplo-
matic relations was a product of the Cold War.
Having been born of the Cold War, the establishment of PRC-Thai relations
was a diplomatic project that was heavily driven and cultivated by the US-backed
military-monarchy alliance from its inception in the mid-1970s to, at least, the
early 1990s. This relationship, in the global context of the shifting alliances
towards the end of the Cold War in Asia, drastically impacted the position of
the military-monarchy alliance in Thai politics as well as the once highly divided
and diverse ethnic Chinese community in Thailand. This study investigates three
major changes in the position of the Thai monarchy and the ethnic Chinese
in Thailand as results/repercussions of the development of PRC-Thai relations
from its point of inception in 1975 to the early phases of the Belt and Road Ini-
tiative in the 2010s.
The first and perhaps most evident development is the flourishing relationship
between the Thai royal family and the Chinese communist government, which
is both extremely ironic and highly consequential in Thai security and foreign
policy trends in the post-Cold War era. Thai royalist politics went from the bru-
tal suppression of alleged socialist-leaning student protesters on the grounds of
Thammasat University in 1976 to opening up the royal residence to grant Deng
Xiaoping an audience with King Bhumibol Rama IX during his Southeast Asia
tour in 1978. HRH Princess Maha Chakri Sirindhorn then became one of the
very few representatives of the head of state to visit China repeatedly in the 1990s,
right after the internationally broadcasted bloodbath that came to be known to
the world as the Tiananmen Massacre of 1989. Twenty years later, the princess
became the only Southeast Asian national to make it to the top ten list of China’s
best friends on the 60th anniversary of the founding of the PRC in 2009.1 This
 Ethnic Chinese in Thailand in the New Era 147
rather rapid development of a special relationship between the Thai royalist rul-
ing class and Chinese communist leaders had considerable impact on the position
of the business elite among the ethnic Chinese community in Thailand.
Leading ethnic Chinese entrepreneurs have been a dominant force in the Thai
economy since at least the founding of the current dynasty at the end of the
eighteenth century. Their close alliance with the royalist political elite has long
been a source of political stability and economic growth for the ruling class in this
country.2 The reconciliation between the Thai royalist ruling class and the larg-
est economy governed by a communist party on planet earth allowed the ethnic
Chinese business elite to benefit from their ethnic and cultural ties with their
ancestral homeland while enjoying the advantage of presenting themselves as the
loyal subject of the Thai monarch at the same time. What appeared to be the big-
gest dilemma for ethnic Chinese survival in Thailand throughout the Cold War
era is no longer a problem since the opening of the PRC under Deng Xiaoping.
In the post–Cold War era, Chinese-ness is no longer perceived as synonymous
with communism, and the most powerful communist government in the world
now considered a Thai princess as among its best friends.
There is, however, an intriguing flip side to the effect of PRC influence in
post–Cold War Thailand vis-à-vis the royalist ethnic Chinese business elite. This
is the second major disturbance to be investigated in this study. While the royalist
Chinese business elite had dominated the Thai economy through their time-
honored alliance with the ruling dynasty, the influx of Chinese capital – both
through direct investments in Thailand and neighboring countries and through
the constantly rising number of Mainland Chinese tourists to Southeast Asia –
has an equalizing effect on competitiveness among ethnic Chinese businesses
throughout Thailand. That is, as businesses in the hinterland provinces and fron-
tier areas could benefit directly from Chinese investments and Chinese tourists,
close ties and personal connections with the central political power holders in
Bangkok is no longer necessary for one to build a successful business or become
a dominant player in the Thai economy of the post–Cold War era. This results in
the diversification of political alliance among the ethnic Chinese business elite in
Thailand. While the old-money traditional elite in Bangkok and the central plains
continue to try to benefit from their close ties and long-standing alliance with
the conservative political faction in Bangkok, the so-called new money tycoons
of the north and northeastern regions of the country appear to have become
more opened to opposing political groups. Consequently, election results come
to be at odds with the political preferences of the economic and political elite in
Bangkok,3 leading to unrests, coups, and military dictatorship that have plagued
Thai politics for the past decade.
The third major aspect of the upheaval in Thailand that has been brought about
largely as consequences of the rise of China in the New Era is no less than the
transformation of the ethnic Chinese cultural identity as presented and perceived
in Thailand. While there appears to be an increased level of awareness of Chi-
nese heritage among a wider variety of communities across the nation – in other
words, being of Chinese descent in the post–Cold War era has been transformed
148  Wasana Wongsurawat
from a liability to a kind of social capital, and therefore more people across Thai-
land are claiming and expressing their ties with China – diversity among the many
different shades of Chinese-ness that was once the trademark of overseas Chinese
communities across Southeast Asia also appears to be in decline. This is partly due
to the Chinese government’s momentous push for the promotion of the PRC’s
official language – standard Chinese/Mandarin/Putonghua – to be taught and
learned throughout the world through the efforts and funding of one of the
world’s most powerful soft-power agencies, the Confucius Institute.4
There has also been a concerted effort by the Chinese government to encour-
age investments, trade, communication, and cooperation from ethnic Chinese
communities across the world back to the land of their ancestors on Mainland
China. The narrative of success of the overseas Chinese in Southeast Asia fig-
ure prominently in presented aspirations of the Belt and Road Initiative. In this
attempt to establish a united and powerful China in the twenty-first century, the
vision of one China under the same standardized version of Chinese language
and culture is also imposed upon ethnic Chinese communities overseas in return
for financial support, political endorsement, and recognition from the govern-
ment of the rising superpower of the post–Cold War era and the second largest
economy on planet Earth.
There appears to be a rising tendency among the ethnic Chinese community in
Thailand – a community that was both culturally diverse and politically divided
at the turn of the last century – to minimize their local/regional identity and
maximize the close proximity of their cultural identity to that which has come to
be perceived as the government-sanctioned national identity of the PRC. From
a people who once identified themselves as coming from a wide variety of home-
towns and clans, and who spoke many different dialects and sub-dialects, the
ethnic Chinese in Thailand since the beginning of the post–Cold War period have
come to identify more and more as an extension of the PRC’s cultural nexus. This
tendency could be observed on sides of the political and geographical spectrum
as mentioned earlier. Both the conservative old-money Chinese in Bangkok and
the rising tycoons in the north and northeastern provinces have turned to Puton-
ghua as the lingua franca of their ethnic background and cultural identity.
While more Thais have become fluent in Putonghua, fewer are able to speak
the dialects of their southern Chinese ancestors. The history and cultural prac-
tices that they are encouraged to learn together with Putonghua are also the
nationalized standard version of one unified China, which leaves no room for eth-
nic minorities, different religious practices, or even dissident history from the late
twentieth century. This rising trend of the nationalization of overseas Chinese
culture raises important questions concerning the nature of the ethnic Chinese
themselves as a Diaspora community. If the standard meaning of a Diaspora is a
dispersion of a people from their original homeland, and the lack of government
support from their countries of origins, forcing them to resettle and establish
their own ethnic and cultural communities abroad, then perhaps the ethnic Chi-
nese in Southeast Asia – especially in Thailand – could no longer be considered a
 Ethnic Chinese in Thailand in the New Era 149
Diaspora since they have come to be so heavily influenced and incorporated as an
extension of the Chinese nation-state in the twentieth century.5
The aforementioned introduced three major shifts influenced by Thailand’s
relations with the PRC in the New Era are very striking demonstrations of Thai-
land’s socio-political and economic landscape that has been thoroughly trans-
formed within the past four decades since Deng Xiaoping’s opening of China
in 1978. With China’s influence continuing to encroach and infiltrate Mainland
Southeast Asia through the Belt and Road Initiative, the transformation process
in the case of Thailand is still continuing to unfold. The ethnic Chinese commu-
nities in Thailand, which have always had a significant role to play in Thailand’s
transformation through the colonial and Cold War periods, will continue to play
a key role in the transformation through this so-called Chinese century.

The Thai royal family and the Chinese communist

government in the New Era
Since the conclusion of World War II, the sustainability of the political domi-
nance of the political conservatives in Thailand relied heavily upon the support
of the US through the Thai government’s devotion to the anti-communist cause
in the Asia-Pacific theater of the Cold War. In the global political context, it
would be fair to conclude that the US replaced Britain as the dominant super-
power of Southeast Asia at the end of World War II. Aside from the obvious and
unavoidable decline of the British Empire across the globe, the US further estab-
lished her hegemonic role in Southeast Asia by planting two strong bases in the
­Philippines – the US’s only Southeast Asian colony at one time – and T­ hailand –
the only non-colony in the region. The US also established herself as the main
supporter and sponsor of the anti-communist side of the Chinese Civil War under
the leadership of Generalissimo Chiang Kai-shek.
In Thailand, the US supported M.R. Seni Pramoj – the former Siamese min-
ister to Washington, DC, founder of the Free Thai Movement, and a distant
member of the Thai royal family, with an obvious conservative political leaning –
to become the first postwar prime minister in Thailand. Later when communist
threats in the region appeared to intensify with the British declaring the Malay
Emergency in 1948 and the Nationalist Chinese government on the brink of
defeat on the Mainland, the US allowed wartime Prime Minister Plaek Phibun-
songkhram to return to office on the condition that he would make the fight
against communism the fundamental policy of his regime and that he would
do so in close cooperation with the then reigning monarch King Bhumibol
Rama IX.6 Phibunsongkhram was eager to attest to his government’s devotion to
the anti-communist cause and led Thailand to be the first country in Southeast
Asia to contribute military forces to the US-led UN coalition in the Korean War
in 1950. Phibunsongkhram’s regime repeatedly announced to the world that
the most important reason for Thailand’s contribution to the Korean War was to
fight communism and protect the three most important aspects of the Thai way
150  Wasana Wongsurawat
of life, which could be combined in a three-word slogan, “nation, religion and
monarchy”.7
Throughout the 1950s and 1960s, the Thai government – under a series of
military dictators – had a national security policy that consistently perceived the
PRC as the gravest threat in the Asia-Pacific theater of the Cold War. This was a
policy that followed closely the US perspective of the Cold War in Asia. It meant
that Sino-Thai relations at every level were heavily scrutinized, and any contact
or attempts to establish contacts with communist China were severely discour-
aged and violently suppressed. Phibunsongkhram’s regime arrested more than
100 individuals for having been involved with or simply expressing support for
the World Peace Conference in Beijing in 1952. This was a conference hosted by
the PRC government that called for world peace and criticized US interference in
support of South Korea in the Korean War. In an ironic turn of events, Phibun-
songkhram himself was ousted by a US-approved military coup in 1957, partly
because of his covert attempts to carry out underground diplomatic relations
with the PRC. The communist scare continued throughout the 1960s and into
the early 1970s as the postwar generation appeared to become more interested
and involved in socialist ideologies widely popular among student activist groups
of those days. The heated part of the Cold War in Southeast Asia intensified as the
US heightened their involvement in the Vietnam War and Indonesia, the larg-
est non-aligned state in Southeast Asia, by overthrowing her founding president
Sukarno, who had been in office since the conclusion of World War II, because of
his relationship with the Indonesian Communist Party (PKI) and the PRC that
proved to be too close for comfort from the US perspective.
In the early 1970s, the US-backed conservative military-monarch alliance that
controlled the Thai government had to adjust swiftly to the dramatic change in
US policies related to the Vietnam War under the Nixon administration. Presi-
dent Richard Nixon’s historic visit to communist China and his meeting with
Chairman Mao in 1972 sent a very strong message to Thailand as the US’s most
important ally in peninsular Southeast Asia. It was crucial that Thailand contin-
ued to support the US in the annihilation of communist movements in Southeast
Asia, but to contain the Vietnamese communists and allow Nixon to make good
on his campaign promise to withdraw American forces from Vietnam, the Thai
military government would need to work with the Khmer Rouge, who would
become the frontline anti-Vietnamese warriors taking directives and support
from communist China.8 This shift in US policy towards the Cold War in Asia
resulted in the Thai conservative regime suddenly finding themselves on the same
side as the PRC and fighting a mutual enemy, the USSR-backed communist Viet-
nam. Consequently, Thai national security policies of the 1970s shifted the target
of the most severe communist paranoia from the PRC to communist Vietnam.
The Thai government under the conservative right-wing PM Kukrit Pramoj –
incidentally the younger brother of the first postwar PM Seni Pramoj – ­established
formal diplomatic relations with communist China in 1975 but brutally sup-
pressed communist-leaning student protesters in the massacre at Thamma-
sat University in October of the following year.9 The right-wing propaganda
 Ethnic Chinese in Thailand in the New Era 151
machine promptly announced that the student movement which became vic-
tims of the 1976 massacre had been heavily infiltrated by Vietnamese communist
agents and that the majority of those killed were actually Vietnamese nationals.
The student victims and survivors of the massacre of 6 October 1976 should
be considered among the most tragic ideological defeats of the twentieth cen-
tury. First, they were slaughtered for being Vietnamese communists when they
were actually in contact with the Communist Party of Thailand (CPT), which
was receiving directives from the Chinese Communist Party (CCP). Then, many
among the surviving students fled to join the CPT in the jungle only to find that
the Great Proletarian Cultural Revolution – the great inspiration behind their
movement in Thailand – had ended in China with the arrest and persecution of
the Gang of Four and a drastically changed CCP policy towards the Cold War
in Southeast Asia – one of which was to collaborate with the right-wing military
government in Thailand in their efforts to contain communist Vietnam from
dominating the entire peninsular Southeast Asia. In other words, the govern-
ment that was behind the student massacre at Thammasat University and the
government (the PRC) that was giving directives to the CPT, from whom the
surviving students were trying to seek refuge, were both working in alliance with
the US in the Cold War.
One of the leading justifications of the violent suppression of student dem-
onstrators on the grounds of Thammasat University on 6 October 1976 were
accusations that the students were involved in pro-communist movements that
aspired to destroy the monarchy and transform the nation into a socialist repub-
lic. Hence, it was crucial for the justification and popular support of the PRC-
Thai formal diplomatic relations that had recently been established in 1975 to
demonstrate that the communist Chinese regime did not pose a threat to the
well-being of the institution of the monarchy in Thailand. The proposed visit
of Deng Xiaoping as the new PRC leader in November 1978 was a welcome
political gesture from the perspective of the Thai royalist ruling class as well. The
leader of the Chinese communist government was not only granted a personal
audience with King Rama IX during his very first state visit to Thailand, but he
was also invited to take part in the ordination ceremony of then Crown Prince
Vajiralongkorn.
It was an odd alliance to begin with, a communist leader being welcomed by a
king and invited to participate in a religious ceremony involving the highest cir-
cles of the Thai government and royal family. Yet, this was not the first instance in
which a PRC leader became involved in an alliance with a modernized monarch.
Mao Zedong himself was famously familiar with King Narodom Sihanouk of
Cambodia in the earlier years of the Cold War.10 The personal connection created
by the 1978 royal audience could be considered a crucial point of development
in Deng Xiaoping’s “reform and openness” policy. It was significant that he chose
Thailand and the Thai monarch as the first destination in his 1978 Southeast Asia
tour, considering the fact that, at least up to World War II, Thailand was the larg-
est base for overseas Chinese in the entire Southeast Asian region, which in turn,
was the region with the largest number of ethnic Chinese outside of Mainland
152  Wasana Wongsurawat
China, and that the ethnic Chinese community in Thailand had been actively
involved in national salvation projects in China from as early as the late nine-
teenth century during the period of political turmoils of the late Qing Dynasty.
Having the opportunity to meet with the Thai monarch himself was another
important symbolic gesture that demonstrated to the world that China was will-
ing and ready to really open up beyond the bamboo curtains of agrarian socialism
so as to embrace trade, commerce, and cooperative development efforts from all
countries regardless of their political ideology. In other words, if even the Thai
monarch is willing to meet with Deng Xiaoping, then there is no reason why
anyone else in the so-called free world should shy away from the opportunity for
friendship and cooperation with the PRC.
Nevertheless, Deng’s 1978 visit was probably even more beneficial for the
political standing of the Thai monarchy and the conservative political ruling
class as a whole. It was a chance to crush left-wing movements once and for all.
A personal connection between the PRC leader and the Thai royal family was a
confirmation that the Chinese communist government was no longer interested
in supporting the CPT in its armed struggle against the Thai government. Now
that China had opened up to the capitalist world, two of the three major foreign
powers in the Cold War – the US and the PRC – had demonstrated their alli-
ance with and full support for the right-wing conservative royalist regime that
had ruled Thailand throughout the post–Second World War decades. The only
remaining anti-American superpower was the Soviet Union, which was too far
away and already at odds with the Thai left in the course of the Sino-Soviet Split
and the civil wars in the former French-Indochina states. There was nowhere to
run to for the surviving student activists and the remaining CPT guerrillas as the
1970s drew to a close. A blanket amnesty was issued through the Order of the
Office of the Prime Minister number 66/2523 in April 1980, allowing most left-
wing student activists and guerrillas to put down arms and return to school and
normal life in Thai society under PM General Prem Tinsulanonda.11 This marked
the official end of the Cold War struggle in Thailand.
1980 was also the year that HRH Maha Chakri Sirindhorn, the third child of
King Bhumibol Rama IX, embarked on her life-long studies of China, Chinese
history, and the Chinese language. She visited China for the first time in 1981 as
a royal representative of her father. Soon after returning, the princess published
her first book on China, Treading the Dragon Land,12 which was a compilation of
her notes and impressions from her first visit to the PRC. Sirindhorn was among
the first group of Thai intellectuals to be allowed into New China in the post-
Mao era. As the government’s guest of honor, she had the privilege of meeting
top leading personalities of the Chinese communist government and visited many
areas that were not yet opened to the outside world. Not surprisingly, the princess
quickly established herself as one of the first Chinese studies experts in Thailand.
Another important turning point in the relationship between the Thai royal
family and communist China in the New Era came shortly after the tragedy of the
Tiananmen Massacre of 1989. Less than a year after the event, that brought about
an arms embargo from the European Union and open criticism on human rights
 Ethnic Chinese in Thailand in the New Era 153
violations from nearly every leader of the “free world”, Sirindhorn embarked on
her second state visit to the PRC in April 1990. She would return to China nine
more times in the 1990s, publish eight more travel books, and translate three
works of Chinese literature in that decade alone. There was a clear theme in the
princess’s China-related publications of the 1990s. They were either about the
tragedies and survival stories from the Great Proletarian Cultural Revolution or
how fast China has developed since it opened up in the late 1970s. The politi-
cal implications of her visits and publications could not be more obvious. Leftist
movements like the Cultural Revolution are very harmful to the people’s well-
being and society’s development as a whole. The Chinese communist govern-
ment has succeeded beautifully in bringing the People’s Republic out of the dark
ages of red guard tyranny into the bright future of the reform era. The Thai royal
family stood by China amidst harsh criticism from the West following the Tianan-
men Massacre. Princess Sirindhorn, or Silintong as she is known in the Chinese
press, is a true friend of the Chinese people. This latest message was confirmed
some 20 years after the Tiananmen Massacre when the princess was awarded
the title of “Best Friend of the Chinese People” at the 60th anniversary of the
founding of the People’s Republic of China in 2009.13
Since the dawn of the twenty-first century, HRH Sirindhorn has visited China
more than 30 times and published more than a dozen books – travel diaries,
translations of novels, short stories, and poetry – on China. In her capacity as his-
tory lecturer at the Royal Military Academy, Sirindhorn has encouraged cadets’
education in all areas relating to China, which resulted in major improvements in
Sino-Thai relations among the armed forces. As a country that had relied heavily
on US support in its security policies and armed forces throughout the period of
the Cold War, it is definitely noteworthy that China’s support for the Thai mili-
tary has risen so quickly within the past decade that it now has become a credible
challenge to US dominance in the security alliance with Thailand. In social and
cultural aspects, Sirindhorn continues to be the royal icon of PRC-Thailand rela-
tions. She facilitated the introduction of the first Confucius Institute in Thailand
in cooperation with her alma mater, the Faculty of Arts, Chulalongkorn Univer-
sity in 2006.14 From then on, the Confucius Institute has grown to more than a
dozen institutes in universities throughout the country, making Thailand host to
the largest number of Confucius Institutes in the Southeast Asian region.

Influx of PRC capital into Mainland Southeast Asia and

its equalizing effects to Chinese communities in Thailand
From G. William Skinner’s Chinese Society in Thailand: An Analytical History,
first published in 1957, to Bisalputra and Sng’s A History of the Thai-Chinese
in 2015,15 anyone familiar with the history of the ethnic Chinese in Thailand
would notice that the mainstream narrative reads much more like “the history of
the Chinese in Bangkok”. Even as Western-educated progressive intellectuals of
the Cold War era constantly remind us that Bangkok is not Thailand – with the
rise of local and community history, and research in local politics and the role of
154  Wasana Wongsurawat
household industry in the development of the national economy – the history of
the Chinese in Thailand from the conclusion of World War II to the conclusion
of the Cold War remained stubbornly in the realm of the Chinese community in
Bangkok. Even when it might extend to include leading ethnic Chinese person-
alities in the provinces, they are almost always closely connected and supported
by the central political powers in the capital city.
The socio-cultural representation of ethnic Chinese in Thailand throughout
the Cold War period was also closely tied to the central political power in Bang-
kok. Major events in Bangkok’s Chinatown almost always include the participa-
tion of a high-ranking member of the royal family and leading ethnic Chinese
businesses – especially financial institutions – striving to acquire the right to dis-
play the royal Garuda emblem as the most prestigious symbol of monarchist
recognition. This is partly a consequence of the violent decades of the Cold War
when any connection to China and even Chinese ethnicity in itself was consid-
ered an indication of the socialist mindset or of being a communist sympathizer.16
At the height of the Cold War in the 1960s to early 1970s, the surest antidote to
this Red Scare was the institution of the monarchy. It was safe to express one’s
Chinese heritage only in the company of one’s expression of devotion towards
the monarchy. However much one wanted to present oneself as an ethnic Chi-
nese, one had to be sure to demonstrate loyalty towards the monarch even more
strongly.
Another source for the strong connection between ethnic Chinese capitalists
and the center of political dominance in Bangkok is the military dictatorship
that continued with US blessing for more than three full decades during the
Cold War in Thailand. This was a period of state planned and controlled eco-
nomic development driven by large quantities of developmental aid from the
US, which mainly came through Thai agents of the government and the armed
forces. Consequently, anyone who aspired to benefit from this largest amount of
capital being injected into the Thai economy during the Cold War would need
to establish some kind of connection with the center of political dominance in
Bangkok – be it the armed forces themselves, the junta government, or agents
of the court. Hence, everybody who was anybody among the ethnic Chinese in
Thailand – anyone worth including in a world-class academic research like Skin-
ner’s Chinese Society in Thailand – would most likely reside in the capital and
possess some very potent connections with the central government.
The most outstanding demonstration of the Bangkok Chinese community’s
close connection with royalist politics and the right-wing institutional ruling
class could be observed from the local Chinese cultural museum, known as the
Yaowarat Chinatown Heritage Center, which is housed in Wat Traimit – one of
the largest Buddhist temples situated at the edge of Bangkok’s Chinatown. As
a museum that has been constructed and run largely on donation money from
the Bangkok Chinatown business community, the level of royalist propaganda
presented throughout the museum’s installations can be startling for unsuspect-
ing visitors. Of a total of six exhibition halls, four are devoted exclusively to dem-
onstrate the intimate and long-standing alliance between the Thai monarch and
 Ethnic Chinese in Thailand in the New Era 155
royal family and the ethnic Chinese community in Bangkok. Yaowawat Road –
the main road through Bangkok’s Chinatown – was commissioned to be built by
King Chulalongkorn Rama V and named after the title of the first crown prince of
the Chakri Dynasty. King Ananda Rama VIII visited Chinatown with his brother,
who later became King Bhumibol Rama IX almost as soon as they returned from
their studies in Europe in 1946. All high-ranking members of the royal family
have regularly participated in important socio-cultural events in Bangkok’s Chi-
natown. The list goes on and on. The main message could not be presented in
a more overt way. The ethnic Chinese in Bangkok’s Chinatown could not have
succeeded and prospered in Thailand without the support and patronage of the
crown, and therefore, they are forever indebted and will be forever loyal to the
Thai monarchy.
The aforementioned described situation in which significant amounts of capital
could only be obtained through connections with the central government and
its conservative royalist political network changed significantly after the dawn
of the New Era in the PRC. With the Cold War in the former French Indo-
china states drawing to a close in the 1980s, US financial support for military
dictators in Thailand dwindled significantly. The kingdom entered into a brief
era of democratization in the 1990s around the same time that ASEAN was
expanding to include former members of the communist bloc – Vietnam, Laos,
Cambodia, and Myanmar – and the PRC was expanding special economic zones
and free-trade zones to encourage trade and investments with Southeast Asia.17
The promulgation of the 1997 constitution not only brought about the rise of
capitalist political icons like Thaksin Shinawatra, but also ushered in a new era of
significant political decentralization in Thailand. For the first time in the modern
history of the kingdom, elected officials at the local level had a say on the alloca-
tion, development, and management of resources within their constituency. This,
coupled with the possibilities of making more direct deals in trade and commerce
with neighboring countries in the Greater Mekong Sub-region that had recently
joined ASEAN and with the PRC, allowed for rapid economic growth at the local
level in the north and northeastern regions of Thailand.18
In the 2000s, one begins to observe the rise of localized expressions of com-
munal identity in the north and northeastern countryside of Thailand. This took
the forms of the emergence of local museums, minority cultural centers, and the
development of tourism in previously unknown localities outside of the main
urban centers of the country. This was around the same time that the rise of
ethnic Chinese museums and cultural centers in the countryside far away from
the central political powers in Bangkok started to become observable. The grand
openings of the Museum of the Descendants of the Dragon in Suphanburi in
2008 and the Udon Thani Thai-Chinese Cultural Center in 2013 could be seen
as a case in point. Only after the dawn of the twenty-first century could one start
to observe the emergence of socio-cultural and historical expression of Chinese
communities outside of Bangkok on such a monumental scale.
The main narrative that accompanies presentations in both the Suphanburi
and Udon Thani cases differs significantly from the traditional storyline that one
156  Wasana Wongsurawat
might be used to from the Bangkok-based ethnic Chinese narrative of the Cold
War era. The Chinese-ness expressed in the museums in Suphanburi and Udon
Thani did not need to be accompanied by overt expressions of loyalty towards the
monarchy. The two provincial museums were, instead, both connected to popu-
lar local shrines and emphasized the history of the ethnic Chinese as being an
integral part of the local community and the great contributions the ethnic Chi-
nese made in terms of connecting the local economy with the regional, national,
and transnational trade network of overseas Chinese elsewhere. In the case of the
Udon Thani Thai-Chinese Cultural Center, it presented Udon Thani Province as
the center of trade and commerce, not only of the northeastern region of Thai-
land, but also of neighboring countries, and emphasized the long-standing his-
tory of connectivity between the Chinese community in Udon Thani and other
Chinese communities across the northeastern region of Thailand and across the
former Indochina states – Laos, Cambodia, and Vietnam.
The two regional ethnic Chinese museums also highlighted their communi-
ties’ importance in connecting Thailand with the PRC as China emerges as the
world’s second-largest economy in the twenty-first century. The very name of
the museum in Suphanburi, “the Museum of the Descendants of the Dragon”,19
underlines the genetic ties among ethnic Chinese across the globe and has
become an important site in the pilgrimage of Mainland Chinese tourists who
travel to Thailand in search of Chinese tradition of bygone eras destroyed in the
Great Proletarian Cultural Revolution. The Udon Thani Thai-Chinese Cultural
Center, on the other hand, emphasizes the community’s adherence to Confucian
values – especially filial piety – and their close collaboration with the PRC’s most
important soft-power agent – the Confucius Institute. The Thai-Chinese Cul-
tural Center also houses the main recital hall of the largest and most complete tra-
ditional Chinese orchestra in Thailand. The many accomplishments of the Udon
Thani Chinese Orchestra make up a significant part of the museum’s display –
images of the band playing on the Great Wall of China and at the national airport
in reception of leading figures of the Chinese communist government upon their
various state visits to Thailand.
Since the opening of the PRC in the New Era, it is clear that the important
Chinese Society in Thailand is no longer limited to the Chinese community in
Bangkok or to those few individuals who managed to cultivate a working rela-
tionship with the center of conservative political power in the capital city. While
the leading business communities across the kingdom continues to be dominated
by the ethnic Chinese, even in the twenty-first century, they are all highly capable
and very eager to serve as the connecting link between Thailand and the land of
their ancestors. Moreover, with the opening up of trade and investment between
China and Thailand’s neighboring countries in peninsular Southeast Asia, pro-
vincial centers of the ethnic Chinese communities in the north and northeastern
regions of the kingdom might even have an advantage over the traditional center
in Bangkok because of their proximity and historical connection with business
communities across the Mekong River.20
 Ethnic Chinese in Thailand in the New Era 157

The end of the Chinese Diaspora in Thailand?

The rise of the PRC in the global political and economic arena since the begin-
ning of the New Era is affecting the diasporic nature of the ethnic Chinese com-
munity in Thailand. That is, the ethnic Chinese communities in Thailand appear
to be presenting themselves more and more along the lines of the cultural/lin-
guistic standards of the PRC as promoted through the agendas of the Confucius
Institute. Regional dialects that once were the main identification of the differ-
ent groups of overseas Chinese in Southeast Asia are quickly dying out, with the
younger generation being literate only in Putonghua, which is now taught from
the primary school level even in the public school system. Local ethnic Chinese
museums and cultural centers as elaborated in the previous section also present
ethnic Chinese identity in Thailand as an important link to the PRC and as an
extension of the cultural identity of the Chinese nation according to PRC stand-
ards. These circumstances force us to reconsider the definition of the Chinese
Diaspora. If the diasporic essence lies in the lack of support or connection with a
territorial nation, would it still be valid to consider ethnic Chinese communities
in Thailand as part of the Chinese Diaspora if the cultures and traditions they
represent have become none other than the standard version of the national cul-
ture of the PRC? If that were the case, how would it affect the Thai nation, Thai
society, and Thai culture as the host of this nationalized diasporic community?
In terms of self-representation, the Chinese cultural museums mentioned ear-
lier clearly express solidarity with the national cultural and linguistic standards of
the Confucius Institute. The Yaowarat Chinatown Heritage Center is housed in
Wat Traimit temple, which is also the main sponsor of Traimit Wittayalai Second-
ary School where Thailand’s first Confucius Classroom was established, allowing
the linguistic and cultural mission of the Confucius Institute to connect with
Thai people at an even younger age through secondary education. The entire
lower level of the Udon Thani Thai-Chinese Cultural Center is devoted to the
life and teachings of Confucius and to present the working relations between the
Udon Thani Thai-Chinese business community and the Confucius Institute –
from committee members’ visit to Confucius’s hometown in Shandong to the
establishment of a Confucius Classroom in Udon Thani.
Tourism is another major driving force behind the cultural nationalizing ten-
dencies of ethnic Chinese communities across Thailand. As the ratio of Mainland
Chinese tourists continued to rise compared with other groups since the dawn of
the twenty-first century, tourist attractions related to Chinese culture, including
attractions involving ethnic Chinese communities, come to view Mainland Chi-
nese tourists as the main customers of the industry. The Museum of the Descend-
ants of the Dragon in Suphanburi Province provide a glaring example of this
trend towards nationalizing the ethnic Chinese for the sake of attracting more
tourists from the PRC. In the Suphanburi case, it would appear that the Dragon
museum had indeed succeeded in rebranding the province from the heartland
of Thai folk culture – once known as the origins of the most well-known Thai
158  Wasana Wongsurawat
folktale Khun Chang Khun Phaen, and the site of the famous sixteenth-century
elephant duel of King Naresuan21 the Great – to becoming one among the coun-
try’s most popular cultural attractions for Chinese tourists.
An increasingly large number of PRC citizens relocating to Southeast Asia –
and specifically to Thailand – for studies, work, investment, and retirement since
the dawn of the twenty-first century have also affected the diasporic identity of the
already well-entrenched ethnic Chinese communities across the kingdom. While
larger numbers of Mainlanders are arriving in Thailand, with the enthusiastic
encouragement of the Thai government, and settling into new Chinese enclaves
in major metropolitan areas such as Bangkok and Chiang Mai, there appears to be
absolutely no incentive for assimilation that had once been the greatest obsession
of Chinese migrants to Thailand during the Cold War era. The PRC passport is
obviously much more powerful than the Thai passport in the post–Cold War era.
Very few hindrances remain in conducting business in Thailand as foreigners as
new Chinese visitors never have to face the dilemma of forsaking their legal status
as Chinese in order to gain acceptance and support of the Thai state through fully
embracing Thai citizenship – a problematic decision that once haunted several
generations of Chinese migrants to this country from the earliest decades of the
twentieth century up to the conclusion of the Cold War year. There is barely any
business advantage for older generations of ethnic Chinese over the newcomers
of the twentieth century. In fact, a widespread phenomenon across Bangkok’s
Chinatown are old ethnic Chinese businesses being taken over by new Chinese
investors with more substantial capital and connections with the PRC.22
In the nineteenth century, at the height of the colonial period, ethnic Chi-
nese identity could serve as the social capital in one’s dialect or hometown con-
nections with the wider trade network of Chinese merchants and colonial trade
agents across Southeast Asia and the South China Sea. Being Teochew, Hokkien,
Hakka, or Hainanese could translate into membership in different trade networks,
different guild associations, or even connection with a different state official or
nobility of the court. The social capital of being ethnic Chinese in twenty-first
century Thailand, however, has much more to do with one’s connection to the
PRC. Whether in the tourism business, attracting investors in the industrial sec-
tor, or seeking large buyers of agricultural goods or even real estate speculators,
the odds are much better if one could connect with Mainland Chinese markets
and PRC capital. Putonghua, as standardized and propagated by the Confucius
Institute, then becomes the hallmark of Chinese cultural heritage that could best
support the proliferation of capital investments in the China-rising twenty-first
century. In this sense, one could take the greatest advantage of one’s Chinese
Diaspora status only if it allows a closer connection with the Chinese nation-state
or PRC capital, only because it might be the closest a citizen of Thailand could
get without acquiring PRC citizenship. In other words, the widely diverse Chi-
nese diasporic cultural traits – linguistics, culinary, fashion, religious faith, and
traditions– no longer provide significant advantage in terms of connections both
business- and state-related.
 Ethnic Chinese in Thailand in the New Era 159
For the various aforementioned reasons, it would appear that the ethnic Chi-
nese in Thailand are slowly but certainly becoming increasingly nationalized to
become more of an extension to the Chinese nation and part of the expanded
greater Chinese economy. In this sense, it will continue to lose the key charac-
teristics of being a Diaspora community and eventually will cease to function as
such. Hence, it might be fair to conclude that the current trend that has resulted
from the rise of the New Era in China, if it continues in the same direction as it
is at present, would bring about the end of the Chinese Diaspora in Thailand in
the twenty-first century.

Conclusion: the New Era of the PRC disturbing

the balance of inequality in Thailand
While it could be said that formal diplomatic relations between Thailand and the
PRC was brought about by Cold War politics of the 1960s and 1970s, the rise
of the PRC’s New Era has resulted in the continuous rise of Chinese influence
in Southeast Asia since the conclusion of the Cold War and would appear to lead
to the PRC completely replacing the US as the hegemonic external power over
Mainland Southeast Asia. China’s meteoric rise in both economic and politi-
cal realms has had a surprising equalizing effect on Thailand’s domestic scene.
While the undemocratic conservative dictatorial forces appear to have to depend
on the PRC increasingly for support in the international political arena, Chi-
nese capital investment in Thailand – through trade, industry, and tourism – has
allowed for a freer and fairer competition among a wider range of entrepreneurs
in the Thai economy. This, in turn, makes it more difficult for coup governments
to sustain their dictatorial power by the time-honored tradition of controlling
the economy through their network of military, monarchy, and Bangkok-based
royalist Chinese business cliques. As localized business networks faraway from
Bangkok – especially in the northern and northeastern regions of the kingdom –
are strengthened through PRC tourism and Chinese investments in neighbor-
ing former Indochina states, they not only become more independent from the
center of political power in Bangkok, but they also become more influential in
the domestic economic scene. Consequently, they come to demand a larger part
in politics through the mechanisms of elections and decentralization of state
power.
Thailand in China’s New Era probably would not be much more independent
from Chinese political and economic influence than she was under the hegem-
onic control of the US during the Cold War. Nonetheless, there is a hopeful
possibility that China’s rising influence as the new hegemon of Mainland South-
east Asia would disturb and perhaps destroy the balance of inequality that has
had such a strong grip on the kingdom through the entire Cold War period.
Although China might not be a force for democracy in the twenty-first century,
China’s economic influence in the New Era would appear to be a strong driving
force behind Thailand’s development into a fairer and more equal society.
160  Wasana Wongsurawat

Notes
1 China Daily. “China Awards Top-10 International Friends” (updated 9 Decem-
ber 2009) www.chinadaily.com.cn/china/2009-12/09/content_9150628.html
2 Wongsurawat, Wasana. “Beyond Jews of the Orient: A New Interpretation of the
Problematic Relationship Between the Thai State and Its Ethnic Chinese Com-
munity”, in Positions: Asia Critique. vol. 24 issue 2 (2016), pp. 555–582.
3 Pathamanand, Ukrist. “Network Thaksin: Structure, Roles and Provincial Power”,
in Pasuk Phongpaichit and Chris Baker eds. Unequal Thailand: Aspects of Income,
Wealth and Power. Singapore: NUS Press, 2016, pp. 136–161.
4 Wongsurawat, Wasana. “Rise of the Red Capitalists: PRC Influence and the New
Challenges of the Royalist-Chinese Business Alliance in Thailand”, in Yos San-
tasombat ed. Chinese Capitalism in Southeast Asia: Cultures and Practices. New
York: Palgrave Macmillan, 2017, pp. 35–55.
5 Wongsurawat, Wasana. “The Social Capital of Being Chinese in Thai Politics”, in
Yos Santasombat ed. The Sociology of Chinese Capitalism in Southeast Asia. New
York: Palgrave Macmillan, 2019, pp. 75–92.
6 Phillips, Matthew. Thailand in the Cold War. Abingdon: Routledge, 2016.
7 Hanklaeo, Katesaraporn. “The Idea of Nation, Religion and King: Thainess and
Thailand’s Participation in the Korean War”, MA thesis, Department of History,
Chulalongkorn University, 2018.
8 Mertha, Andrew. Brothers in Arms: Chinese Aid to the Khmer Rouge, 1975–1979.
Ithaca: Cornell University Press, 2014.
9 Phongpachit, Pasuk and Chris Baker. A History of Thailand. Cambridge: Cam-
bridge University Press, 2014.
10 Macmillan, Margaret. Nixon and Mao. New York: Random House, 2007.
11 Phongpachit, Pasuk and Chris Baker. A History of Thailand. Cambridge: Cam-
bridge University Press, 2014.
12 Treading the Land of the Dragon or Yam Daen Mangkon [ย่ำ�แดนมังกร] was first pub-
lished in December 1981 and remains one of the most re-published works of
HRH Sirindhorn. In 2018, a lecture which the princess presented to students
at Thammasat University in 1990 on the subject of her experience of writing
this book – the first of her many travel books concernin China – was published
as a booklet by Nanmee Books in commemoration of HRH Sirindhorn’s long-
standing dedication towards promoting PRC-Thai relations.
13 China Daily. “China Awards Top-10 International Friends” (updated 9 Decem-
ber 2009) www.chinadaily.com.cn/china/2009-12/09/content_9150628.htm.
14 “Brief Introduction to the Confucius Institute at Chulalongkorn University”.
www.arts.chula.ac.th/confucius/home_e.htm.
15 Sng, Jeffery and Pimpraphai Bisalputra. A History of the Thai-Chinese. Singapore:
EDM, 2015.
16 Wongsurawat, Wasana. “Home-base of an Exiled People: Hong Kong and
Overseas Chinese Activism from Thailand”, in Wasana Wongsurawat ed. Sites
of Modernity: Asian Cities in the Transitory Moments of Trade, Colonialism and
Nationalism. Hong Kong: Springer, pp. 103–117.
17 Santasombat, Yos ed. Impact of China’s Rise on the Mekong Region. Basingstoke:
Palgrave Macmillan, 2015.
18 Praditsil, Chaiyon and Chainarong Khrueanuan. “Inequalities of Local Power and
Profit: The Changing Structure of Provincial Power”, in Pasuk Phongpaichit and
Chris Baker eds. Unequal Thailand: Aspects of Income, Wealth and Power. Singa-
pore: NUS Press, 2016, pp. 120–135.
19 Banharn Silpa-acha. Phatara Khamphitak and Intharachai Phanichakul eds. Ban-
harn Silpa-acha lao rueang khrang sutthai [Banharn Silpa-acha tells his story one
last time] memorial volume, November 2016.
 Ethnic Chinese in Thailand in the New Era 161
20 Santasombat, Yos ed. Impact of China’s Rise on the Mekong Region. Basingstoke:
Palgrave Macmillan, 2015.
21 Saichon Sattayanurak. Chatthai lae khwampenthai doi Luangwichitwathakan
[the Thai nation and Thai-ness by Luang Wichit Wathakan] Bangkok: Matichon,
2002.
22 Ran Guanyu. “Outside of the Old Enclave: A New Chinese Immigration Neigh-
borhood in Huai Khwang, Bangkok”, MA thesis, MAIDS, Faculty of Political
Science, Chulalongkorn University, 2015.
Index
Note: Page numbers in italics indicate a figure and page numbers in bold indicate a
table on the corresponding page.
Abe, Shinzo 65
approved destination status (ADS)
system 33 – 34, 41
Arlt, W. G. 39
Asian Development Bank (ADB) 62 – 64,
87; Greater Mekong Subregion
(GMS) Program 70; Yunnan Province
and 113, 119
Asian Infrastructure Investment Bank
(AIIB) 1, 64, 65, 87, 136
Association of Southeast Asian Nations
(ASEAN) 13, 22, 28, 61, 64; as
a bloc 64 – 65; cooperation with
China in natural rubber production
105 – 106, 107; rubber producing
countries of 95 – 97, 98, 99, 100;
Thailand and 155
Bangladesh-China-India-Myanmar
Economic Corridor (BCIM-EC) 114
Beijing Consensus 2
Beijing Tourism Group 40
Belt and Road Initiative (BRI) 1, 2 – 3,
61, 65, 70 – 71, 71, 136; people-to-
people exchange and 12 – 13; Yunnan
Province and 113 – 114
Berenskoetter, Felix 140
Berger, Blake H. 64
Bisalputra, Pimpraphai 153
border bazaar trade 121 – 122
Borlaug, Norman 26
BRICS Summit 12
British Red Cross Society 25
brotherhood among neighbors
136 – 139
Cambodia 137, 140
capital flows, cross-border 124 – 125
Chen, Huiping 70
Chiang Mai Initiative Multilateralization
(CMIM) 64
China: Belt and Road Initiative (BRI)
1, 2 – 3, 12 – 13, 61, 65, 70 – 71, 71,
113, 136; contribution of travel and
tourism to GDP growth of 38; credit
expansion and housing bubbles in
56, 56 – 58, 57, 58; developmental
strategy of 2 – 9; diplomatic discourse
and (see diplomatic discourse,
Chinese); economic cooperation with
Japan (see economic cooperation,
Chinese-Japanese); influence on
ethnic Chinese in Thailand 146 – 159;
outbound tourism of (see tourism,
outbound Chinese); overview of
economy of 50 – 53; people-to-people
exchange (see people-to-people
exchange); rubber industry and (see
rubber production industry); as
second largest economy in the world
1; slowdown in technological progress
in 53 – 55; trade wars with the United
States 49 – 50, 58 – 60; transboundary
river cooperation with North Korea
(see transboundary river cooperation,
North Korea and China); Yunnan (see
Yunnan, opening up of)
China Climate Action Network
(CCAN) 20
China International Travel Service
(CITS) 33, 34, 37
China National Tourism Administration
(CNTA) 33, 34, 35, 37
China Tourism Academy (CTA) 36
China Travel and Tourism
Administration 37

Chinese Society in Thailand: An
Analytical History (Skinner)
153 – 154, 156
Climate Action Network (CAN) 20
Clinton, Hillary Rodham 26
coercive diplomacy 133
Cold War era see ethnic Chinese in
Thailand
Confucius 139
Continuous Linked Settlement (CLS) 66
counterfeit and inferior goods trade 124
credit expansion and housing bubbles in
China 56, 56 – 58, 57, 58
cultural exchanges 12 – 15, 18; Yunnan
Province and 118 – 119
cultural turn in tourism 37 – 39
currency autonomy 65 – 66
Dalai Lama 41
Deng Xiaoping 1, 2, 32, 53, 111;
Thailand and 134, 141, 147,
151 – 152
diplomatic discourse, Chinese:
brotherhood among neighbors and
136 – 139; brotherhood discourse in
Sino-Thai relations and 139 – 141;
Chinese thoughts on diplomacy
of socialism “with Chinese
characteristics” and 134 – 136;
introduction to 132 – 134; reflection
and conclusion on 141 – 142
drug-substitution projects 122 – 123
economic cooperation, Chinese-
Japanese: ASEAN as a bloc and
64 – 65; competition versus 62 – 64;
credit expansion and housing bubbles
and 56, 56 – 58, 57, 58; currency
autonomy and 65 – 66; future of
66 – 67; introduction to 49 – 50; lack
of leadership and 60 – 61; overview of
Japanese and Chinese economies and
50 – 53; policy proposals for 61 – 66;
problems in 53 – 61; slowdown in
technological progress and 53 – 55;
trade war and strong US dollar and
49 – 50, 58 – 60, 59
ethnic Chinese in Thailand 146 – 149;
conclusions on 159; decline of PRC
influence on 157 – 159; influx of PRC
capital into Thailand and 153 – 156;
Thai royal family and Chinese
communist government in New Era
and 149 – 153
Eznack, L. 140
Index  163
filial nationalism 32
flooding, Yalu River 73 – 74
Fong, V. 32
Foreign Affairs 26
Free Independent Travelers (FIT) 41
Free Thai Movement 149
free trade proposals 61 – 62
global systems of nations and societies
26 – 28
Global Youth Forum 19
Greater Mekong Subregion (GMS)
Program 70, 113
Greater Tumen Initiative (GTI) 76 – 77;
as litmus test for peace and prosperity
87 – 89; sustainable development and
80, 80 – 85, 84; see also transboundary
river cooperation, North Korea and
China
“Green Revolution” 26
Harper, Stephen 41
He Guangwei 33
Heracleous, L. 134
History of the Thai-Chinese, A
(Bisalputra and Sng) 153
Hong Kong 32 – 33, 42 – 43
housing bubbles in China 56, 56 – 58,
57, 58
Huang Hongxiang 24 – 25
Hu Jintao 134
humanism 16
humanistic exchange 15 – 17
hydropower dams 77 – 79, 86
individual visit scheme (IVS) 35, 42 – 43
International Monetary Fund (IMF) 49
Japan: lack of leadership role in Asia
of 60 – 61; overview of economy of
50 – 53; problems in cooperation with
China 53 – 61
Japan International Cooperation Agency
(JICA) 25
Jin, Z. 132
Kaji, Sahoko 66
Kawai, Masahiro 49
Kennedy, John F. 26
Kerry, John 15
Korean War 149 – 150
Lai, C. 133
Lancang-Mekong Cooperation (LMC)
113, 115, 115, 117, 136
164 Index
Laos 119 – 128, 126
Liang, C. 138
Li Anshan 14
Li Jinzao 39
Li Keqiang 40, 137
Lin, Justin 55
Liu Qi 16
Macao 32 – 33, 43
Mao Zedong 32, 53, 151
modernization of outbound tourism
35 – 36
Myanmar 124, 127 – 128
nationalism, filial 32
National Tourist Bureau 36
nongovernmental organizations (NGOs)
20, 22
North Korea see transboundary river
cooperation, North Korea and China
Nye, Joseph, Jr. 26
Nyiri, P. 31
One Belt, One Road Initiative (OBOR)
40, 44
Opium War 53, 61
outbound tourism see tourism,
outbound Chinese
Oxford Committee for Famine Relief
(Oxfam) 25
Palau nation 42
Peace Corps 25, 26
people-to-people exchange 10 – 11;
basic features of 11 – 15; cultural
exchanges and 12 – 15, 18;
differences in concepts and ideas in
15 – 21; global systems of nations
and societies and 26 – 28; from one-
sided display to “working together”
21 – 26; Yunnan Province and
118 – 119
People to People International (PTPI)
14, 19
Pramoj, M. R. Seni 149, 150
Prayut, General 140
PRC influence on Thailand see ethnic
Chinese in Thailand
Rama V, King Chulalongkorn 155
Rama VII, King 139
Rama VIII, King Ananda 155
Rama IX, King Bhumibol 146, 152, 155
Regional Comprehensive Economic
Partnership (RCEP) 62
Rifai, Taleb 39
rubber production industry: ASEAN
countries in 95 – 97, 98, 99, 100;
China’s consumption and production
of natural rubber and 97 – 105, 101,
102, 103, 104, 105, 105; concluding
remarks and policy implications of
cooperation in 108; methodology and
analysis of ASEAN-China cooperation
in 105 – 106, 107; research results
on 107, 107 – 108; world output in
94 – 95, 95
Sakuragawa, Masaya 57
Sihanouk, King Narodom 151
Silk Road International Art Museum
Alliance 13
Silk Road International Festival of Arts 13
Silk Road International Library
Alliance 13
Silk Road International Museum
Alliance 13
Silk Road International Theatre
Alliance 13
Sirindhorn, Maha Chakri 146, 152 – 153
Siriphon, Aranya 3
Skinner, G. William 153 – 154
Sng, Jeffery 153
socialism, diplomacy of 134 – 136
Solé-Farràs, J. 133
Song, Zheng 55
Sørensen, C. T. 132
South Korea 149 – 150
sustainable development, Tumen River
80 – 85
Taiwan 42, 43
Taiwan AID 25
technological progress slowdown in
China 53 – 55
television, Chinese 13, 36
Terminal High Altitude Area Defense
(THAAD) missile system, U.S. 42
Thailand: diplomatic discourse with
China 123, 124, 137, 139 – 141, 142;
ethnic Chinese in 146 – 159
Tiananmen Massacre of 1989 146,
152 – 153
Tourism Law, 2013 35 – 36
tourism, outbound Chinese 3 – 4, 30 – 32;
approved destination status (ADS)

system in 33 – 34, 41; concluding
remarks on 43 – 45; cultural turn in
37 – 39; dynamism and policy reform
impacts on 32 – 40; emerging world
tourism governance led by 39 – 40;
individual visit scheme (IVS) 35,
42 – 43; international politics lessons
learned from 40 – 42; Ministry
of Culture and Tourism for 37;
modernization of 35 – 36; as positive
mechanism 42 – 43; pragmatism in 32;
visiting friend and relatives (VFR) in
Hong Kong or Macao and 32 – 33
trade liberalization 61 – 62
transboundary river cooperation, North
Korea and China: achievements
and challenges in 86 – 89; Belt and
Road Initiative (BRI) and 70 – 71,
71; conclusions on 89 – 90; general
patterns of 69 – 71, 71; hydropower
dams and 77 – 79, 86; introduction to
68 – 69; sustainable development and
80 – 85; Tumen River 74 – 77; Yalu
River 71 – 74, 72
Trans-Pacific Partnership (TPP) 61, 62
Treading the Dragon Land
(Sirindhorn) 152
Trump, Donald 61
Tse, T. 41, 42
Tumen River Area Development
Program (TRADP) 76 – 77; as
litmus test for peace and prosperity
87 – 89; sustainable development and
80 – 85; see also transboundary river
cooperation, North Korea and China
Tzu Chi Foundation 25
United Nations World Tourism
Organization (UNWTO) 39
United States, trade war between China
and 49 – 50, 58 – 60
values, exchange of 18 – 19
Vietnam 137, 151
Vision and Actions on Jointly Building
Silk Road Economic Belt and 21st-
Century Maritime Silk Road 114
Index  165
visiting friends and relatives (VFR)
regulations 32 – 33
Voluntary Service Overseas (VSO) 25
Wang Yi 1
Washington Consensus 2
water resources: Tumen River 74 – 76;
Yalu River 71 – 74, 72
Wongsuwan, Prawit 140
World Bank 49, 87
World Tourism Alliance (WTA) 36,
39 – 40
World Trade Organization (WTO) 49,
50, 110
Xi Jinping 1, 3, 8, 36, 39 – 40;
diplomatic discourse and 132, 135,
137, 138, 141
Yalu River see transboundary river
cooperation, North Korea and China
Yang, J. 134, 136
Yang Jiechi 17, 135
Yang, L. 40
Yunnan Daily Press Group 13
Yunnan Fudian Bank 117 – 118
Yunnan, opening up of: agricultural
cooperation in 117; construction
of cooperation platforms for 118;
cultural exchange and people-to-
people connectivity with 118 – 119;
financial cooperation in 117 – 118;
impacts and implications of cross-
border activities between Mekong
region and 119 – 128; major
achievements of 115 – 119; power
trade and energy cooperation in
117; process and characteristics of
110 – 113; regional cooperation and
113 – 115, 115; tourism cooperation
in 117; transportation development
and regional connectivity in 116 – 117;
way forward for 128 – 129
Zhuang Liwei 3
Zhu Jinsheng 3
Zilibotti, Fabrizio 55