Laos: Seeking a relationship with China

Author Name HARA Yonosuke  (National Graduate Institute for Policy Studies) /YAMADA Norihiko  (Institute of DEveloping Economies, Japan External Trade Organization) /KEOLA, Souknilanh  (Institute of Developing Economies, Japan External Trade Organization)
Creation Date/NO. January 2011 11-J-007
Research Project The Rise of China and the Transformation of the East Asian Regional Order
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In recent years, following huge changes in the international politics of East Asia, Laos's geopolitical position has once again been spotlighted, with some even speaking of their expectations that the country's position will rise from being an inland country to being a bridge country. However, without assistance from other countries, it is extremely difficult for the country to run itself. Against this background, its relationship with China, which provides large amounts of financial aid and investment, is becoming the greatest issue for Laos today. A typical example of this is new urban construction projects in Vientiane City in exchange for aid for the construction of a sports stadium.

Although deepening its relationship with China brings Laos benefits, it is also creating several very serious problems, such as land and environmental issues as well as Laos's acceptance of Chinese into the country. These problems are not all due to the deepening of the China-Laos relationship; there are also problems with the Laos Government's development policies. However, it is a fact that most of these problems have arisen as a result of Laos's deepening dependence on China.

Because the current China-Laos relationship has been built from the beginning to be advantageous to China, it is enormously difficult for Laos to develop an equal relationship with China. However, while still continuing to maintain its bond with China, it is important that Laos not accept aid and investment randomly but instead determine what is beneficial for the country and its people. An especially important issue is how Laos should deal with China as a member of ASEAN. Whatever the case, Laos faces difficult steering in its diplomacy due to its geographical and historical remoteness.