Lancang-Mekong Cooperation: China’s Institutional Shield

In contrast to the Belt and Road Initiative, China’s Lancang-Mekong Cooperation (LMC) has received little attention from both scholars and the media. In a recent article, we examined how China is using the LMC as an institution to advance its positions with Mekong countries, as well as to reduce the competitive pressures coming from the US and Japan in the region.

In 2015, China initiated the Lancang-Mekong Cooperation with the five Mekong countries (Myanmar, Thailand, Laos, Cambodia, and Vietnam). The LMC consists of three pillars — (1) political and security issues, (2) social, cultural and people-to-people exchanges, and (3) economic and sustainable development. And it covers five areas of cooperation — connectivity, cross-border economic cooperation, production capacity, water resources, and agriculture and poverty reduction.

In addition to China’s increasing trade with Mekong countries, there is another reason for China’s establishment of the LMC — it serves as China’s institutional shield. China created the LMC in response to growing pressures from the US and Japan over China’s hydropower dam activities in the Mekong. The LMC has the potential to serve as an institutional tool to reduce the pressures from these two powers.

In 2009 under the Obama administration, the US initiated the Lower-Mekong Initiative. Then, in 2020 during the Trump administration, the US upgraded the initiative to the US-Mekong Partnership. It pledged to increase aid to Mekong countries even as the US was reducing foreign aid overall. Under the Partnership, the US pledged to provide $150 million to Mekong countries. Reflecting US concern about China’s influence, then Secretary of State Mike Pompeo accused China of “manipulating flows [of waterways] in a non-transparent manner”. In short, the US appears to be willing to devote more resources to limit China’s influence in Mekong countries.

Together with the US, Japan has also intensified its commitment to the Mekong region. Since 2009, Japan has held annual summits with Mekong countries, and its scope of cooperation with these countries has expanded. Japan has also cooperated with the US on energy in the region. For instance, within this framework, the US and Japan supported the Electricity Generating Authority of Thailand and Vietnamese Electricity. Under this commitment, Japan has so far shared a number of cost-effective and sustainable technologies. For instance, in an effort to reduce greenhouse gas emissions, Japan provided digital technologies  to improve heat rate and detect faults during the electricity generation process.

The US and Japan are not the only two powers interested in the Mekong region. India, South Korea, and Australia have also gradually increased their involvement in the region.

For China, these external powers’ engagement in the region is seen as an intrusion into China’s backyard. While China has many counter-strategies, such as the provision of financial assistance and investment to the lower Mekong countries, the LMC is providing an additional tool to resist the intrusion.

China uses the LMC to reduce the influence of the US, Japan and other external powers and to unify Mekong countries as one region with China at the centre. To do this, China has employed two tactics.

First, China has poured a lot of money into the LMC. All of the LMC members have received significant development funding with no strings attached. So far, China has provided around $300 million to the LMC Special Fund. Under this Fund, Mekong countries can apply for development projects funding.

Second, China has promoted the “building a community of common destiny” narrative to bind the Mekong countries together with China at the centre. This narrative has been embedded in all policy documents released by the LMC. It paints a picture of how prosperity in one country can fuel prosperity in another. With China at the centre, Mekong countries are expected to join China in common prosperity, rather than go against it in competition. China wants to limit the “external” involvement in the region, since for China, it can create more obstacles than opportunity for cooperation.

But it’s not clear whether Mekong countries will be willing to accept the domination of the LMC. It is also unclear whether China’s narrative will be successful. Vietnam and Thailand, for instance, still protest China’s hydropower dams. Various external powers have enhanced their engagement with the Mekong region in recent years. Even the most enthusiastic followers of China (i.e., Laos and Cambodia) have strengthened their institutional engagement with the US and Japan. Indeed, both Laos and Cambodia have hosted the Lower-Mekong Initiative meetings with the US in the past years.

How the institutional competition in the Mekong region will play out is not clear right now. But increasing competition for influence and power through minilateral institutions is certain. The US and Japan will increase their engagement via their institutional frameworks and China will intensify the LMC. As long as this institutional competition is still manageable, the Mekong countries will benefit from this rivalry.

See all General posts.
Tagged: .