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Beijing turns on the charm for Mekong countries

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Left to right: Vietnamese Foreign Minister Pham Binh Minh, prime ministers Thongsing Thammavong of Laos and Prayuth Chan-ocha of Thailand, Chinese Premier Li Keqiang, Cambodian Prime Minister Hun Sen and Myanmar's Vice President Sai Mauk Kham pose for a photo at the Lancang-Mekong cooperation summit in Sanya, China, on March 23.   © Reuters

BOAO, China   China and five Southeast Asian countries along the Mekong River announced on March 23 an agreement to work together to develop the region, building infrastructure and modernizing industries with an infusion of Chinese cash and assistance.

     The joint communique was issued at a summit in the Chinese city of Sanya, on Hainan Island. China hosted top officials from Thailand, Vietnam, Laos, Cambodia and Myanmar. At the meeting, presided over by Chinese Premier Li Keqiang, the participants agreed to create a framework through which China's surplus of materials from excess industrial production can be channeled to help develop areas along the Mekong.

     China has political reasons for doing so. The Mekong flows through traditionally pro-Beijing countries such as Laos -- which this year holds the rotating chairmanship of the Association of Southeast Asian Nations -- and Cambodia. Beijing hopes tighter ties with these countries will help it counter others in Southeast Asia such as the Philippines, which is sparring with China over ownership of islands in the South China Sea and is backed by the U.S.

     Citing the need to improve infrastructure and industrial facilities in the Mekong basin, the six countries agreed to collaborate on power generation and transmission, cars, metallurgy, building materials, transportation infrastructure and other industrial facilities.

     China will offer direct investment and technical assistance, as well as export production facilities to foster regional development. In addition to offering funds from the China-led Asian Infrastructure Investment Bank, Li said China will set up a line of credit of up to $10 billion for the import of Chinese products, and 10 billion yuan ($1.53 billion) in low-interest loans for infrastructure-building.

HUB AND SPOKES   The leaders also adopted the Sanya Declaration and promised to deepen political and cultural exchanges. With Vietnam, Thailand and Laos facing a severe drought, the declaration included an agreement to better utilize water resources in the basin.

     The six countries previously met once every three years to discuss issues related to the Mekong, hosted by the Asian Development Bank, which is led by the U.S. and Japan. Beijing is apparently offering a substitute: a top-level meeting of the six countries held in China, with an eye toward bringing the others into its economic sphere of influence.

     The people of the five Mekong River countries view China's push for greater influence with a mixture of hope and fear. Vietnam, Thailand and Laos, in the lower Mekong basin, are struggling with a severe drought. Securing water supplies is vitally important to the region's farmers. China offered assistance in developing the Mekong's water resources at the Sanya summit, a move they hope will stabilize agricultural output.

     Thai Prime Minister Prayuth Chan-ocha expressed appreciation for China's decision to release water from a dam on the upper Mekong just before the talks.

     Meanwhile, Vietnam, which is locked in a territorial dispute with China in the South China Sea, finds itself in a difficult position. Up to now, Vietnam has joined the Philippines in condemning China for what it sees as land grabbing. But with China dangling the carrot of development assistance in the basin, it may be tempted to compromise over other matters.

     Japan has hosted the Mekong five at its own annual summit in recent years. When Prime Minister Shinzo Abe and leaders from the five countries met in Tokyo in July of last year, they adopted a joint communique on cooperation from 2016 to 2018. Japan pledged to extend 750 billion yen ($6.65 billion) in aid to build ports, roads, power stations and high-speed railways. That was about 150 billion yen more than it offered for the three years through 2015.

     The five Mekong basin economies are thought to have relatively high growth potential. The Japanese and Chinese jostling for economic and political influence in the region looks set to intensify.

Nikkei staff writer Tamaki Kyozuka in Bangkok contributed to this report.

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