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Laos has recently become a new addition to China's interests as both countries continue to strengthen their political and economic ties.

Laos has recently become a new addition to China’s interests as both countries continue to strengthen their political and economic ties.

Laos is a landlocked country in the Indochinese peninsula with a population of around 6 billion people. Because of its geographic position, its $14.2 billion economy is heavily dependent on investment and trade with its neighbors – Thailand, Vietnam and China. Agriculture, mainly subsistence rice farming, accounts for the majority of Laos’ economy, producing over 51 percent of its gross domestic product. Its inadequate infrastructure and mostly unskilled work force hamper economic growth, making it one of Southeast Asia’s poorest countries.

Diplomatic relations between China and Laos were established in April 25, 1961. The two countries not only share a 500 kilometer long boundary but also political ideologies as Laos is also ruled by a communist party. Aside from some negative relations in the 1970’s and 1980’s, the two countries maintained neighborly relations. But it was not until November 2000, when then Chinese President Jiang Zemin paid a state visit to Laos, that bilateral ties between the two countries started to improve rapidly.

President Jiang Zemin’s visit to Laos in 2000 saw the signing of the Joint Statement on the bilateral cooperation, which confirmed the development of comprehensive cooperation between the two countries based on long-term stability,  friendship and mutual trust. The improvement of bilateral ties were already seen by 2001, when Sino-Laotian trade volume increased by 51.4 percent to $61.87 million, compared to 2000. Over the next few years, China increased its investment in Laos, covering areas such as building materials, cultivation and agriculture and pharmaceutical production. China also sent more aid to Laos in projects such as ground stations for receiving satellite TV programs, a hydropower station by the Namgao River and the Langprabang Hospital. Laos benefits from the billions of dollars in investment and development aid that it receives from China, while China benefits from the natural resources and business opportunities that Laos offers.

More recently, Chinese Premier Wen Jiabao’s visit to Laos in March 2008 produced seven cooperation agreements in several sectors including the economy, technology, energy and e-governance with goals to further boost bilateral ties. Wen promised the continuance of high-level official exchanges between the two countries to expand mutual political trust and bilateral cooperation. Moreover, Wen and his Laotian counterpart, Prime Minster Bouasone Bouphavanh, agreed to expand two-way trade and mutual investment to strengthen cooperation in fields such as infrastructure, human resource, science and technology, education and national defense, and make special efforts to help Laos promote its capacity building process.

Other signs of increasingly strengthening bilateral ties between Laos and China include the introduction of economical and fuel-saving cars made in China, the CHERY QQ, to the Laotian market in June 2008, the growth in membership of the Laos-China Business Association to more than 100 members in April 2008, and the establishment of a center for cooperation on land and natural resource management, which aims to exchange technical knowledge between the two countries, in August 2008.

It is hoped that the increase in Chinese influence in Laos will also come with the improvement of the Laotian economy and the lives of the country’s citizens. It is clear that this will depend on the strength and sustainability of bilateral ties between the two countries, which presently appears to have a promising future.

Source: www.AsiaEcon.org
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Source: www.asiaecon.org |

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