Yunnan model

The Yunnan region has evolved its own development strategy, which appears to be ideal for northeastern India too.

PALLAVI AIYAR in Kunming

BANG opposite the airport, Kunming's first Bangladeshi restaurant, Al Medina, opened its spice-scented doors two months ago. Run by Mohammad Al-Amin, a businessman from Dhaka, the restaurant is already doing brisk business. Al-Amin says the idea came to him when he realised that all the flights from Dhaka to Kunming were chock-a-block. The flights began operating just over a year ago and their full-loads are one indication of the booming trade between Bangladesh and China's Yunnan province, of which Kunming is the capital. From virtually nil a few years ago, bilateral trade stood at $40 million last year.

Located in the southwest of China, Yunnan has for long been an impoverished landlocked region with an inhospitable terrain. Populated by 26 different minority groups, including Tibetans and the Dai, who are of Thai ethnicity, the province has been the focus of intermittent secessionist movements.

In many ways Yunnan is a mirror of India's northeastern region; a historically underdeveloped, geographically isolated area, it is home to diverse tribal groups and is far from the political capital of Beijing. Yet, following a concerted effort to develop infrastructure, lure in tourists and open up the province to bordering countries, the average per capita income of Yunnan has doubled over the last decade to just under $1,000. Tourism is flourishing and contributed almost 20 per cent of the province's weighty $45-billion gross domestic product (GDP) last year. Some 50 million tourists, including three million from overseas, visited the region in 2005. A slew of newly constructed six-lane highways and railroads facilitate their travels in the province. Yunnan also boasts 11 airports, including an international one at Kunming.

"The Yunnan government has a very clear development strategy," explains Jin Cheng, Director-General of the province's International Regional Cooperation Office. "We want to make full use of our region's cultural and ethnic diversity to develop tourism and we want to make Yunnan into China's gateway to South Asia and South-East Asia," he says.

The underlying idea is to boost the economy through a combination of infrastructure development, cross-border diplomacy and strategic marketing. This will bring prosperity to the province and thus help bind restive minority groups to Beijing by giving them a stake in China's economic boom. Since Yunnan lacks a port, the province's focus has been on opening and developing its border trading routes, gradually creating a regional economy that transcends international borders. The Yunnan Foreign Affairs office is currently working on six major international projects, including the Greater Mekong Sub Region (GMSR), which comprises Cambodia, Vietnam, Laos, Thailand, Myanmar and Yunnan, and the BCIM, or Bangladesh, China, India and Myanmar, initiative. Yunnan's budget for developing cross-border infrastructure was RMB 20 billion ($2.5 billion) in the last five-year plan period (2001-2005).

Yao Jiannong, head of the Development Strategy Section of the Yunnan Development Research Centre, describes how the creation of excellent road, rail and air links between the member-countries of the GMSR has enabled them to be marketed together as part of a single tourist package in Europe. "The Mekong area has, as a result, become one of the world's fastest-growing tourism regions and we have all benefited," says Yao.

Domestically too, Yunnan has marketed itself strategically; for example, it claims the moniker of "Shangrila" for Deqing County, a remote northern part of the province. "Even though Yunnan has scenery similar to that of adjoining provinces like Tibet and Sichuan, it is we who have been able to build a `Shangrila' brand," boasts Yao Yunxiang, Vice-Chairman of the Yunnan Sub-Council of the China Council for the Promotion of International Trade (CCPIT). "Tourism creates interest and awareness. People first come here on holiday and later decide to invest here because they can see for themselves the opportunities," he continues. Yunnan has already had some $1.4 billion of foreign direct investment, according to Yao.

The similarities with northeastern India are limited to geography and population. The seven Indian States in the region continue to languish in poverty with per capita incomes well below the national average.

Traditional trade routes that are crucial to the local economies and that link the region to China and South-East Asia have rotted with disuse as conflicts led to their closure. The whole area faces a debilitating paradox. Cross-border trade has been outlawed owing to security concerns even as trade with the rest of India through the narrow Siliguri corridor has failed to take off. Secessionist violence continues to wrack the region and the tribal people remain marginalised. Money is poured into the security apparatus needed to clamp down on dissent, but infrastructure remains seriously under-funded, adversely affecting trade and tourism.

Northeastern India's competitive advantages in fact lie precisely in the same areas as Yunnan's, given their geographical location, natural beauty and colourful ethnic minorities: tourism and the role of gateway to the East. Yet these advantages remain unexploited.

One proposal with the potential to alter this situation is the "Kunming Initiative" presented in 1999 in Kunming at a BCIM conference on regional cooperation and development. Its central tenet is to integrate BCIM economies through cross-border infrastructure development, including rail, air, and river links and roads.

Thus far China has been the initiative's most enthusiastic proponent and India its least. The initiative currently remains a track-2 (non-governmental) one despite Yunnan's efforts to lobby New Delhi to upgrade it to the governmental level. "If we press ahead seriously and open up direct overland routes between northeastern India and Yunnan, it could reduce transport costs by over 30 per cent, not to mention the slash-down on transport time," enthuses Yao Jiannong. Currently the $18-billion-plus trade between China and India is primarily conducted by sea, often entailing detours of thousands of kilometres.

The Yunnan Development Research Centre estimates that a direct road link between Yunnan and India via Myanmar would allow the journey from Kolkata to Kunming to be made in three or four days. A railroad would reduce it even further to 48 hours. In contrast, for goods to reach by sea it usually takes upwards of 10 days. Improved infrastructure could also transform the northeastern region into a tourist hub and help integrate it into the China-ASEAN tourist circuit.

Much attention has focussed on the potential reopening of the historic Stilwell road, the shortest land route between northeastern India and southwestern China. Known alternatively as the Ledo or Burma road, the Stilwell road was built in the 1940s under the command of United States Army General Joseph Stilwell, who used it to move supplies to China during the Second World War.

The road stretches from Kunming to Ledo in Assam and comprises around 60 km in India, 1,040 km in Myanmar and 640 km in China. The Indian part of the road has fallen into disrepair following its closure in 1961 for security reasons and large chunks of the road in Myanmar are barely passable during the rainy season. Yunnan's section of the road on the other hand, is ready for use - a substantial part of it has been transformed into a gleaming multi-lane highway. The Chinese are also helping to rebuild part of the Stilwell road in Myanmar.

Eager to get started and impatient with the time it will take to revitalise the Stilwell road, the Yunnan government has now turned its focus on another possible overland route that is ready for use: the Kunming-Ruili-Mandalay-Imphal route. Yunnan's foreign affairs office is currently lobbying India and Myanmar to conduct a joint survey of this overland route. It believes that this can be opened for trade within months, provided the political will exists. The Indian government has already helped Myanmar build 100 km of good-quality road from Imphal towards Mandalay, and the Kunming-Ruili expressway is ready for traffic.

Yunnan is also planning rail connectivity with Myanmar. A railroad currently exists between Kunming and Dali, a city to the province's west. The extension of this line towards the Myanmar border in Baoshan is expected to be completed within the next few years. Plans to build rail tracks to Ruili are also being discussed.

Finally, the Yunnan government is prevailing upon China Eastern airlines to start flights between Kunming and New Delhi/Kolkata before the end of this year. Jin Cheng reveals that the airline was initially reluctant to comply, believing that there would not be enough traffic to justify the flights in commercial terms. "But there were the same fears when we first began flights to Dhaka and these are now so full it is difficult to get tickets," says Jin, "We believe that once the connectivity exists, traffic will come."

In contrast to this attitude, in India security concerns in the troubled northeastern region make the government cautious in committing to opening up borders. Fears that cheap Chinese goods will flood the markets and hurt local producers also contribute to this reluctance.

In the absence of a settled border with China, security concerns are only natural. However, the current situation in the northeastern region is such that enormous resources are spent to maintain security forces in order to clamp down on disaffected groups. Rather than inspiring fear in the populace, a better strategy might be to develop the trade infrastructure in the area as Beijing has done with its outlying provinces, including Yunnan. This would bind people there to the Centre more closely because it would give them a stake in the country's economic growth.

Professor Ren Jia of the Yunnan Social Science Academy says that modern day Yunnan and northeastern India have trading ties that stretch back to the 4th century B.C. Even today a substantial underground economy of trade exists via Myanmar. She argues that the current trade restrictions only encourage smuggling and that by converting what already exists into legitimate trade, both consumers and governments would benefit. Moreover, legitimising trade would affect the smuggling of arms and drugs.

"Cheap Chinese goods might enter Indian markets, but so would cheap Indian goods come to China," says Professor Ren. "It's not a one-way street." In 2005, Yunnan-India trade was worth $124 million, of which $92 million comprised imports from India and $32 million exports from China. While India's exports to Yunnan (as to China as a whole) were dominated by iron ore, Yao believes there is a lot of room for expanding trade in agricultural products, chemicals, and pharmaceuticals. He also believes tourism and educational services are other areas of potential cooperation.

India's northeastern States have all supported the Kunming Initiative, seeing in it a way out of the grinding poverty in the region. In 2002, Assam Forest Minister Pradyut Bordoloi, whose constituency includes Ledo, participated in a Kunming Initiative meeting held in Dhaka, despite it being a track-2 one. The Centre has dragged its feet and allowed the northeastern States little leeway to proceed with a strategy they all endorse.

In contrast to India's heavily centralised system, China has granted its provinces a substantial level of autonomy to work out the details of local-level projects like the Kunming Initiative. "The Centre guides us, but by and large it listens to us because it realises we know our needs and abilities best," explains Jin Cheng.

"We have faced security concerns with all our neighbours including Myanmar,Vietnam and Laos," he said. Indeed, China has in the past had fraught relations with all these countries. "But today's world cannot be held back by historical events. Trust has brought us all gains and made us all richer," concludes Jin Cheng.

Adds Yao Jiannong: "For Yunnan and northeastern India, the time to strike is now. Sino-Indian political relations are good, both our economies are growing, and Sino-Indian trade itself is booming. All the conditions are right for action."