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Developing Northeast the Yunnan way

Pallavi Aiyar

As Beijing has done with Yunnan, New Delhi should develop trade infrastructure in the Northeast and give it a stake in India's economic growth.

LOCATED IN China's southwest, Yunnan has for long been an impoverished landlocked region with an inhospitable terrain. Peopled by 26 different minority groups including Tibetans and the Dai who are of Thai ethnicity, the province has intermittently been the focus of secessionist movements. In many ways Yunnan is a mirror of India's Northeast, a historically underdeveloped, geographically isolated area, home to diverse tribal groups and far from the political capital. Yet, following a concerted effort to develop infrastructure, lure in tourists, and open up the province, 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 GDP last year. Some 50 million tourists, including three million from overseas, visited the region in 2005. Facilitating their travels in the province is a slew of six-lane highways and railroads. Yunnan also boasts 11 airports including an international one in its capital, Kunming.

"The Yunnan government has a very clear developmental 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 China's gateway to South Asia and South East Asia."

The underlying idea is to boost the economy of the area through a combination of infrastructure development, cross-border diplomacy, and strategic marketing, bringing prosperity to the province and thus binding restive minority groups more tightly 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 thus currently working on six major international projects including the Greater Mekong Sub Region (GMSR), which comprises Cambodia, Vietnam, Laos, Thailand, Myanmar, and Yunnan in China as well as the BCIM or Bangladesh, China, Myanmar, and India 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, talks about how the creation of excellent road, rail, and air links among the member countries of the GMSR have 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.

Despite the similarities pointed out earlier with India's Northeast in terms of geography and population, it is apparent that the parallels between the two regions end here. The seven States that comprise Northeast India continue to languish in poverty. Per capita incomes are well below the national average.

Traditional trade routes crucial to the local economies linking the region to China and South East Asia have rotted with disuse as national borders and historical conflicts led to their closing off. The whole area faces a debilitating paradox. Cross-border trade has been outlawed due to security concerns even as trade with the rest of India through the narrow Siliguri corridor has failed to take off.

The tribal people here remain marginalised and secessionist violence continues to rock the region. Money is poured into the security apparatus needed to clamp down on dissent but infrastructure remains seriously under-funded, affecting trade and tourism.

The Indian Northeast's competitive advantages lie in precisely the same areas as Yunnan's: tourism and as a gateway to the East. Yet these advantages remain unexploited.

One concrete proposal to alter this dismal situation is the "Kunming Initiative" proposed in 1999 during a conference on regional cooperation and development held in Kunming. The proposal centres on integrating BCIM economies, especially along border areas, primarily through cross-border infrastructure development including rail, air and river links but in particular roads.

Thus far China has been the initiative's most enthusiastic proponent; India its least. The initiative currently remains track-two despite Yunnan's efforts to lobby New Delhi to upgrade it to governmental level.

"If we press ahead seriously and open up direct overland routes between Northeast India and Yunnan, it could reduce transport costs by over 30 per cent, not to mention slashing down on transport times," 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 3-4 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 Northeast 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 Northeast India and southwest China. The Stilwell road was built in the 1940s under the command of U.S. Army General Joseph Stilwell who used it to move supplies to China during the latter part of the Second World War.

The road stretches from Kunming to Ledo in Assam and comprises around 60 km in India, 1040 km in Myanmar, and 640 km in China. The Indian part of the road has fallen into disrepair following its closure in 1961 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 transformed into a gleaming multi-lane highway. The Chinese are also helping to rebuild part of the Stilwell road that lies in Myanmar.

But 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 already ready for use: the Kunming-Ruili-Mandalay-Imphal route.

The Yunnan foreign affairs office is currently lobbying India and Myanmar to conduct a joint survey of this overland route, which it believes can be opened to 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 also ready to go.

Apart from roads, 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.

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

While in the absence of a settled border with China, security concerns are only natural, the current situation in the Northeast is one where enormous resources are spent in maintaining security forces aimed at clamping down on disaffected groups, which remain marginalised and impoverished. Rather than inspiring fear in the populace, a better strategy might be to develop the trade infrastructure in the area, binding the people there to the Centre more closely by giving them a stake in the country's economic growth much as Beijing has done with its outlying provinces, including Yunnan.

Professor Ren Jia of the Yunnan Social Science Academy says that modern-day Yunnan and Northeast India have trading ties that date back to the 4th century BC. Even today a substantial underground economy of trade exists via Myanmar. The current trade restrictions thus only encourage smuggling, she argues, and by converting what already exists into legitimate trade both consumers and governments would benefit. Moreover, legitimising trade would also make it harder for the illegal smuggling of arms and drugs that currently flourishes in the area.

"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, CCPIT's Yao believes there is a lot of room for expanding trade in agricultural products, chemicals, and pharmaceuticals. He also believes tourism and educational services to be other areas of potential cooperation.

"We have faced security concerns with all our neighbours including Myanmar and Vietnam and Laos," says Jin Cheng. 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," he concludes.

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