For the last decade, the elephant in the living room of China's relationships with the countries through which the Mekong River flows has been the growing number of dams built on and planned for the Lancang River – as the Mekong's headwaters in Yunnan are known.

The river - which in February was at half its normal level for that month - is a source of food and livelihood for the 65 million people living in its basin in Yunnan, Laos, Myanmar, Thailand, Vietnam and Cambodia.

On Monday, Thai Prime Minister Abhisit Vejjajiva met with Chinese Deputy Foreign Minister Hu Zhengyue, telling Hu that residents of the lower Mekong region were concerned about the river's recent low water levels and were uneasy regarding the lack of clear information about China's dams on the Lancang, according to a Nation report.

Despite Abhisit's polite request for better information, Thai officials came to China's defense, saying that the recent low levels in the lower Mekong basin – the lowest in half a century – were primarily due to a drought in Laos. Foreign Minister Kasit Piromya said that rain in Laos normally accounts for 35 percent of the Mekong's water supply and that only four percent of the river's total water was held behind Chinese dams.

China currently has three dams operating on the Lancang, with a fourth at Xiaowan scheduled to commence operation in 2012. If completed, the Xiaowan hydropower station will be the world's tallest dam, rising almost 300 meters and capable of retaining 15 billion cubic meters of water.

Plans for a protest outside the Chinese embassy in Bangkok next month by residents of the northern Thai city of Chiang Rai suggest that residents of China's neighbors downstream may become increasingly vocal about the impact they feel Chinese dams are having on the river.

The Bangkok protest will be timed to coincide with the first Mekong River Summit, organized by the Mekong River Commission (MRC) and scheduled to be held in the Thai beach town of Hua Hin from April 2 to April 5.

The conference's theme, "Transboundary water resources management in a changing world" is slightly undermined by the fact that the MRC's membership only includes Thailand, Laos, Vietnam and Cambodia, with Myanmar and China only participating as "dialogue partners".

It is difficult to imagine China making concessions to protestors, governments or anyone else for the time being. The Bangkok Post is reporting that a letter sent last month to Yunnan Governor Qin Guangrong by the Chiang Rai provincial government demanding the release of water from Lancang River dams was rebuked by Qin, who said the water was needed in Yunnan for agriculture during the dry season.

In addition to the protest related to the Mekong's current low levels, some Thai villagers will also attempt to deliver a petition to China seeking compensation for flooding in 2008:


In May 2009, the United Nations said China's plans to eventually build eight dams on the Lancang "may pose the single greatest threat to the river". China, however, is not the only country building dams on the river. Laos has plans for 23 dams on Mekong tributaries and the Mekong itself to be finished in the coming year, with Vietnam and Cambodia also planning dams of their own.

Lancang River image: news.china.com.cn

Yunnan and neighboring Guangxi will soon be allowed to use the yuan to settle transactions with Southeast Asia, according to a government official speaking at the China-ASEAN Expo yesterday.

China-ASEAN Expo vice secretary general Nong Rong told reporters at the trade fair in Nanning, capital of Guangxi Zhuang Autonomous Region, that conducting business with Southeast Asian countries in yuan would lower the foreign exchange risks posed by currency fluctuations.

"Preparation work for the pilot programs are progressing smoothly," Nong said. "Some companies that were deterred by foreign-exchange risk may now seek to expand overseas as the risks have been reduced."

China's State Council initially announced its plans to let Yunnan and Guangxi conduct yuan settlement in Southeast Asia last December. Since then it has also announced its intentions to launch similar programs in Shanghai and four cities in Guangdong.

Should China launch the Yunnan/Guangxi yuan settlement scheme, it will be a significant step in the development of the yuan into an increasingly important global currency. Chinese President Hu Jintao and other officials have called for the yuan to eventually become a global reserve currency alternative to the US dollar.

The 17th Kunming Fair and 2nd South Asian Commodities Expo wrapped up yesterday after five days, during which more than US$2 billion in trade was generated, according to local media reports citing fair statistics.

Of the money spent at this year's "twin expos", US$1.08 billion was in import-export sales, with the remaining US$920 million consisting of the value of contracted deals involving foreign investment and US$71 million in economic and technical cooperation agreements.

International involvement in the yearly trade expos reached an all-time high, with non-mainland enterprises accounting for 26.2 percent of the expos' 612 exhibitors. Of the international participants involved, Southeast Asia and South Asia were the most heavily represented regions.

Breaking down the import and export figures, Hong Kong/Macau/Taiwan, Japan, India, Myanmar and Vietnam were the top destinations for exported goods. Chemical fertilizer, silver, wild mushrooms, shelled nuts and legumes and machinery equipment.

HK/Macau/Taiwan was also the top source of imported goods sold at the expos, followed by Singapore and India. Chemical products, electronic goods and raw materials were the main imported goods.

Image: www.yn.xinhuanet.com

Kunming explorer not "kidnapped by terrorists"
Hours after Kunming newspapers went to print with the news that local resident and domestically famous explorer Jin Feibao (金飞豹) may have been "kidnapped by terrorists" in the Sahara near the border of Algeria and Mali, Jin made telephone contact with his wife Li Jia (李佳) at 1:00 this morning.

Li said Jin and his travel partner geologist Fei Xuan (费宣) were safe and in good shape. Jin and Fei are in the middle of an 80-day expedition across the Sahara Desert.

Prior to this morning's phone call, Jin's Kunming support team had not heard from the travelers for three days. Before the break in communication the two had been in daily contact with Jin's strategic planning company via portable satellite communication equipment.

West Kunming's Majie to get makeover
On Monday Kunming's Xishan district government officially launched the Majie New Town Project, which will convert the Majie area around Chunyu Lu into a base for commodity trade with Southeast Asian markets.

Over the next three to five years the Majie area will be converted into Kunming's western business and transport hub. Total investment in the project is expected to reach 10 billion yuan (US$1.46 billion) part of which will be spent on construction of high-grade office and commercial space.

Bank of China grants loan for Dianchi cleanup
The Yunnan branch of the Bank of China has extended a 4 billion yuan loan to Kunming Dianchi Lake Investment Company for lake and wetland cleanup projects that are scheduled for completion next year.

According to a ChinaCSR report, the loan will be used to divert polluted lake water to the Yunihe, Baiyuhe, Kunyang and Haikou wastewater treatment plants. Four rain water processing plants and a condensate pump station will also be constructed.

Jin Feibao image: news.kunming.cn
Majie image: en.kunming.cn

Kunming's South Railway Station has long been the city's most important passenger train station, but its days appear to be numbered with the announcement of plans to build a new south station – in Chenggong.

In addition to becoming the new passenger rail station for Kunming, the new south station in Chenggong (呈贡) will also be connected to the urban railway network that is already under construction. In addition it will serve as the main hub for long-distance bus services in and out of the city.

Times are changing for both Kunming and Chenggong, with most municipal offices and major universities in Kunming moving to new facilities in Chenggong by the end of this year. Chenggong is also being built up into a logistics hub aimed at facilitating rail transport between China and Southeast Asian countries.

As with Kunming's new airport – also currently under construction – the new south rail station in Chenggong may also include involvement with foreign companies. According to officials in the Kunming municipal government, companies from France and the US as well as domestic Chinese companies have been involved in bidding for the project.

The Chenggong station may also end up becoming Kunming's second transport link to Taiwan, after the recent launch of direct flights to Taipei. Speaking at the National People's Congress earlier this month, Minister of Railways Liu Zhijun said Beijing is "actively planning" a cross-strait rail line connecting mainland China with Taiwan.

The planned rail link between the mainland and Taiwan will be centered in coastal Fujian province and will reportedly include a line connecting Beijing and Taipei. According to officials cited in Chinese media reports, the cross-strait rail network may be expanded to include Hefei, capital of Anhui province in eastern China, as well as Kunming.

Concrete details on how Taiwan would be linked to mainland China via rail have not been released, but it is thought by some that a combination of underwater tunnels and island hopping across the Taiwan Strait is possible.

With Kunming being groomed to be China's gateway to Southeast Asia, more attention is being paid to the new R3E road which runs 1,807 kilometers and links the city with Bangkok. Initial reports from Bangkok suggest that although international trade along the route – which also passes through Laos – has increased sharply, it could grow even faster if physical and bureaucratic obstacles are addressed sooner rather than later.

The R3E road opened in Autumn 2008 to boost intraregional trade, tourism and investment. Yunnan is home to the road's northernmost 688 kilometers, which lead into a 229-kilometer stretch leading into Laos. The remaining 890 kilometers link the Lao-Thai border with the Thai capital.

Thai trade statistics from the customs checkpoints at Chiang Khong and Chiang Saen indicate that Chinese imports into Thailand were up 15 percent year-on-year, reaching 25.8 million yuan, while imports from Laos grew by 85 percent, totaling 142.7 million yuan. Switching directions, Thai exports to China were only up four percent, totaling 9.9 million yuan, compared to Thai exports to Laos, which nearly doubled to reach 250.4 million yuan.

In terms of the flow of goods between the more developed economies of China and Thailand, Laos is a bottleneck for the road in terms of physical infrastructure and customs processing, according to a report in the Bangkok Post.

A 480-meter bridge across the Mekong River connecting Houeixay, Laos with Thailand's Chiang Rai province was originally expected to commence construction this year. However, the possibility of delay has increased as the global financial crisis has worsened. Construction of the 310 million yuan bridge is to be jointly funded by China and Thailand.

In addition to structural challenges to making the road more efficient, the Bangkok Post reports that customs officials in Laos "continue to collect high tariffs, sometimes arbitrarily, that can amount to as much as 30% of the total cost of goods," citing Thai businesses.

Should transport on the road become more streamlined, experts are predicting that as many as 10 million containers could travel R3E annually.

The road's proponents are also saying it helps alleviate gridlock on the Mekong River. During the river's high water season, ships traveling from Jinghong to Chiang Rai take around 12 hours, while ships heading upstream can take two to three days, which is much less viable for agricultural and horticultural goods that have a short transport life.

Map: Bangkok Post

Kunming Airlines (昆明航空公司) will launch its maiden flight on February 15, flying from Kunming to Changsha and on to Harbin, according to an announcement by majority shareholder Shenzhen Airlines yesterday.

The new airline, which was originally expected to start operations last month, is aiming to increase connections between Yunnan and China's second-tier cities as well as increasing air connectivity between Kunming and Southeast Asia. Tickets for flights on Kunming Airlines (code: KY) are now on sale nationwide.

Shenzhen Airlines owns 80 percent of the new airline, for which it has provided two B737-700 and one B737-800 aircraft plus 30 pilots and 26 flight attendants.

According to Kunming Airlines' development plan, the airline will spend the next three years adding to its fleet of aircraft and building an extensive flight network within Yunnan, as well as adding routes to provincial capitals around the country.

The airline's chief rival within Yunnan is China Eastern Airlines' Yunnan subsidiary which recently split with its Shanghai-based parent company after a tough year in Yunnan last year which saw mid-air protests by pilots followed by harsh punishment from aviation regulator Civil Aviation Administration of China (CAAC).

Ground was broken last Friday on Kunming's first skyscraper – the 72-story, 316-meter South Asian Gate (南亚之门) building – which will be located in the Tuodong Lu Central Business District, according to Kunming media reports.

Upon its completion, which is scheduled for four to five years from now, the building will be home to a five-star hotel, serviced apartments, grade-A office space, residential apartments, a commercial area plus leisure and entertainment facilities. It will be the largest building in Yunnan province.

The building is a joint project between Jiangsu World Group (江苏天地集团) and Yunnan Zhongju Group (云南中炬集团). In addition to being a local landmark and the dominant feature in Kunming's skyline, the building is expected to serve as a hub for business between China and South and Southeast Asia.

Image: en.kunming.cn