Last Friday while much of the world was nursing the hangover of a decade of war and terrorism, economic turmoil and environmental degradation, China and its Southeast Asian neighbors took a big step toward regional integration with the launch of a new free trade area (FTA). The long term implications for Yunnan are massive.

China and the Association of Southeast Asian Nations (ASEAN) have now entered the first phase of an FTA, eliminating tariffs on around 7,000 items including fruits, vegetables, textiles and machinery. These goods represent roughly 90 percent of trade in the new economic bloc, which is the world's largest in terms of population and third-largest after the EU and NAFTA in terms of GDP.

The first phase includes China and the more developed ASEAN members: Brunei, Malaysia, Indonesia, the Philippines, Singapore and Thailand. On Friday these countries also launched the first phase of an FTA within ASEAN itself. The remaining members – Cambodia, Laos, Myanmar and Vietnam – will join the ASEAN China FTA in 2015.

Although it does not directly border any of the first phase countries, Yunnan has much to gain from the FTA's launch. It has water, air and highway connections to Thailand plus air links to Malaysia and Singapore, all of which are expected to become even busier trade routes. The launch of the FTA has long been viewed as a major milepost in the rise of Yunnan as China's gateway to Southeast Asia.

As some observers note, the FTA is more than just a step toward trade integration, it is also a major strategic achievement for China, whose political power in Southeast Asia already greatly surpasses that of regional rival India and is also seriously challenging American influence in the region.

China's soft power in Southeast Asia will undoubtedly grow in step with trade within the FTA, and much of this influence will be projected from Yunnan.

In the coming decade, China and Southeast Asia will become increasingly connected by a vast network of highways and rail which will provide cities in Yunnan with cheap overland access to markets in Myanmar, Laos, Vietnam, Cambodia, Thailand, Malaysia and Singapore. Seated at the northern end of this transport web, Yunnan is poised to become an increasingly important international trade hub.

The initiation of the ASEAN China FTA is a modern revival of the ancient tea and horse caravan routes from centuries ago known as the South Silk Road, which linked China with Southeast Asian markets as well as Tibet and India.

Total trade between China and Southeast Asia was US$100 billion in 2004 and US$231 billion in 2008, but this is just the beginning. Bilateral trade – much of which will be passing through Yunnan – is expected to double over the next decade.

Difficult as it may be to imagine, Yunnan's days as an economic and political backwater are officially over.

Deteriorating relations between Thailand and Cambodia have brought the fate of the eastern line of the proposed Trans-Asian railway which would link Kunming with Singapore into doubt, according to a Phnom Penh Post report citing Thai and Cambodian sources.

A six-kilometer section of track that would link Aranyaphrathet in Thailand with Sisophon in Cambodia may not be built, which would be a major blow to the 5,300 kilometer regional rail network. It is this section that would act as a linchpin, connecting all existing railway networks in the vicinity.

The never-easy relationship between Thailand and Cambodia has become increasingly tense in recent weeks.

In November Cambodian Prime Minister Hun Sen angered the current Thai government by offering deposed Thai leader Thaksin Shinawatra a home and an economic advisor post in the Cambodian government after refusing an extradition request by Bangkok, where he is supposed to serve two years in prison for corruption. The Thai government under Prime Minister Abhisit Vejjajiva has interpreted this as criticism of its judicial system.

Since Cambodia's refusal to extradite Shinawatra, both countries have recalled their ambassadors from each other's capitals and a Thai citizen has been arrested in Cambodia for spying.

This is the lowest point in relations between the two countries since Shinawatra's days in power in 2003, when rumors that a Thai actress had claimed that Cambodian icon Angkor Wat belonged to Thailand resulted in mob violence aimed at the Thai embassy and Thai-owned businesses in Phnom Penh.

One day later the Cambodian embassy was damaged in an attack by a crowd in Bangkok. Diplomatic relations between the countries were suspended for three months afterward.

Adding to the drama is the fact that Shinawatra still holds much influence on the Thai side of the border, where he is still popular in rural regions. On top of that, consummate political survivor Hun Sen, who has been a mainstay of Cambodian politics since the days of the Khmer Rouge, is much more adept at political brinkmanship than Thailand's Vejjajiva.

There has been no word from Bangkok or Phnom Penh that either country has decided to scrap plans for the Aranyaprathet-Sisophon link. Were one country to withdraw from the plan, the rail link between Cambodia and Vietnam – and the rest of the rail network – would become unviable to governments and lenders, according to experts familiar with the project.

China should push forward the building of a third Eurasian land bridge connecting Shenzhen and Rotterdam, Yunnan Governor Qin Guangrong told the China Daily yesterday.

The 15,000 kilometer proposed transport corridor would pass through 17 countries – in China it would pass through Guangdong, Guangxi and Yunnan before entering Myanmar and passing through Bangladesh, India, Pakistan, Iran and Turkey before continuing into Europe.

Qin said the rail and road network would stimulate trade and by providing an alternate route to Europe would also promote China's energy and economic security.

Qin was in Beijing with other Yunnan officials for meetings with the central government to discuss a proposal to help Myanmar build more than 300 kilometers of road and rail to link Yunnan's rail network with South Asia's highway network.

If built, the proposed land bridge would join the two existing transport routes across the Eurasian continent - one spanning 13,000 kilometers from Rotterdam to eastern Russia and the other covering 10,900 kilometers connecting Rotterdam with Lianyungang in eastern China's Jiangsu province.

Qin said that a branch line for the third land bridge extending from Turkey through Syria and Palestine into Egypt would also facilitate the transport of goods manufactured in Guangdong's Pearl River Delta to African markets by cutting 6,000 kilometers off of the Guangdong-Egypt sea journey.

Scholars first raised the idea of a third land bridge two years ago, but no progress has been made - despite only needing to add approximately 1,000 kilometers of new highways and railways to existing transport infrastructure.

The proposed land bridge's main obstacles are disinterested national governments and cumbersome border crossing procedures, analysts said.

Image: China Daily

In recent years, the relationship between Asian giants China and India has gradually shifted from vocal distrust to guarded optimism. With the political thaw between the two countries, an economic relationship has grown rapidly – in 2002 bilateral trade was a mere US$2 billion, last year that number surpassed US$51 billion.

As China and India continue to open up to each other, the lack of sufficient transportation links is hampering trade and tourism. With both countries eager to increase interconnectivity, Kunming is emerging as China's de facto gateway to India.

Beginning in June, China Eastern Airlines will increase its flight services between Kunming and Kolkata, capital of eastern India's West Bengal state, from four to seven flights weekly, according to Indian media reports.

Li Ji, general manager of China Eastern's Kolkata operations, told reporters in India that more flights will be added to the Shanghai-New Delhi route, which currently has only three flights weekly.

Li said increasing tourism between the two countries was the driving force behind the decision to increase flight services. At present, China Eastern flights between the two countries have full occupancy, he added.

Local politics in India, particularly the country's occasionally restive northeast, are also beginning to focus on increasing connectivity with Kunming. MP and parliamentary election candidate Sarbananda Sonowal, from Assam state's Dibrugarh constituency in the Lok Sabha (LS) – India's directly elected lower house of parliament – has become one of India's most vocal proponents of a road to Kunming.

Sonowal has been arguing for a reopening of the Stilwell Road, a former World War II supply route built in 1944 under the supervision of US General Joe Stilwell. The 1,700-kilometer (1,000-mile) road once connected Kunming with the city of Ledo in Assam state, with most of the road passing through northern Myanmar.

Rather than serving as a military supply road, Sonowal imagines a resuscitated Stilwell Road as becoming a new channel for trade between India and China. China's portion of the road – all of it located in Yunnan – has already been upgraded to a modern six-lane expressway.

The main obstacles to the road's revival have been the fact that it passes through Myanmar's politically volatile north, plus a general reluctance by the Indian government, which has voiced security and drug trafficking concerns about the road in the recent past.

"The reopening of Stilwell Road is important not only for people of ... Dibrugarh LS constituency, but also for entire (Indian) northeast, as it would re-establish this region's old trade links with China and other countries in Southeast Asia," Sonowal recently told Indian reporters.

Goods transported between India and China via a new Stilwell Road would take two days to make the trip. At present, sea cargo between the two countries must pass south of Singapore and through the Malacca Strait. Reopening the Stilwell Road would cut the distance between China and India by 5,000 kilometers (3,100 miles).

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.

Yunnan's newest airport opened Monday in Tengchong County, near the China-Myanmar border.

Tengchong Hump Airport (腾冲驼峰机场) is named after the famed route over the Himalayas flown by the American Volunteer Group (aka the Flying Tigers) and commercial airliner China National Aviation Corporation (CNAC) during World War II.

Today Tengchong is a travel destination best known for its natural hot springs and the rustic old town of Heshun (和顺). The area was also a major trade hub with Burma (Myanmar) during the Ming Dynasty.

The new airport in Tengchong County, located in Tuofeng Village, currently features three daily flights connecting it with Kunming. Yunnan Airport Group spokesperson Zou Huiyu said it will also add flights connecting Tengchong with Lijiang and Jinghong.

Travel time from Kunming to Tengchong was once a 10-hour bus ride, now it is only a 50-minute flight away. Last year Tengchong received 2.88 million tourists – a number that is expected to grow this year with the opening of the new airport. Tengchong Hump Airport is expected to handle nearly 300,000 passengers this year.

Image: ynxxb.com

A feasibility study is underway for a new high-speed rail line between Shanghai and Kunming, construction of which is expected to begin in 2009, according to Kunming media reports.

The new rail line, which is scheduled to be completed in 2015 – around the same time that the rail network linking Kunming and Singapore is hoped to be completed – will shorten the travel time between Shanghai and Kunming from 37 hours to less than nine hours.

The Shanghai-Kunming passenger line (沪昆客运专线) will connect Shanghai and Kunming via the provinces of Zhejiang, Jiangxi, Hunan, Guizhou and Yunnan, passing through the major cities of Hangzhou, Nanchang and Changsha. Its target speed is reportedly 350 km/hr – compare to France's TGV and Japan's Shinkansen aka 'Bullet Train' which currently operate at 320 and 300 km/hr, respectively.

The cross-country line is part of a nationwide rail upgrade that has allocated 500 million yuan (US$73.2 million) in funds for Yunnan province alone.

According to China Rail Ministry plans, Yunnan will not only be on the receiving end of improved rail connectivity with central and eastern China over the next six to seven years, it will also improve its regional and internal rail network. Kunming Rail Ministry officials told local media that the following projects have also been approved:

• Lijiang to Shangri-la (Zhongdian): schedule yet to be made public

• Yunnan to Guilin – construction to start next year and finish in 2015

• A rail line around Dianchi Lake: scheduled for completion in 2010

• Guangtong to Dali: schedule yet to be made public

• Kunming to Yuxi: construction to start next year and finish in 2015

Rail services between Kunming and Chengdu resumed on Friday, two weeks after being severed by a 6.1-magnitude earthquake that killed 40 and damaged or destroyed more than 900,000 homes in southern Sichuan and northern Yunnan provinces.

A passenger train carrying more than 1,000 passengers departed Kunming on Friday afternoon, relaunching rail traffic between the two provincial capitals just in time for Mid-Autumn festival.

The 18- to 23-hour trip is one of the most tunnel-ridden sections of rail in China.

Related article: Earthquake rattles Sichuan, Yunnan provinces