Laos and China have enjoyed a good relationship over many years. Leaders from the two countries have cooperated in different development sectors, including assistance with goods trading and investment promotion.
Such cooperation and economic promotion plans have pushed strong growth in the trade and investment value of the two countries, with China now the top foreign investor in Laos.
The Ministry of Planning and Investment (MPI) reported recently that, in the period since 2011 to last year, the trade value between Laos and China increased annually from about 10.5 trillion kip (US $1.3 billion) in 2011, up to US$1.7 billion in 2012, about US$2.7 billion in 2013 and US$3.6 billion in 2014.
"However trade value declined to around US$2.78 billion last year due to the impact of the global economic slowdown as some product prices dropped globally, such as mining ore and rubber," the report noted.
The trade also includes that between Laos and China's Yunnan province, that had a value of US$203 million in 2010, which increased to US$1.37 billion last year, covering 40 per cent of the trade value of the two parties.
The main important factor pushing the trade growth is that the two parties often hold discussions on any problems and find solutions to facilitate imports and exports at the border.
Laos is also invited to various trade fairs in China to promote trade and investment cooperation.
The two parties also have cooperation in agricultural product quality checking before it is exported to China, including in rice, dried cassava chips, bananas and watermelons.
The Ministry of Industry and Commerce's website reported that each year, China grants import quotas of rice to World Trade Organisation members amounting to around 2.66 million tonnes. The allocation of such quotas is based on a first-come first-served basis. In 2015, under the bilateral agreement, China granted a rice import quota to Laos for 8,000 tonnes of rice.
To ensure the safety of exported rice from Laos to China, the two parties have reached a protocol on inspection and quarantine requirements for importing Lao rice.
The rice mentioned in this protocol refers to polished rice that has undergone a milling processing without rice husk and other impurities. The rice will need to meet phytosanitary requirements and conditions, pest management measures, methods of processing, packaging, transport and other important aspects.
To enhance safety and facilitate the export of Laos' agricultural products such as bananas, watermelons and cassava to China, the Lao and Chinese governments have exchanged views and reached a consensus on phytosanitary requirements for the export of watermelons, bananas and cassava from Laos to China in accordance with the results of pest risk analysis and shall comply with the relevant phytosanitary laws and regulations of China and Laos.
In the investment sector, the MPI reported that, in 2011, Chinese investment in Laos saw 160 projects underway valued at over 22.27 trillion kip (US$2.75 billion), including joint venture investment within the local sector.
"Now Chinese investment in Laos has over 760 projects underway with a value of about (US$6.7 billion), making China the top ranked foreign investor in Laos, followed by Thailand and Vietnam," the five-year report noted.
Investment cooperation also included Laos and Yunnan. Currently Laos is the second top in terms of overseas investment by Yunnan with a value of US$1.04 billion.
Many companies from Yunnan completed construction projects in Laos, including the development of roads, electricity transmission lines, water supplies, and economic zones.
Besides the trade and investment cooperation, the two parties also have agreements on assistance, such as in 2011, when the Chinese government granted free aid to the Lao government worth about 174 billion kip (150 million yuan) to support national construction projects, including the National Convention Centre, Party Central Committee's Office, Fourth Lao-Thai Friendship Bridge, payment system improvements at banks, as well as vehicles and equipment support.
From 2011 to last year, China released zero interest loans to Laos for important projects, including buying aircraft, renovation of the National Culture Hall, vehicles and equipment to facilitate the ASEM-9 and the establishment of a Lao Front for National Construction training centre.
In the same period, China also released low interest loans to support projects in agriculture, water supplies, optic fiber installation and road improvements.
There were also 'buyer credit loans' for development and improvement projects in the energy sector, especially investment in power plant construction, electricity transmission lines, roads, bridges, airports, satellites and internet.
The MPI's report noted that China also provides more than 300 scholarships for Lao students per year.
Grants and assistance have also flowed from Yunnan, including assisting Laos with the construction of an animal feed factory, purchase of equipment, insecticides, and training in the health and agriculture sectors.
Deputy Division Director of the Department of Asian Affairs under China's Ministry of Foreign Affairs, Liu Zhi (whilst addressing at a seminar on production capacity cooperation recently in Beijing), said that China's investment in Laos mainly focuses on infrastructure development that helps to improve people's livelihoods.
The main projects in Laos are the China-Laos railway, while in the telecommunications sector China is partnering with Laos on the country's first satellite project. In the energy sector, China is helping Laos to build power plants. The two countries have also established cross-border economic zones to support Free Trade Agreement projects, especially the Yunnan-Laos project.
These projects will play an important role in terms of improving people's livelihoods. China is still looking forward to deepening cooperation with Laos in the future. It boasts advantages in production capacity including equipment, technology and managerial experience.
Laos is in need of advanced production capacity. In the short term, Laos needs more technological support and technology transfer in the areas of energy, manufacturing, agriculture, education, medicines and services. In the long run, Laos is looking for help with the development of human resources.
Source: Asia News Network (ANN)