For Chinese neighbours, caution is the byword and trade the catchword - part one

Bangladesh

Bangladesh has long established diplomatic ties with China. Over time, China has set up in Bangladesh power plants, fertiliser factories, marine fisheries, and infrastructure developments including six “friendship” bridges and a Bangladesh-China Friendship Centre. However, the price has been the dumping of Taiwan by Bangladesh. Also, after all this time, there is still a negative trade balance with China. It seems the Chinese Government is materialistic when dealing with needy places like Bangladesh, even though making otherwise welcome offerings.

Bhutan

Sandwiched Bhutan is located between the two giant nations of Asia - China in the north and India in the south. Bhutan maintains an excellent and friendly relationship with India and its foreign relations are overtly “Indo-centric”.

Contrarily, Bhutan does not have any diplomatic ties with the People’s Republic of China, despite sharing a contiguous northern boundary of 470 kilometres. Bhutan’s relationship with China has been described as “indifferent”. Bhutan’s border with China is largely un-demarcated, or remains an unresolved issue: consequently Bhutan’s Chinese relations are centred around the resolution of border disputes.

Bhutan had traditional trade relations with Tibet. However, Bhutan closed its northern borders with China after the influx of Tibetan refugees in 1960. When that age-old cross-border trade came to a halt, there was no official trade or business relations between Bhutan and China.

However, Bhutan and China signed an agreement to “Maintain Peace and Tranquillity on the Bhutan-China Border” in 1998. The agreement “reiterates its position to fully respect the independence, sovereignty and territorial integrity of Bhutan”.

Burma, now known as Myanmar

While China always protests innocence in neighbouring disputes, it has to be remembered that the Burmese Communist Party was backed by China, and the Burmese Government has supported the Naga insurgency in India for nearly two decades since the mid-1950s, bringing separatist activities into India’s north-east border regions.

The British introduced opium into Burma in the late 19th Century to increase supplies for its trade with China while the US’s CIA encouraged the production of opium in that region to finance its Kuomingtang allies in China (and ethnic groups in Myanmar). But Myanmar has taken serious and significant measures to control the menace. The area under opium cultivation in Myanmar reduced from 161,012 hectares in 1991 to 130,300 hectares in 1998 - this represents nearly 90 per cent of the production of opium in South-East Asia.

China has supplied weapons for the re-equipment and expansion of the Myanmar military machine since 1989; it has also been deeply involved in economic and trade co-operation, providing assistance in building and strengthening the infrastructure. India is strategically concerned by the port upgrades, especially at Hyanggi and the communications facilities at Coco Island in the Bay of Bengal (both with China assistance), a mere 45kms from Indian territory.

Mongolia

As a small nation situated between two giant powers - China and Russia - confronting one another, Mongolia’s Government saw no other choice but to come under the protective umbrella of one of them. For Mongolians, historical experience caused them to choose the Soviet umbrella. Consequently the relationship between Mongolia and China did not recover until the end of the Sino-Soviet confrontation when Beijing and Ulaanbaatar each recognised their shared strategic interests, and re-engaged. While Russia continues to have a political and economic influence in Mongolia, it is now the PRC which is emerging as the main political and economic partner.

Mongolians had viewed China as a hostile country before the late 1980s, but now generally regard China as a major power able to generate regional and world economic development.

As Jiang Zeming has said, there are no unsettled political, legal or historical problems between the two countries. Yet, deep-rooted distrust of China caused by historical experience still persists among Mongolians and the Mongolian media is frequently suspicious of China’s ambitions, particularly fearing Chinese expansion.

Unequal competition between China and Mongolia on the world cashmere market is a problem for Ulaanbaatar. Beginning in the late 1990s, Chinese traders started to buy raw cashmere from Mongolia's domestic market for export to China for processing. This has drained Mongolia of its cashmere supply. Mongolia's domestic cashmere manufacturers are using only about 40 per cent of their production capability and Mongolia is losing export revenues. Mongolia produces 20 per cent of the cashmere on the world market. When Ulaanbaatar increased the export tax on raw cashmere, smuggling to China became yet another issue which needed to be addressed.