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City on the Rise: Kunming

Future N. ASEAN Capital?


Future N. ASEAN Capital?


The city of Kunming, located deep in China far from any coast, shares many ethnic, linguistic and cultural characteristics in common with Southeast Asia. The completion of major transportation infrastructure projects has transformed the city into a strategic center for making inroads into the ASEAN region.



Future N. ASEAN Capital?

By Elaine Huang
From CommonWealth Magazine (vol. 556 )

Kunming, the capital of Yunnan Province, is also known as the City of Eternal Spring for its temperate climate. While nearby Chongqing in Sichuan bakes under searing 38-degree Celsius heat in the midst of summer, Kunming enjoys a pleasant 26 degrees.

Walking along the streets of Kunming, the character tai (peace, and the first character in the Chinese rendering of "Thailand") is noticeably popular on business establishments. The eaves and roofs of some buildings are pointy in the middle and sweep up on the corners in recognizably Thai fashion.

The more than 20 ethnic minorities gathered in the Yunnan Nationalities Village can be found in Thailand, Myanmar, Vietnam and Laos. In spite of having different names in different countries and regions, like the Hani people being known as Akha in Southeast Asia, they are the same ethnic groups across the regions borders.

Kunming, and for that matter all of Yunnan Province, does not feel much like China. Rather, it looks and feels closer to Southeast Asia.

Landing in Kunming after a three-hour flight from Taipei, it is shocking to realize that Changshui International Airport, tucked away in the southwest corner of China at an elevation of 2000 meters, is already the country's fourth-busiest airport after only two years of operation, behind only the Big Three of Beijing, Shanghai and Guangzhou. And it is the ASEAN region that is the propulsive force behind the explosive growth.

Changshui handles 90 flights per week from ASEAN countries, an average of 13 flights per day.

Chan Mao-sheng, CEO of the Taili Group and a Taiwanese entrepreneur who frequently shuttles back and forth between Kunming and Ruili on the Myanmar border, visited Kunming for the first time 20 years ago. He still recalls vividly how life used to be: "Back then, it took 36 hours to get between the cities, and even phone calls were hard to place."

Kunming is now highly accessible, having been transformed into the starting point of a northern ASEAN transportation network linked via water, air, road, and railway. The opening of the Kunming-Bangkok Highway connects the roadway arteries. From China to Laos, connecting straight through Thailand in the heart of the ASEAN region, the highway originates at the Yuxi toll station on Kunming's Kunyu Highway.

Chinese business people based in northern Thailand's Chiang Mai make the journey multiple times every year to attend such trade shows as the China-ASEAN Exposition.

Further, on the eve of ASEAN becoming a common market, the railway development pact China and Thailand previously reached has been revived. The plan, viewed as a component of Li Keqiang's "high-speed railway diplomacy," is a part of an ambitious intercontinental transportation project – the Trans-Asian Railway.

Although the project was stalled after former Thai Prime Minister Yingluck Shinawatra was forced out of office, the head of the military junta now in power, Prayuth Chan-ocha, recently announced that work would commence in 2015.

This 22.3 billion US dollar project calls for the construction of two railway lines in Thailand, originating in Kunming and terminating in Singapore, linked to China's southwestern railway line.

"By connecting itself through Thailand with the Southeast Asian countries, China is expanding its influence in the region," remarks Shao Yu, the chief economist at Chinese securities firm Orient Securities and a part-time professor at Nanjing University's School of Management and Engineering.

The Trans-Asian Railway is challenged by varying rail gauge sizes in different countries. If this can be resolved, then "Kunming, which has already become the ASEAN region's hub, will become the capital of the Southeast Asian mainland (or northern ASEAN region)," Shao says.

"With convenient transportation, strategically Yunnan will become China's bridgehead facing Southeast Asia and South Asia, with Kunming being the economic center to the ASEAN region," asserts He Shengda, deputy director of the China Society for Southeast Asian Studies.

In spite of its rather remote southwestern location, the number of foreign consulates in Kunming defies the imagination, with six consulates among the ASEAN's 10 countries alone. With the establishment of the ASEAN Economic Community (AEC) next year, Kunming is undergoing a significant transformation.

Traveling through the southern outskirts of Kunming along the Kunyu Highway, one arrives at the Chenggong District, a new political and economic center currently under development.

The Kunming city government and various institutions of higher learning have already relocated here. Yunnan's hallmark enterprises, such as Yunnan Baiyao, have made Chenggong their headquarters and shipping centers. Logistics zones and commercial centers are currently under construction for businesses ready to enter the ASEAN market via the Kunming-Bangkok Highway.

Over 100 businesses have moved into the Chenggong Commercial Center, engaging in apparel and jewelry wholesale operations. "They're attracting merchants from bordering Myanmar and Laos," says Chan Mao-sheng.

Whilst few Taiwanese businesses have paid much attention to Kunming, food industry heavyweights Master Kong and Uni-President have set up production lines in Kunming to facilitate their entry into the ASEAN market.

Container trucks from Taiwan's Uni-President food company ply the Kunming-Bangkok Highway, taking the land route to export to the northern ASEAN market. 

Three years ago, Uni-President invested in a general food production facility in Chenggong, with another facility currently under construction in the Kunming National Economic and Technological Development Zone, not just targeting China's southwestern market, but further considering expansion into Southeast Asia.

Zero tariffs Taiwanese firms based in Yunnan

In the effort to attract Taiwanese businesses Yunnan is currently promoting a campaign for Taiwanese enterprises to "enter Yunnan, move westward into ASEAN, and develop southern Asia." 

Cheng Zunwu, economic director of the Taiwan Affairs Office of Yunnan Province, enthusiastically endorses Kunming: "Businesses that go west first for production, then move into the ASEAN region, can enjoy zero tariffs."

In Chiang Rai, a northern city of Thailand, as well as in Tachileik, the border town of Myanmar a bridge away from northern Thailand's Mae Sai, merchants can be seen everywhere selling products from China, ranging from fruits, clothing, handbags, dried food and groceries, to home electronics.

"They all come via waterways and roads from Yunnan," says Zhang Mingzhu, a Burmese of Chinese descent.

Huang Youhan (pseudonym), an underground money exchanger on the Thai-Myanmar border, claims that the biggest single sum he has handled coming in and out of Yunnan was as much as 100 million Thai baht. In Mae Sai and Tachileik alone there are over a dozen similar underground money exchange operations like his.

 Kunming is becoming a hub for the flow of people, currency and goods between China and the northern ASEAN region. In Kunming, Beijing and Shanghai are distant and undetectable, but Southeast Asia is right there before one's eyes.

Translated from the Chinese by David Toman