The Mekong Region Is a Test of China’s Global Development and Security Model

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Sharing both water resources and land borders with most countries in the Mekong River region, China depends on a stable and prosperous neighborhood to advance its political, economic, and security interests. The Mekong region boasts abundant natural resources and serves as a continental shipping route for China, bypassing potential choke points in the Malacca Strait. Since 2013, China has promoted infrastructure investment throughout the region, particularly through the Belt and Road Initiative (BRI), to bolster stability and security through economic development. 

Although China’s economic foreign policy is generally welcomed by Mekong countries, Beijing is increasingly concerned about nontraditional security challenges arising from its investments in the region. While water rights disputes with Mekong countries related to China’s upstream hydropower developments along the river are often discussed, another top nontraditional security concern for China is regional criminal networks.

The region is known for its poor infrastructure, low literacy rates, illicit trade, and organized crime. Some overseas Chinese investors and businesspeople have taken advantage of the BRI’s positive image in the region to promote their own private and illicit activities, such as overseas gambling, online scams, human trafficking, and other crimes. After Myanmar’s coup in 2021, many organized criminal networks migrated to the country, where the government lacked effective law enforcement mechanisms, worsening China’s perception of the regional security environment.

​In recent years, Beijing has put more focus on ameliorating its image and mitigating the widespread regional criticism that Chinese investment appears to be associated with rising crime. It has reinforced its domestic public security and legal apparatus to defend its “overseas interest security” (海外利益安全), a concept proposed by Chinese President Xi Jinping as part of his “comprehensive national security” outlook in 2014. It has also continued to pursue cooperation with international and regional institutions, such as the United Nations Office on Drugs and Crime and Association of Southeast Asian Nations (ASEAN), and taken the lead in bilateral and subregional law enforcement mechanisms.

Protecting its citizens and their interests is a critical aspect of China’s Mekong policy. Distinct from its development-first foreign policy, China’s evolving Mekong policy demonstrates that effective development cooperation often requires close security cooperation between China and target countries. Through securitizing cross-border threats, Beijing is able to strengthen its law enforcement and security influence in the region.

Historical Background

Since the mid-1990s, China has promoted the concept of a development-security nexus and leveraged development cooperation and integration to address regional security challenges often associated with poverty in the Mekong. As expressed in their 2017 Asia-Pacific security proposal, Chinese officials assessed that “security and development are closely linked and mutually complementary…the improvement of the security framework will help ensure a peaceful and stable environment for economic development…faster regional economic integration will provide solid economic and social support for the development of the security framework. . . .”

In the 1990s, China launched the “opium substitution policy” in Myanmar and Laos to share agriculture development experience and integrate its less-developed neighbors into the regional market. During this period, China joined international organizations such as the Asian Development Bank and rolled out the Greater Mekong Subregion Economic Cooperation Program in an effort to boost the regional economy. China also offered special treatment to less-developed Mekong countries through the Early Harvest Programmes in the ASEAN-China free trade agreement. To incentivize and promote legal trade, China provided financing and technical support for the expansion and dredging of Mekong river sections in Laos and Myanmar under the Agreement on Commercial Navigation.

More recently, Beijing proposed two new economic corridors, the China-Indochina Peninsula Economic Corridor and the Sino-Myanmar Economic Corridor, as part of its trillion-dollar economic foreign policy, known as the BRI, launched in 2013.[1] With strong financial support from China, the Mekong region has since witnessed improved connectivity through railways, highways, hydropower grids, and telecommunication networks. China has also supported investments in regional industrial parks and economic and trade zones designed to strengthen the export-oriented regional economy (see table 1).

Table 1. China’s involvement in cooperation zones in the Mekong region
Name
Sihanoukville Special Economic Zone (Cambodia)
Sino-Thai Rayong Industrial Park (Thailand)
Longjiang Industrial Park (Vietnam)
Sino-Vietnamese (Shenzhen–Haiphong) Economic and Trade Cooperation Zone
Vientiane Saiseta Comprehensive Development Zone (Laos)
Mohan/Boten Economic Cooperation Zone (Laos)
Ruili-Muse Economic Cooperation Zone (Myanmar)
Kyauphyu Special Economic Zone (Myanmar)
Thailand Eastern Economic Corridor
Source: Author’s compilation

To pursue development cooperation and address regional security issues, China launched a new initiative, the Lancang Mekong Cooperation (LMC), in 2016. Highlighting the fact that Mekong countries are “closely linked by mountains and waters . . . [and] China is a reliable partner by nature,” the then Chinese premier Li Keqiang said that “the best way to avoid conflict and maintain regional stability is through development.”

One of the key priorities of the LMC has been rural development and poverty reduction. China has provided financing and capacity building for water navigation, irrigation, and drought and flood prevention and management. Meanwhile, it has tried to justify its upstream hydropower development by highlighting its contribution to a low-carbon future.

To expand the Mekong region’s trade networks, China proposed in 2020 the Mekong Economic Development Belt as part of the China-led New International Land-Sea Trade Corridor, spanning from East Asia to Europe.

Illicit Activities Challenge China’s Development-Security Concept

When sharing about its development experiences overseas, Beijing often touts the idea that “development is the key to security.” However, the idea of using development to promote security may not have the same appeal abroad as it does for Chinese audiences. As China has exported its credit, capital, and human resources to Southeast Asian countries, unintended public security and social issues externalities have often followed.

One of the most cited examples is Chinese investments in Sihanoukville, Cambodia. Hailed as an exemplary BRI project, Chinese investments in Sihanoukville represent a test of China’s development cooperation promise. Alongside improved infrastructure to support Sihanoukville’s manufacturing, the city also witnessed the growth of Chinese business networks that colluded with corrupt local officials and even criminal organizations. Due in part to weak governance in Cambodia, locals suffered from an increase in social issues such as gambling, gang violence, money laundering, drug trafficking, kidnapping, prostitution, and scam operations that led to the first crackdown by the Cambodian government in 2019.

After the Cambodian government began cracking down on these illicit activities, some crime groups shifted their networks to long-standing conflict zones in eastern and northern Myanmar. As one study conducted by a Chinese scholar through a geographic information system showed, there were 122 hubs for scam operations involving human trafficking, gang violence, fraud, prostitution, and drugs between 2020 and 2021. The hubs were mostly concentrated in the northern part of Myanmar adjacent to the Chinese border. To protect its citizens from financial losses and deter them from overseas criminal activities, the Chinese government enhanced border policing in tandem with telecom surveillance and financial monitoring, with the help of technologies such as generative artificial intelligence.

After China stepped up policing along its border with northern Myanmar, Chinese crime groups incurred more costs in these areas and shifted to Myawaddy and Shwe Kokko in Kayin State along the Myanmar-Thailand border. Taking advantage of the Myanmar government’s ineffectual law enforcement capacity after the coup in 2021, some Chinese crime syndicates reportedly colluded with Kayin border guard forces to build “special economic zones,” like Yatai New City Special Economic Zone (also known as Shwe Kokko project).[2] These “zones” are believed to be involved in money laundering, cryptocurrency fraud, and online scams targeting Chinese citizens.

In addition to security challenges, China’s image as a committed development partner has been tarnished by its slow response to negative press reports and the lack of transparency surrounding many of its overseas investments. Private investors and those with criminal backgrounds have taken advantage of the information gap to illegally brand their private investments as part of the BRI. For instance, some investors fraudulently associate their casino investments in Sihanoukville with a BRI project called the “Sihanoukville Special Economic Zone.” Another prominent case is that of She Zhijiang (also known as Dylan She), a former Chinese citizen who branded the Yatai New City project in Myanmar as an important element of the BRI, only to host illicit online gambling and scam operations. He was arrested by the Thai government in 2022.

Many of these sham businesspeople claim to pay allegiance to the Chinese state or support the Chinese government’s international initiatives like the BRI. For instance, the founder of the World Hongmen History and Culture Association, who was sanctioned by the U.S. Department of the Treasury for criminal activities in 2020, proposed to set up a private security company to support the BRI.[3] A few co-opted local elites even publicly brandished their connections with the Chinese government and host country governments to heighten the importance of their investments. Another high-profile Chinese investor under criminal investigation by the Thai government initiated the unofficial Global One Belt and One Road Association, involving a high-ranking Thai politician.

Due to the lack of transparency about the relationship between the BRI and these unofficial, illicit activities, some reports accuse the Chinese government of tolerating criminality related to its overseas investments. Indeed, the Chinese government is said to tap overseas Chinese people (including Chinese investors) as part of its United Front work to strengthen its influence and cultivate economic relations with host country governments. Reports suggest that the government has exerted influence in the Golden Triangle Special Economic Zone in Laos through private investments controlled by Zhao Wei, a Chinese investor under sanctions by the U.S. Department of the Treasury.

China’s Responses

To address concerns over China’s development role in the Mekong region, and to respond to the domestic outcry over financial losses and safety concerns for Chinese citizens,[4] Beijing has taken numerous measures to improve the transparency of its overseas investment projects. For instance, the Chinese Ministry of Commerce began providing official lists of state-backed projects on its website. In the case of Yatai New City Project, not only did the Chinese embassy in Myanmar issue public statements clarifying the unofficial nature of the project, but it also supported the Myanmar government’s investigation into and subsequent punishment of the relevant parties.

Second, Beijing has tightened its border security and strengthened domestic law enforcement and surveillance. In 2021, it included overseas gambling in its criminal law, and the following year the Law on Combating Telecom and Online Fraud came into effect. The Chinese subdistrict offices in charge of community governance (街道办事处) also took preemptive measures to deter residents from traveling to high-risk countries including Cambodia and Myanmar.

Third, China has tried to reinforce its influence through cross-border law enforcement and security cooperation. Facing a social and public security crisis in August 2019, the Cambodian government, for instance, invited China to join its law enforcement operations. Later that year, China set up the China-Cambodia Law Enforcement Cooperation Office in Phnom Penh, the first overseas police cooperation center for the Chinese police force. China also assisted the Laos Ministry of National Defense with building the Integrated Defense and Rescue Service Points in Luang Namtha and Bokeo Provinces, and it offered equipment and technology to train local law enforcement for rescue and defense operations. The ongoing security challenges in northern and eastern Myanmar, where Chinese criminal networks have been able to expand, led China to request law enforcement and security cooperation with Myanmar’s military government.

Enduring Challenges

Nonetheless, China’s cross-border security cooperation in the Mekong region has faced many challenges. For instance, Beijing is frequently accused of infringing on other countries’ water resources for its unilateral upstream hydraulic infrastructure projects. Downstream countries like Thailand consider such activities as a threat to their environment. As a result, general mistrust tends to inhibit robust security cooperation between China and the Mekong region.

A major turning point that led China to expand its regional law enforcement and security presence in the Mekong region was the so-called Mekong massacre in October 2011, when thirteen Chinese sailors were allegedly murdered by a drug cartel on the river. It was considered China’s first time of projecting its security presence beyond its borders that was not mandated by the United Nations.

Since then, China has pursued quadrilateral security cooperation with Laos, Myanmar, and Thailand.[5] Furthermore, a joint anti-drug operation called Safe Waterway was inaugurated in Jinghong, China, in 2013. In 2015, Cambodia and Vietnam joined the project, which was expanded to include cooperation in areas such as rescue, anti-terrorism, human trafficking, and cybercrime.

These in-depth, cross-border law enforcement and security operations risk infringing on the sovereignty, autonomy, and independence of Mekong countries. To persuade Mekong countries, especially Thailand and Vietnam, to include political and security cooperation in the agenda of the LMC, Beijing has emphasized that regional norms such as autonomy, consensus, equal footing, and noninterference endorsed by ASEAN will be respected. Such norms give a platform for all countries to voice their concerns and have autonomy to decide the scope and scale of cooperation. To assuage concerns from other ASEAN members that are not part of the LMC, China has highlighted that the LMC is “complementary and coordinative” with ASEAN. In 2017, Beijing established the Integrated Law Enforcement and Security Cooperation Center with riparian countries in Kunming, China. Member states agreed to work on training, joint patrol and operations, criminal database tracking, information sharing, and inspections. By October 2023, China, Laos, Myanmar, and Thailand had conducted 134 law enforcement activities on the Mekong River.

The Mekong Region Is a Test Case for GDI and GSI

The Chinese government has promoted its regional development and security initiatives in the Mekong region as an example of its efforts to build a “pioneer” area for its Global Development Initiative (GDI) and a “pilot” area for its Global Security Initiative (GSI).

The concept of using development cooperation as a means to address security challenges in the Mekong is well reflected in the GDI and the GSI. To many developing countries, economic development is critical to achieving stability and security. That is why many regional states welcomed China’s development proposals, such as the BRI and the LMC. To gain further support for security cooperation, China has tried to adhere to the principles of noninterference, multilateralism, and harmony among distinct civilizations. China hopes that appealing to these norms will reinforce its image as a trustworthy development partner.

As China’s Ministry of Public Security admitted in 2022, crime syndicates comprised of Chinese citizens in the Mekong region have become a global security issue and the front line in China’s fight against nontraditional security challenges. China and Mekong countries all have a clear sense of urgency in stemming the rise of cross-border criminal networks.

China’s role in the region demonstrates that development cooperation often requires closer security cooperation. Initially, China’s regional development cooperation focused on alleviating poverty and its associated risks. But China’s development activity created security externalities. And as those challenges grew, there was greater need for regional security cooperation. Regional countries’ initial interest in benefiting from development cooperation with China ultimately required closer security cooperation. As a result, China has emerged as a leading provider of security in the Mekong region.

What does this mean for the GSI? China’s experience disproves the conventional wisdom that security cooperation requires sufficient levels of political trust between countries.[6] In the case of China and the Mekong, regional states had initially opposed China’s growing security role but gradually accepted its involvement as they deepened development cooperation.

Despite progress made in cross-border law enforcement, China must do more to ensure that development and security cooperation work hand in hand. As is, China’s GDI and GSI face three major obstacles. First, given the weak law enforcement capacity of many of China’s development partners, Beijing may need to take a more interventionist approach to cross-border security, while avoiding the impression that it is interfering in other countries’ domestic politics. For instance, it is difficult for China to enforce the law in areas disputed by the Myanmar military government and local autonomous governments (administered by ethnic armed groups) without endorsing one or the other government.

The second paradox is the trust deficit toward China, especially in light of China’s unilateral approach to water governance. Concerns over China’s regional environmental impact impede its efforts to enforce law enforcement and regional security. For instance, the Thai government still restricts China from entering its administrative sections of the Mekong River under the quadrilateral joint patrol.

Third, misperceptions and misinformation about the relationship between Chinese state-backed projects and criminal networks point to a fundamental problem with China’s opaque lending practices. Local governance capacity is needed to manage the risks of crime.  Unintended public security externalities will continue to pose threats to local governments and China’s overseas economic interests, as well as its efforts to present itself as a trustworthy development partner.