Developing Economic Corridors in the Greater Mekong Subregion: A Multi-Country Perspective – China

Economic Corridor Development in China

Developing Economic Corridors in Continental Southeast Asia: A Cross-Country Comparison Research Project China-Indochina Peninsula Economic Corridor Development Report

Liu Jinxin
Kunming South Asia & Southeast Asia International Logistics Research Institute (SSILR), China
(Translated by Du Juan, Chai Fengqi)

1. Introduction

An economic corridor is an integrated network of infrastructure facilities in one geographical area designed to promote economic development. It connects different cities or countries in a geographic area through integrated infrastructure facilities such as highways, railways, and ports to link infrastructure to further economic activity. Economic corridors are a geographical and economic concept, using economic means to bind geographically adjacent regions. They connect regions and countries through transport and promote infrastructure construction by establishing industrial clusters along the routes, attracting investment and financing as well as developing the overall regional economy; economic corridors are also a dynamic concept, starting with transport corridors and continually given economic cooperation functions to achieve market unification and the movement of production factors.

In September 1998, the Asian Development Bank (ADB) first defined economic corridors as significant networks or connections between economic agents along a defined geography, linking market supply and demand sides. The ADB introduced this concept at the 8th GMS Economic Cooperation Ministerial Conference, to be recognized by international organizations and institutions such as The United Nations Economic and Social Commission for Asia and the Pacific (ESCAP) and ADB. A joint statement by ministers of GMS member countries indicated that their nations would build economic corridors to connect the region with the world’s major markets; node cities in the economic corridors would become enterprise development centers; economic corridors would be further expanded according to critical transportation channels to promote economic development and efficiency, tap regional potential, and become a land bridge serving economic activities in China, Southeast Asia, South Asia, and East Asia.

On 6 June 2008, the Kunming Consensus was reached at the 1st GMS Economic Corridor Forum, including two noteworthy documents: Key Points of the Development Strategy Action Plan for the GMS North-South Economic Corridor and Terms of Reference for the GMS Economic Corridor Forum. Simultaneously, the GMS Economic Corridor Forum mechanism was officially established to better coordinate between public and private sectors as well as central and local governments on economic corridor development. The documents determined the three stages of GMS economic corridor development, for transportation, logistics, and the economy. The economic corridor concept has gradually evolved from narrowness to broad cross-border entities, from transport venues linking economies through specific geographic markers to infrastructure renewal, urban development, and new industrial park construction. The overall regional development plan may widen the geographical corridor to achieve an industrial layout around transport nodes and hubs. This will permit transport corridors to function as economic radiation and trade facilitation, promoting the flow of commodities, people, and services by coordinating development planning and policy of different nations and regions along the routes to achieve high-quality sustainable development.

2. Economic Corridor Development in China: China-Indochina Peninsula International Economic Corridor

On 28 March 2015, the National Development and Reform Commission, the Ministry of Foreign Affairs and the Ministry of Commerce jointly issued Vision and Actions on Jointly Building Silk Road Economic Belt and 21st-Century Maritime Silk Road. It indicated that the land Belt and Road Initiative (BRI) would jointly develop the economic corridors of China-Pakistan; New Eurasian Land Bridge; China-Indochina Peninsula; China-Mongolia-Russia; China-Central Asia-West Asia; and Bangladesh-China-India-Myanmar by exploiting international transport routes, relying on core cities along the Belt and Road (BR) and using key economic industrial parks as cooperation platforms; at sea, smooth, secure, and efficient transport routes would collaboratively be built to connect major sea ports along the BR.

Figure 1 China-Indochina Peninsula International Economic Corridor

The China-Indochina Peninsula is the core economic corridor linking China to Southeast Asia and South Asia. The China-Indochina Peninsula International Economic Corridor (CIP-IEC) relies on the infrastructure of Pan-Asian Railway Network, Asian Highway Network and International Land Port Network by using central economic cities and ports along the routes as key nodes. The CIP-IEC starts from Kunming to link Nanning, connecting China with Viet Nam, Laos, Myanmar, Thailand, Cambodia, and Malaysia. It ends at Singapore, serving as a land-sea economic belt connecting China with Southeast Asia and South Asia; it is one of six economic corridors for international economic cooperation innovated under the collaborative BR framework. As such, it significantly expands cooperative fields and levels between China and its neighbors. It focuses on promoting trade, investment, tourism and interpersonal exchanges, and achieving regional integration and connectivity by completing port, industrial park, and transport facility infrastructure.

2.1. Bilateral Economic Corridors

With seamless connections and coordinated development, construction of a cross-regional logistics network connecting the China-Indochina Peninsula Economic Corridor will achieve regional transportation infrastructure interconnectivity in terms of logistics channels and nodes. With the LMC as the core, five bilateral economic corridors (China-Viet Nam, China-Laos, China-Laos-Thailand, China-Laos-Cambodia and China-Myanmar) will be constructed with railways as structures and international land ports along the corridors as support.

  • China-Viet Nam Economic Corridor (CV-EC)
    To accelerate docking for China’s BRI and Viet Nam’s Two Corridors, One Belt (TCOB) Plan, the y-shaped China-Viet Nam economic corridor starts from Yunnan, relying on two railway routes: Kunming-Hekou-Lao Cai-Hanoi-Haiphong; and Nanning-Pingxiang-Dong Deng-Hanoi-Haiphong. It extends to Ho Chi Minh City, attaining southern Viet Nam.
    In October 2004, Chinese and Vietnamese government leaders first proposed the TCOB initiative. A joint declaration from China and Viet Nam proposed negotiations on launching construction of the China-Viet Nam economic corridor, showing governmental level conception and cooperation. In November 2022, a Joint Declaration of Strengthening and Deepening Comprehensive Strategic Cooperative Partnership between China and Viet Nam promised mutual acceleration of negotiations and signature of the cooperative plan connecting the BRI and TCOB.
  • China-Laos Economic Corridor (CL-EC)
    To accelerate the docking of China’s BRI with a strategy of transforming Lao PDR from a land-locked to a land-linked economy, the China-Laos Economic Corridor started from Yunnan, relying on the China-Laos Railway, passing through prominent nodal regions, and arrived at southern Laos.
    In 2013, Chinese and Lao government leaders agreed to form a comprehensive strategic cooperative partnership based on mutual trust, assistance and benefit; in November 2017, both countries signed a memorandum of understanding (MOU) to jointly construct a China-Laos economic corridor. In November 2018, at the first China International Import Expo (CIIE), governmental leaders of both countries agreed to promote the corridor, to ensure the construction of the China-Laos Railway, and to strengthen all fields of cooperation.
    In 2023, at the Third Belt and Road Forum for International Cooperation, an Action Plan on Building a China-Laos Community with a Shared Future (2024-2028) between the Communist Party of China and the Lao People’s Revolutionary Party was signed. It was supplemented by the Laos-China Economic Corridor (LCEC) Cooperation Framework (2019–2030).
    The goals were to promote continuous construction of the China-Laos Economic Corridor, develop regional connectivity, and create a regional BRI cooperative model. In 2004, to develop northern Laos and strengthen economic and technological ties between Yunnan and Laos, a China Yunnan-Laos North Cooperation Mechanism (China Yunnan-Laos North Cooperation Working Group Meeting) was created. Until December 2020, eleven meetings were held in Yunnan and Laos for this platform promoting cooperation between China and Laos.
  • China-Laos-Thailand Economic Corridor (CLT-EC)
    To accelerate the symbiosis between China’s BRI with Thailand’s EEC strategy, the China-Laos-Thailand Economic Corridor jointly builds a corridor starting from Yunnan, connected by the China-Laos Railway and the China-Thailand Railway, passing through several significant Lao and Thai nodes before arriving in southern Thailand.
    In April 2004, the First Meeting of the China Yunnan-Thailand (North) Cooperation Working Group was held at Kunming. Both nations signed the minutes of the meeting, which established a single governmental negotiation mechanism between the Thailand Ministry of Foreign Affairs and the foreign local government. Since 2002, seven working group meetings have been held alternately in Yunnan and Thailand. During the seventh meeting, both sides concurred to rename the Yunnan-North Thailand Cooperation working group to Yunnan-Thailand Cooperation Working Group to broaden and intensify cooperative fields between Yunnan and Thailand.
  • China-Laos-Cambodia Economic Corridor (CLC-EC)
    To speed the cohesion of China’s BRI with Cambodia’s Rectangular Strategy, the China-Laos-Cambodia Economic Corridor extends the China-Laos Railway to connect Cambodia, based on the Stung Treng-Kratie-Kampong Cham-Phnom Penh-Takeo-Kampot-Sihanoukville rail line, through major regional nodes to an inland connection with China, Laos and Cambodia. 
  • China-Myanmar Economic Corridor (CM-EC)
    To facilitate the unification of China’s BRI with the Myanmar Sustainable Development Plan (2018-2030), the y-shaped China-Myanmar Economic Corridor traverses eastern, western, southern and northern Myanmar, based on transport infrastructure connectivity of China and Myanmar. It starts from Yunnan and proceeds through Muse, Mandalay and other nodes, divided in two directions: easterly extending to Yangon; and westerly to Kyaukphyu Special Economic Zone.
    In 2017 at a Beijing meeting, government leaders approved of building a China-Myanmar Economic Corridor. In September 2018 at the First China-Myanmar Economic Corridor Forum in Guangxi, participants discussed how to achieve potential mutual Chinese and Burmese economic complementarity. Also debated was how to promote China-Myanmar Economic Corridor development by improving infrastructure facilities and strengthening economic and trade cooperation. Later in September 2018, both countries signed an MoU on building a China-Myanmar Economic Corridor. In 2019, at the Second China-Myanmar Economic Corridor Forum, participants exchanged views on related project cooperation plans and future economic corridor development directions. In April 2019 at the Second Belt and Road Forum for International Cooperation, both countries signed an MoU on a China-Myanmar Cooperation Plan (2019-2030). In 2022, at the Seventh Lancang-Mekong Cooperation (LMC) Foreign Ministers’ Meeting, Chinese and Myanmar leaders assented to build the China-Myanmar Economic Corridor.

2.2. Regional Economic Corridors

Great Mekong Subregion Cooperation (GMS)

In 1992, the Great Mekong Subregion Cooperation (GMS) initiative was innovated by the Asian Development Bank (ADB), involving six countries in the basin: China, Myanmar, Laos, Thailand, Cambodia and Viet Nam. The aim was to enhance economic and social development in the s ubregionby strengthening economic ties among member countries. After initial planning and project selection stages, it has now arrived at the project implementation stage. The GMS Economic Corridor is based on a three verticals and two horizontals transport channel construction. The goal is to rapidly develop an economic belt by integrating industry, trade, and infrastructure. Three vertical lines point north and south, while two horizontal lines indicate east and west. The three verticals include Kunming Yunnan-Dali Yunnan-Dehong Yunnan-Mandalay, Myanmar-Yangon, Myanmar; Kunming Yunnan-Xishuangbanna Yunnan-Laos-Bangkok, Thailand; and Kunming Yunnan-Honghe Yunnan-Hanoi Viet Nam-Haiphong, Viet Nam; the two horizontals are Moulmein, Myanmar-Phitsanulok, Thailand-Savannakhet, Laos-Da Nang, Viet Nam; and Yangon, Myanmar-Bangkok, Thailand-Phnom Penh, Cambodia-Ho Chi Minh City, Viet Nam.

Since November 2002, China has participated in triennial Greater Mekong Subregion (GMS) leaders meetings. Seven times Chinese government leaders have issued statements and speeches, while also participating in planning and implementation of GMS projects in diverse fields. In 2002, China signed the GMS Cross-border Transport Facilitation Agreement (CBTA) and its annexes and protocols. After signing the Intergovernmental Agreement on the Trans-Asian Railway Network (2006), China has cooperated with the construction of the Pan Asian Railway.

Lancang-Mekong Cooperation (LMC)

The Lancang-Mekong Cooperation Mechanism (LMC) is a new subregional cooperation mechanism initiated by China, Cambodia, Laos, Myanmar, Thailand and Viet Nam. Its purpose is to deepen friendship and practical cooperation in the six countries along the Lancang and Great Mekong Rivers; promote economic and social evolution; build an economic development belt along the rivers; create a shared LMC community; support ASEAN community construction and regional integration; advance South-South cooperation; implement the UN 2030 Agenda of Sustainable Development; and maintain regional peaceful development with continuous prosperity.

In November 2014, at the Seventeenth China-ASEAN Summit, Chinese Premier Li Keqiang proposed the establishment of the Lancang-Mekong Cooperation Framework. In November 2015, the First LMC Foreign Ministers’ Meeting at Jinhong, issued a concept paper and a joint press communiqué formally launching the LMC mechanism. The March 2016 First LMC Leaders Meeting issued a Sanya Declaration and Joint Statement on Production Capacity Cooperation Among LMC Countries. The January 2018 Second LMC Leaders Meeting at Phnom Penh produced a Phnom Penh Declaration and Five-Year Plan of Action on LMC (2018-2022). An August 2020 online webinar hosted the Third LMC Leaders Meeting, culminating in a Vientiane Declaration and Co-chairs Statement on Cooperation of Synergizing the LMC and the New International Land-Sea Trade Corridor. Another online webinar in December 2023 presented the Fourth LMC Leaders Meeting, releasing a Nay Pyi Taw Declaration and Five-Year Plan of Action on LMC (2023-2027).

Bangladesh-China-India-Myanmar Economic Corridor (BCIM EC)

The Bangladesh-China-India-Myanmar Economic Corridor (BCIM EC) is among the six economic corridors of the BRI. Its transport lines and integrated transport channels as main development axes with central economic cities as main nodes connect East, South, and Southeast Asia, linking the Pacific and Indian Oceans, covering southwest China, Myanmar, Bangladesh, West Bengal, east India, and northeast India to achieve an international regional economic belt to economically develop these subregional countries.

In 1999, the Yunnan Academy of Social Sciences of China initiated the BCIM Economic Cooperation Forum. Researchers from four nations signed a Kunming Initiative to propose to build an international cooperation mechanism based on cooperation in transport, tourism, economy and trade. In 2011, the Yunnan government proposed the BCIM Economic Corridor (Kunming-Mandalay-Dhaka-Kolkata) initiative. In February 2013, the first BCIM car rally suggested the feasibility of inland regional BCIM connectivity. The following month, China and India jointly proposed to construct a BCIM Economic Corridor, a project approved by Myanmar and Bangladesh. In December 2013, the first BCIM EC joint working group meeting was held in Kunming. The parties signed the meeting minutes and joint research plan, starting BCIM EC intergovernmental cooperation. In December 2014, the second joint working group meeting at Cox’s Bazar discussed BCIM EC prospects, priority projects and development directions. The Chinese government’s Vision and Actions on Jointly Building Silk Road Economic Belt and 21st Century Maritime Silk Road (2015) fast tracked BCIM EC construction. In April 2017, a third joint working group meeting in Kolkata reached a consensus on how to interlink connectivity, energy, investment, and financing, trade in goods and services and investment facilitation. In 2018, Chinese and Indian leaders restarted BCIM EC interconnectivity and cooperation at the Eighteenth Shanghai Cooperation Organization (SCO) Summit in Qindao.

2.3. International Economic Corridor Development

In September and October 2013, China’s President Xi Jinping proposed an initiative to jointly construct a Silk Road Economic Belt and Twenty-first Century Maritime Silk Road. On 20 December 2014, Premier Li Keqiang of the State Council of China stressed the importance of deepening relations between China and the five Indochina Peninsula nations at the Fifth Leaders Meeting of GMS Economic Cooperation, and suggested jointly building comprehensive transport networks and industrial cooperation. In 2015, four Chinese ministries and commissions issued Vision and Actions on Jointly Building Silk Road Economic Belt and Twenty-first Century Maritime Silk Road, in which the China-Indochina Peninsula Economic Corridor concept was officially proposed. On 26 May 2016, the Ninth Pan-Beibu Gulf Economic Cooperation Forum & China-Indochina Peninsula Economic Corridor Development Forum issued the Initiative to Jointly Build a China-Indochina Peninsula Economic Corridor. It marked the full implementation of this innovative cooperation.

A Research Report of the China-Indochina Peninsula International Economic Corridor Logsitics Network (2017) notes the space layout of the China-Indochina Peninsula Economic Corridor. The Pan Asian Railway Network and Asian Highway Network, starting from Kunming and Nanning, are built along international rivers, border lines and integrated transport network, refilling missing sections, upgrading key areas, unblocking main lines, connecting main economic central cities, international land ports and border ports. They pass through Myanmar, Laos, Viet Nam, Cambodia, and Thailand to connect with Malaysia and reach Singapore. It is a 4-3-2-3 parasol structure international integrated channel.

Four railways channels:

  • Kunming (Nanning)-Hanoi-Haiphong-Ho Chi Minh City (China-Viet Nam Economic Corridor)
  • Kunming-Vientiane-Bangkok-Kuala Lumpur-Singapore (China-Laos-Thailand Economic Corridor)
  • Kunming-Vientiane-Pakser-Phnom Penh-Sihanoukville (China-Laos-Cambodia Economic Corridor)
  • Kunming-Yangon-Kyaukpyu (China-Myanmar Economic Corridor)

Three highway channels:

  • Bangkok-Vientiane-Vinh City-Hanoi-Phang Siang-Nanning
  • Bangkok-Chiang Mai-Hoi Sun-Mohan-Kunming
  • Bangkok-Chiang Mai-Mae Hong Son-Lei Koo-Tung Chi-Mandalay

Two urban channels:

  • Mandalay-Maodan Mian-Myawaddy-Phang Sellok-Khon Kaen-Savannakhet-Da Nang
  • Yangon-Thawa-Bangkok-Phnom Penh-Sihanoukville-Ho Chi Minh

Three land-water intermodal transport channels:

  • Kunming-Hekou-Hanoi-Haiphong
  • Kunming-Guan Leh-Chiang Sean-Luang Prabang-Vientiane-Bangkok (Sihanoukville)
  • Kunming-Ruili-Lando-Bhamo-Mandalay-Yangon (Kyaukphu)

3. Challenges to China-Indochina Peninsula International Economic Corridor Development

3.1. Infrastructure

3.1.1. Transport

Transport infrastructure is the biggest obstacle to regional economic corridor development. Transport costs are high, the multi-modal transport is undeveloped, the market-based transport organizations of different countries lack cooperation, railway construction lags behind, and LMC international shipping development is retrograde.

  • Rail: a serious lag and lack of connectivity in railway and international land port infrastructure construction is the biggest bottleneck restricting development of logistics cooperation.
    • The China-Viet Nam Railway: all sections in China adopt the international standard gauge, while sections in Viet Nam remain meter-gauge railways. While China’s domestic border railway network remains under construction, Yunnan and Guangxi will promote construction of their respective sections of the railways. Viet Nam has missed the best opportunity for international cooperation; the construction of the China-Viet Nam Railway is forecast to be completed and opened for use around 2030.
    • The China-Laos Railway: due to mismatched two-way transport capacity demands, and increasing cross-border express delivery business demands after connection with the China-Europe Express, China is considering the feasibility of building a double route to alleviate future pressure. Industrial development and construction along the China-Laos railway lines notably expands benefits to Laos. Construction of railway joint nodes between Vientiane and Nongkhai is currently the major weakness of the China-Laos-Thailand Railway Corridor. Laos, as a beneficiary of the China-Laos Railway, is worried about being marginalized by Thai interests and is not an active participant in railway facility connectivity between Laos and Thailand.
    • The China-Thailand Railway: for China, the construction of domestic Thailand railway networks proceeded slowly. Connections to the Larang Port and Malaysia and Singapore through Thailand’s meter gauge railway network is more economically viable, and the priority is to realize the cooperative connectivity of China-Laos-Thailand railways. Currently, both Malaysia and Thailand’s systems are meter-gauge railways. Malaysia’s Kuala Lumpur-Northport and Northport-Padang Besar sections have completed electrification reconstruction. Promoting cooperation of railway freight operation connectivity between China, Laos, Thailand and Malaysia will be a priority of regional economic corridor development.
    • The China-Laos-Thailand-Cambodia Railway: the sections of Kunming-Vientiane-Bangkok-Nakhon Ratchasima-Poipet-Phnom Penh and Kunming-Vientiane-Thakhek-Savannakhet-Pakse-Stung Treng-Phnom Penh commissioned Chinese institutions to perform feasibility studies and organize the construction management committee. In 2023, Laos and Cambodia signed a joint agreement to connect the two states of Champasak and Attapeu in Laos with the two states of Preah Vihear and Ratanakiri in Cambodia by railway. In 2022, China and Cambodia signed a joint statement in which China offered to help Cambodia build an industrial development corridor in Sihanoukville and a fish-rice corridor in Tonle Sap Lake area, and proposed to achieve the connection between the railway in Cambodia and the China-Laos-Thailand Railway as soon as possible.
    • China-Myanmar Railway: affected by ongoing political instability in Myanmar, the China-Myanmar Railway construction project is progressing slowly, while Yunnan has completed the national section and most lines are already in use. But full route connectivity and operation remains uncertain as overseas section progress has been postponed.
  • Road: upgrading and reconstructing highways at junctions between countries are highly significant. Roads in Yunnan and Guangxi have all completed high-speed upgrading and are open for use. However, upgrading and reconstruction of highways between China and Myanmar at Zhangfeng-Bhamo; Houqiao-Myitkyina; and Chinshwehaw-Lashio have been progressing slowly. Highway upgrading and reconstruction between China and Laos at Mengkang-Landui-Phongsaly-Nateuy is at the feasibility study stage. The feasibility study of the new highway project between China and Laos at Boten-Houayxay has been completed and the project is now at the bidding and construction stage.
  • Air: after the Covid-19 pandemic, many regional airlines are heavily indebted and operating inefficiently. Increasing fuel costs have required many airlines to recover from slowly recovering market demand for capacity. In terms of cargo, due to weak global economic growth, the decoupling and breaking of the industrial chain supply chain and continuation of geopolitical conflicts weakens the regional demand for air cargo to a low level. Yet freighter capacity strength put into production is increasing because of development of cross-border e-commerce new businesses. A vast new market increases demand for cold chain transport, humanitarian rescue, and emergency logistics transport demand. But gaps remain in customs clearance facilitation, shipment arrangements, route configuration, logistics provider service level and full information monitoring.
  • River: the minutes of the Seventeenth Meeting of the LMC Shipping Coordination Joint Committee for Commercial Ships of China, Laos, Myanmar and Thailand (2019) about drafting a coordination development plan for the LMC international shipping and regional logistics network, no nation is leading the research works. Since 2020, affected by the COVID-19 pandemic and the opening of the China-Laos Railway, LMC international shipping is currently recovering, but operationally still faltering. A China-Myanmar Irrawaddy land-water joint transport channel is bogged down.
3.1.2. Other Facilities

Benefiting from the United Nations Economic and Social Commission for Asia and the Pacific (UNESCAP) Sustainable Action Plan on Connectivity, the China-Laos Railway has been completed and opened to traffic as a demonstration project. Dry ports are becoming a driving force in the growth of economic corridors, but their planning, construction, and operational connectivity are development bottlenecks. After completion and commissioning of the China-Laos Railway, the Thanaleng Dry Port in Vientiane was put into operation, resulting in economic benefit. The Luang Prabang Dry Port was built and used. The Nathuyet Dry Port entered a preparatory stage. Savannakhet Dry Port in Laos is a model national dry port construction project, constructed and operated in tandem with Malaysian enterprises. The Thakhek Dry Port project entered the construction phase and the Pakse Dry Port project will also attract investor attention.

The construction of dry ports and harbors projects in Thailand has introduced new opportunities. Since the operation of the China-Laos Railway, the ICD Dry Port in Bangkok is saturated and plans for new dry port projects have begun. Thailand’s new port projects, including Phrase 3 of the deep-water port in Laem Chabang, the new Lat Krabang Port, and Chumphon Port, hope to appeal to Chinese company investors, but construction periods are long, and competition from the USA, Japan and Singapore may be decisive.
Myanmar’s dry ports and harbor project construction have had mixed results. Since 2018, Yangon Railway Port and Mandalay Dry Port were completed and put into use by Myanmar enterprises in the railway-highway-water intermodal transportation business. This was affected by armed conflict, with transportation cost increases, and performance was operatively affected by uncertainty. However, port project construction at Moulmein, Tavoy, and Kyaukphyu remains at a standstill. With the China-Myanmar border area fully controlled by local ethnic forces, full restoration of the Yangon-Mandalay-Kunming transportation corridor is impossible in the short term, and National League for Democracy (NLD) crossing tolls along the route are established, resulting in newly increased transport costs. Myanmar’s Myawaddy and Thailand’s Mae Sot Ports have become important bilateral trade routes.

There are good investment opportunities for dry port and harbor projects in Cambodia. With the construction of a fish and rice corridor in the Tonlé Sap area of Cambodia, five Phnom Penh Dry Port projects are operational and have received investments. The Cambodian government plans to exploit the opportunity of railroad development to develop land port projects such as Poipet, Khétt Battambang and Stung Treng.

There is an urgent demand for construction of dry ports and harbors projects in Viet Nam. With tensions between China and the United States and increased investment by Chinese enterprises in Viet Nam, that nation’s port logistics has been unable to meet market demands. The Vietnamese government has approved a National Logistics System Development Plan (2020-2030), which proposes to establish national-level logistics centers in Hanoi, Da Nang and Ho Chi Minh City.

Lagging construction and poor operational connectivity of dry port projects in Yunnan lead to a lack of competitiveness. The Yuxi logistics port project received an Asian Infrastructure Investment Bank (AIIB) loan to begin construction in 2024; Ruili Dry Port project is in the planning and approval stage; Hekou Beishan Dry Port is completed and put to use with insufficient operational benefits; Jinghong Mengyang project is in a stagnant state. Kunming, Yuxi, Pu’er, Jinghong, and Mohan along the Yunnan section of the China-Laos Railway are lagging behind in construction of railway logistics hubs, lack of competitiveness in operational connectivity, inattention to dry ports by the local government, and misunderstandings and misapplication of international norms such as the United Nations Intergovernmental Agreement on Dry Ports (2013).

Among the shortcomings of Yunnan’s participation in the China-Laos-Thailand Railway Economic Corridor: logistics infrastructure construction in border cities is not advancing; water ports lack effective development and use; high highway transport costs; insufficient design and construction of natural gas filing stations for freight vehicles; excessive highway tolls in China; inadequate building of logistics parks; international dry ports along economic corridors are in the initial stages or the point of aggregation; the inter-modal network system with dry ports as its core has yet to be established.

3.2. Institutional Challenges

Non-physical barriers impede international corridor development; the leading measure to remove them is accessing international transport facilitation conventions and forming international legal cooperatives, such as by concluding bilateral and subregional agreements.

The limitation of China’s import quota system, lack of a coordination mechanism between national customs offices, and differences in international development policies, construction standards and operational rules are block development of a soft environment for economic corridors.

3.2.1. Domestic Rules and Regulations

In March 2015, the Ministry of Foreign Affairs and the National Development and Reform Commission jointly issued Vision and Actions for Promoting the Construction of the Silk Road Economic Belt and the Twenty-first Century Maritime Silk Road, in which principles of co-construction, frameworks, cooperation foci, cooperation mechanisms, and especially the overall structure of the Six Corridors, Six Routes, and Multi-Countries, Multi-Ports plans were also deployed.

On 22 November 2016, China’s Ministry of Transport, together with seven ministries and commissions, issued Opinions on Implementing the Belt and Road Initiative and Accelerating the Facilitation of International Road Transport, putting forward development goals for facilitating international road transport: to establish and improve cooperative relationships and working mechanisms for international road transport with major countries along the Belt and Road; open economic corridors and transport channels with neighbouring countries; strive for road access; gradually eliminate software shortcomings and non-physical barriers constraining development of international road transport; and reduce inefficient transport of people and goods.

The goals are to gradually eliminate software shortcomings and non-physical barriers constraining the development of international road transport, reduce inefficient steps of people and goods transport; decrease cross-border transportation time and costs; and improve transportation efficiency and service levels.

In 2023, the Chinese government issued a white paper, The Belt and Road Initiative: A Key Pillar of the Global Community of Shared Future. In it, President Xi Jinping announced eight action plans, including construction of a three-dimensional Belt and Road connectivity network.

It represented a disjunction with the Fourteenth Five-Year Plan for the Development of the Logistics Industry in Yunnan Province, the Fourteenth Five-Year Plan for the Development of the Logistics Industry in Guangxi, and UNESCAP’s Trans-Asian Railway Network, Asian Highway Network and Dry Port Network. On governmental levels, China should promote the connection with the ADB-GMS Economic Corridor Development Plan and ASEAN Connectivity Plan.

3.2.2. Bilateral Rules and Regulations

Currently, the China-Myanmar automobile transportation agreement has yet to be signed; the China-Laos and China-Viet Nam automobile transportation agreements require revision and improvement; the China-Laos-Myanmar-Thailand merchant shipping agreement must be supplemented and improved. China, Laos and Thailand have not signed the international road transport agreement; the CBTA has not yet been fully implemented; subregional transport facilitation agreements have not yet been initiated in BCIM EC, and China-Indochina Peninsula EC. China has signed agreements on mutual customs assistance and cooperation with Viet Nam and Thailand, but cooperation agreements have yet to be concluded with Myanmar, Laos, Cambodia, or Malaysia. Nations along the economic corridor have policies, such as shareholding restrictions, restricting foreign investment in the logistics industry.

3.2.3. Regional Rules and Regulations

The nine routes of the GS Economic Corridor proposed by the ADB are no longer adapted to new development needs, and the regional infrastructure connectivity program and legal framework proposed by UNESCAP must be further implemented by member countries. There is a lack of standardized understanding of the China-South China Peninsula International Economic Corridor at home and abroad, and misconceptions exist in public opinion media. Regional nations have yet to ratify international agreements and standards such as the World Trade Organization’s Trade Facilitation Agreement (WTO TFA). The Asia-Pacific Model E-Port Network established by the Asia-Pacific Economic Cooperation (APEC) in 2014 has established an operation center in Kunming. If the network concept can be enacted at major ports along economic corridors, time and cost of customs clearance should be significantly reduced. However, for now there is little awareness among regional countries of the positive effects of the Asia-Pacific Model e-Port Network on facilitating customs clearance. Model Logistics Information System (LIS) standards adopted by UNESCAP have not yet been applied.

3.2.4. Multilateral Rules and Regulation

In terms of industrial policies on logistics, all CIP-EC countries have enacted development plans and related policies in the field of transportation and logistics, but there is a lack of international communication and effective articulation among these policies. The Intergovernmental Agreement on the Trans-Asian Railway Network, the Intergovernmental Agreement on the Asian Highway Network, and UNESCAP, as well as the Master Plan for ASEAN Connectivity, and three economic corridors of overall transportation network layout proposed by the Strategic Framework for Economic Cooperation in the GMS for the Next Ten Years issued by the ADB in 2002 are main policy formulation bases for constructing a regional transportation and logistics network. The three economic corridors proposed by the ADB in the 2002 Framework and overall transportation network layout are the main loci for developing regional transportation and logistics policies. China acceded to the United Nations Convention on International Road Transport (UNCIR) in 2016, but Myanmar, Thailand, Malaysia, and Viet Nam have still not approved the agreement. The Greater Mekong Subregion CBTA has yet to be fully implemented and the issue of facilitation of international road transport remains the most prominent problem constraining logistical cooperation among countries along the economic corridors.

3.3. Logistics Service Provider Challenges

Enterprises providing transport and logistics services in countries along the economic corridors are generally small in scale, and there is a lack of large multinational logistics enterprises; international logistics service capacity; application of logistics standardization; vocational skills of logistics practitioners; exchange and dialogue mechanisms between governments and enterprises in the field of international logistics; services provided in overseas road sections in insurance, capital settlement, and claims for cargo damages; protection of legitimate rights and interests of Chinese enterprises investing in transportation and logistics projects overseas; transportation and logistics supply chain security.

In logistics markets, construction of key logistic hub parks (dry ports) is invested and developed by state-owned enterprises and operated by several small and medium-sized private logistics enterprises. China-Laos Railway freight transport is mainly operated by local enterprises. Due to differences in enterprise scale and market geography as well as market competition between local logistics providers and external logistics service providers in Yunnan, the former lack professional knowledge about working in different economic corridors, but may have stronger practical experience and operational capabilities.

3.4. Manufacturing, Trading and Investing Challenges

Three preferred economic corridors for manufacturers/traders of Yunnan: Kunming-Fang Chenggang, China-Laos Railway, and Bangladesh-China-India-Myanmar Economic Corridor are determined by lack of access to the sea in Yunnan and concentration of major manufacturers and traders in Kunming.

With the rapid development of artificial intelligence (AI) plus various industries (AI+), green and smart logistics have become development trends, and growing economic corridors should focus on potential economic sectors: cross-border e-commerce, dry port and harbor construction and operation, railway and rail industry, vocational education, digital economy, and new energy trucks.

Adapting to digital economy development needs is essential for accelerating application of science and technology across industrial chains such as production, trade, transport and consumption. To promptly promote multi-scenario AI+ industry applications is a leading challenge for manufacturers, traders and investors.

4. Overcoming Economic Corridor Development Challenges

  1. Participating in Constructing a Cross-regional Logistics Network
    The Yunnan-Laos northern cooperation working group mechanism heightens Yunnan-Cambodia cooperation. Laos and Cambodia require support to build the Vientiane-Pakse-Phnom Penh-Sihanoukville Railway. Studying Yunnan participation in China-Laos-Cambodia corridor construction and formulation of the construction program necessitates completing missing sections, accelerating implementation of highway construction in Boten-Vientiane and Boten-Huay Xai and upgrading and reconstructing highways in Lwegel-Bhamo and Mong Khang-Phongsaly.
    To implement the Kunming-Southeast Asia multi-modal transportation demonstration project, enterprises should be supported in launching the Kunming-Lwegel-Bhamo-Mandalay-Yangon land-water joint transport-ation service. Laos must be more proactive in extending Mekong River international shipping to Vientiane.
    Announcement to UNESCAP of international dry port projects such as Mengding, Mohan, Tengchong, Yuxi and Pu’er should be highlighted. Kuming International Dry Port is a pilot project for jointly building free trade ports with international dry ports along the China-Laos-Thailand Railway.
    Direct air routes and flight schedules should be organized from Yunnan to major Southeast Asian economic centers. Upgrading of Kunming Changshui International Airport should be prioritized to achieve the status of new international hub airport linking South Asia to Southeast Asia.
  2. Prioritizing Promotion of Key Nodes Construction
    Construction of the China-Indochina Peninsula International Economic Corridor (IEC) and the LMC should cohere into an integrated and coordinated system of unified promotion and guaranteed systems and mechanisms.
    Building and operation cooperation should be bolstered at five dry port logistics hubs: Kunming international (China); Mohan international (China); Na Teuy (Laos); Thanaleng (Laos); and Mat Ta Phut (Thailand), to build an China-Laos-Thailand port alliance along the China-Laos-Thailand EC.
    China-Laos-Thailand EC governmental and non-governmental mechanisms and the Yunnan-Laos-Thailand Pilot Free Trade Zone should form a new cooperation pattern among governments, enterprises, and social organizations.
    Enterprises must be encouraged to participate in the overall arrangement of Thailand’s dry port and harbor construction projects, and explore operation cooperation of the Kunming-Bangkok-Ranong Port (sea-rail-road multi-modal transportation) corridor; with enterprise participation in building operative connections at Malaysia’s Penang Free Port, Port Klang, and Thailand-Malaysia Railway. Construction of the Khong Khuay Locks and other buildings in Laos will connect the upper and lower Mekong. Participation in constructing international dry ports Saat vannakhet and Pakse (Laos) and supporting Yunnan research institutions and enterprises planning and constructing the Boloven Plateau Special Economic Zone (Laos) are other essential elements.
  3. Promoting the Facilitation in Trade and Custom Clearance
    Facilitation policies should be formulated to promote negotiation and implementation of international agreements, and promote infrastructure operational connectivity. Kunming Customs must establish a cooperative mechanism with international customs along the routes and sign agreements on inter-custom mutual assistance and cooperation; nations along the routes should be encouraged to follow the Transport International Router (TIR) Convention; the GMS Cross-border Transport Facilitation Agreement (CBTA) should be implemented; bilateral agreements should be negotiated on international road transport between China and Myanmar; the Asia-Pacific Model Electronic Port Network extension along economic corridors would effectively reduce the time and cost of international EC customs clearance; multi-modal transport operation and cooperation agreements are needed for Myanmar, Lao and Cambodian enterprises under the framework of the Model Bilateral Agreement on International Road Transport and the UNESCAP Model Subregional Agreement on Transport Facilitation.
  4. Improving Logistics Informatization Levels
    Taking UN logistics information system standards as a model, enterprises should be encouraged to build logistics big data centers, on- and offline logistics linkage and cross-border e-commerce logistics services, enhance logistics informatization, and establish a monitoring index system for logistics corridors at multi-modal ports, starting with Kunming.
    Smart dry ports, ports and logistics projects should be developed at scientifically and technologically innovative ECs involved with rail transport, new energy automobiles, fifth-generation technology (5G) applications, unmanned aerial vehicle (UAV) logistics, digital agriculture, green health, cross-border tourism, minerals/energy, and culture/education.
  5. Promoting Investment and Financing Logistics Development Cooperation
    Research institutes should collaborate in joint international research projects on international logistics in the land-water transport corridors of Simao – Jinhong – Guanlei – Chiang Saen – Luang Prabang, Vientiane – Thakhek – Savannakhet – Pakse, Mandalay – Kyaukphyu, Vientiane – Pakse – Phnom Penh – Sihanoukville, Lwegel – Bhamo – Mandalay – Magwe – Kyaukphyu (railway, highway and rivers shipping).
    Investment and financing connectivity mechanisms should be innovated, especially for international railway construction and operation investment and financing models. Enterprises would be advised to establish an LMC international dry port fund.
  6. Strengthening Logistics Cooperation Mechanism Building and Platform Building
    The GMS Economic Corridor Cooperation Forum, Governors Summit, and LMC Cooperation Week optimize and enhance logistics cooperation mechanisms, strengthening intergovernmental planning docking and policy communication. Exhibitions and forums promote interconnected Chinese policies, rules and standards.
  7. Sustainably Supporting Economic Corridor Logistics Development Research
    Government-commissioned purchasing services, long-term research mechanisms, annual research results, and public think-tank products should be promoted to the international community, focusing on research about the China-Laos-Thailand, China-Laos-Cambodia and China-Myanmar corridor construction projects.
  8. Promoting Construction of the China-Laos-Thailand Economic and Logistics Corridor
    The China-Laos-Thailand Logistics Corridor linking Yunnan, Laos and Thailand’s Eastern Special Economic Zone should be prioritized to develop the China-Indochina Peninsula International Economic Corridor. Research institutes and Yunnan enterprises should be incentivized to study investment and financing of EEC construction projects and the cooperative construction and operation project of the Ranong Port-Chumphon Province Land Bridge Corridor (Thailand). New cooperation models are needed of professional think tanks, enterprises, industry associations, law firms, and insurance and financial institutions.
  9. Building one Logistics Monitoring Indicator System of Multi-modal Transport Border Ports Starting from Kunming
    Special support policies should be researched and formulated for international freight container trains of the China-Viet Nam International, Kunming-Central Asia, and China-Europe International Railways.

5. Summary

GMS economic corridor development experience suggest that strengthening governmental cooperation mechanisms, upgrading governing capacity, emphasizing local government initiatives, participating in and complying with UN international norms, and continuously supporting development of small and medium-sized enterprises (SMEs) are basics for China to launch LMC cooperation.

Developing economic corridors is needed to reshape international economic value chains. Shortening, localizing, and regionalizing value chains boost LMC national economic development. Redistributing Chinese manufacturing industry supply chains, reducing logistical costs by building an international multi-modal railway transport corridor, and the clustering industries to in dry port industrial zones along railroads are extrinsic driving forces supporting EC sustainable development.

The Guangxi Zhuang Autonomous Region is a key subject province participa-ting in the China-Viet Nam Economic Corridor. Yunnan Province bears historical responsibility as an international land-sea corridor linking the Pacific and Indian Oceans and China. The China-Laos-Cambodia Economic Corridor should serve as a model for developing economic corridors in Southeast Asia, due to the political stability of the three nations, which should benefit policy continuity and build confidence of business investors. The major uncertainty of the China-Laos-Thailand Economic Corridor is that the political changes in Thailand may cause construction project delays and business losses. The China-Myanmar Economic Corridor and Bangladesh-China-India-Myanmar Economic Corridor are testbeds for Chinese international cooperation.

The trend of localizing and regionalizing global value chains determines that supply chains will be organized around final consumer markets. It is feasible to build new regional value chains by deepening economic corridor construction. Chinese BRI connectivity and economic corridor development are mutually reinforcing. Connectivity of facilities and trade, financial integration, policy and interpersonal communication through development practices will provide high standards for international organizations. In terms of politics, economy, and security, sustainability will be boosted by speeding construction of small and beautiful projects for the welfare of inhabitants. In developing Southeast Asian economic corridors, Kunming is a starting point and engine, whereas Bangkok is a central hub. The era of economic corridors, based on the Trans-Asian Railway Network, is a new economic era of artificial intelligence + industry, in which subversive technological innovations, asymmetric market demand, and complementary industrial chains will lead the development trend of economic corridors.

Over the next 20 years, development of Southeast Asian economic corridors will create an era of railway economy; digital technology; embracing internationalization of Chinese industrial transfer; and cooperation and competition between China and the USA. Each country will prioritize its own economic development and participate in regional economic cooperation. Whether the China-Laos-Thailand Economic Corridor can be a leader depends on whether China and Thailand will grasp the opportunity.

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