The past decade saw rapid development in the relations between China and ASEAN, especially since the announcement at the ASEAN-China Summit in 2001 in Brunei to build a China-ASEAN Free Trade Area (CAFTA). This CAFTA carries immense significance to the economic cooperation and development in Lancang-Mekong Basin or the Greater Mekong Sub-Region (GMS). This chapter addresses this significance, with the focus on Yunnan's strategy of how to fully tap this development and business opportunity. It ends with some policy recommendations of how best to develop the GMS under the framework of the CAFTA.

OPPORTUNITIES AND CHALLENGES IN YUNNAN's GMS DEVELOPMENT

Opportunities

In the early 1990s, the Asian Development Bank (ADB) and the six riparian countries of Lancang-Mekong River started a ministerial meeting to kick off the regional cooperation, which has since been known as the “Greater Mekong Sub-Region (GMS) Cooperation”. A series of cooperation mechanisms have since been set up, including the (1) ADB-launched GMS Cooperation; (2) ASEAN-Mekong Basin Development Cooperation; (3) Mekong Committee; and (4) Growth Quadrangle of China, Laos, Myanmar and Thailand. The Framework Agreement on Comprehensive Economic Cooperation between the ASEAN and China, signed at the ASEAN-China Summit in November 2002, identified the GMS cooperation as one of its five priority fields while the Joint Declaration signed at the GMS Summit in 2002 further clarified the key projects of economic cooperation and urged for formulation and implementation of medium and long-term cooperation programmes.

China's Yunnan province has a population of 43 million and area of 394,000 square kilometres which ranks eighth in China. It borders with three Mekong riparian countries with a total borderline of 4,060 kilometres. From ancient times, Yunnan had been an important gateway that linked China and Southeast Asia, called the Southern Silk Road. Now Yunnan has ten first-class port cities (state level) and ten second-class ports (provincial level), eighty-six border passes or trading places along the borders with Myanmar, Laos and Vietnamese, and four big rivers (Dulong-Irrawaddy, Nu-Salween, Lancang- Mekong and Red River) flow from Yunnan through mainland Southeast Asia. This geographical proximity and close relations with these countries give Yunnan a distinct advantage and strong interest in developing the GMS as a backbone of the CAFTA and as a breakthrough in the economic cooperation between China's southwest and ASEAN, and as the linkage connecting East Asia, Southeast Asia and South Asia.