Abstract
Since we analyzed in class the FDI inflows in China, I wanted to study the investments of China in the rest of the world, and I chose to focus on Laos. In 2011, China's trade with Southeast Asia reached nearly $370 billion. China projects its trade with the region to be about $500 billion by 2015. So Southeast Asia is an important market for China and that's why I chose to study this area, and particularly one country in this area: Laos. This country is interesting to study as it is a really poor country and as China is investing a lot in it. It used to be an isolated and enclosed country. It was and is still sometimes considered as a buffer state but its aim is to switch from this status to one of decisive crossroad. Its position in the Chinese trade in Southeast Asia is thus interesting and worth analyzing.
The presence of Chinese people in Laos dates back to before the absorption of Laos in French Indochina in the end of the 19th century. During the colonization period, since the Lao economy was growing, more and more Chinese migrated to Laos. Sovereignty was granted to the country in 1953. Then a war between the Pathet Lao (allies of the communist Viet Minh) and the US-backed Royal Lao Army followed. The US withdraw in 1973 and the population was divided between Pathet and non-Pathet Lao, but only during two years since after that the Communist took over and created the Lao People's Democratic Republic. This political turmoil led to a massive exodus of the Chinese migrants back to Yunnan. Then, in 1978, the diplomatic relations between China and Laos deteriorated because of Laos close relationship with Vietnam, China's enemy at the time – Vietnam had invaded Cambodia to remove the Khmers Rouge, whose regime was supported by China, from power.
