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Issues & Insights Vol. 18, WP1 – The Lancang-Mekong Cooperation Mechanism (LMCM) and its implications for the Mekong sub-region

The Lancang – Mekong Cooperation Mechanism (LMCM) was officially launched at the first LMCM Leaders’ meeting in Sanya, China in March 2016 with the participation of leaders from Cambodia, China, Laos, Myanmar, Thailand, and Vietnam. The LMCM includes cooperation in political and security issues, sustainable economic development, and social, cultural, and people-to-people exchanges. The scope of cooperation covered under the mechanism is much broader than other existing mechanisms in Mekong sub-region.

This paper will examine how the LMCM fits into the national development strategies of Mekong riparian countries and identify possible associated risks for downstream countries. As the initiator and its strongest supporter, China is the only country that has articulated a clear vision for the LMCM, which serves China’s strategy to expand its influence in the region through building and promoting China-led cooperation mechanisms. The LMCM also serves China’s domestic development needs by addressing excess production capacity and economic development of its western region. For other Mekong riparian states, the LMCM mostly fits into their interest in poverty reduction, agricultural development, and improving connectivity. It also fits some other specific political interests for these countries.

Although this initiative does contribute to overall cooperation in the Mekong basin, it also poses some possible risks for downstream states such as economic dependence due to Chinese economic dominance, reduced ability in adopting monetary policy, and the probability of indebtedness to China. Other risks might occur due to the increased unemployment rate, the introduction of Chinese laborers, and negative environmental impacts. Based on the potential risks, this paper recommends strategies for Mekong states to minimize risks while taking advantage of the LMCM for their national development and regional cooperation.