Vietnamese fruits seller on floating market - woman selling fruit from her boat in the Mekong river delta, Vietnam. Photo: iStock

China’s consolidation of the South China Sea remains the easiest component of its expansionist policy of pushing foreigners out of the eastern Pacific. The second phase of this consolidation is far more daunting, namely the control of the Mekong Delta and its diffused conglomerate of peoples who aren’t formally associated with China’s official economy. How the Han masters in Beijing view this region, specifically how the Chinese leadership handles the racial, ethnic and nationalist aspirations that animate the Mekong’s sociopolitical base will foretell much of Xi Jinping’s future as leader of China and characteristics of the Asian powerhouse’s domestic and foreign policies.

Historically, the northern regions of China have dominated both the interior and the southern littoral, the  breadbasket of which has always been the Mekong Delta. This vast region isn’t susceptible to concentric movements of a commanding political center. Those who make their living off the Mekong remain diffused, working hybrid careers making them inimical to the policy wiles of Keynesian thought in Beijing. But macroeconomic policy themes isn’t how Beijing seeks to coerce them; having built hydropower plants throughout its sprawling tributaries, Beijing firmly believes that by controlling the pace of the Mekong it can command the political relations of hordes of unassimilated workers who thrive throughout the delta and upstream. This is a dangerous mix of hubris that must be played deftly, for it will define Beijing’s relation to its peripheries while shaping China’s trajectory out of the middle-income trap.

Having scope means being able to succeed without having to expend precious capital, it means having an understanding, a superior grasp of tacit relations that characterizes statesmanship as classical politics. Beijing’s cursory hold on the Mekong will spell disaster for China’s foreign and domestic politics if they firmly believe that engineering displaces requisite tacit leadership in this fraught interior.

Those who make their living off the Mekong remain diffused, working hybrid careers making them inimical to the policy wiles of Keynesian thought in Beijing

A brief look at China’s neighbors throughout Southeast Asia should countenance Beijing’s hold of its view of the Mekong River as susceptible to delivering policy wiles hewed from engineering alone.

The political map of Southeast Asia embodies the dizzying array of ethnicities, races, nationalisms and monarchies that have escaped the hold of Beijing since imperial, dynastic eras; they’re ripe for return. Currently, the entire region of Southeast Asia continues to possess a democracy deficit favorable to Chinese interests, but a closer look reveals a mixed view of regimes, peoples and interest that aren’t alien to Chinese leadership, if they can devise fiscal stratagem’s to counter the natural bulwarks of interior unassimilated aliens. This contrary, granular view of sociopolitical aspirations and their regimes throughout Southeast Asia can help frame Beijing’s formal policy architecture of how best to format a Mekong Delta grand strategy to benefit Beijing’s view of the stability of its interior.

The political map put out by Freedom House shows tiny East Timor as wholly free in its political arrangements. The entire rest of Southeast Asia remains classified as either partly free (Indonesia, Malaysia, Myanmar and Singapore) or not free at all (Laos, Thailand, Vietnam and Cambodia). This should help inform Beijing’s view of those hordes of unassimilated migrants working throughout the Mekong. They have little wish to abandon their lot to the growing menace of authoritarianism that is taking root in their former countries. It is the strength of the Chinese state writ large that appeals to them, even though the entire history of the southern Mekong was allied against the northern Han.

Another way of viewing the opportunity of a grand strategy uniting Mekong tributaries favorable to Beijing is to anticipate how Chinese political institutions throughout the Mekong continue to function, even after years of abuse.

The current view of Chinese rebalancing out from export manufacturing doesn’t’ take into account the hybrid nature of the business ecology that thrives throughout the Mekong. Beijing needs to accommodate, not arrest this thriving metropolis and it can fortify its policy by continuing to permit the yuan to appreciate while openly promoting its current account surplus trend. With increasing domestic consumption and investment, Chinese monetary authorities can openly promote banking, bond market reform in the hope of openly promoting a business cycle that embraces a strong civic ethos favorable to Beijing.

Openly promoting growth among the myriad ethnicities that make a living throughout the Mekong is sound policy, but it needs to occur within concomitant fiscal practices that strengthen the appeal for risk and reward. Why not have state-owned enterprises pay larger dividends putting financial pressure on inefficient business models while boosting consumption? Why not envision the liberalization of China’s financial markets, beginning with the Mekong, to the foreign usage of yuan-denominated asset transactions.

Finally, by having Beijing embrace a grand strategy for the Mekong on fiscal principals that openly secure China’s interests in its fragile interior strengthens the hands of reformers while pushing China towards a transparent, market-based exchange rate.

Beijing has ample time to configure a framework to engage and promote the Mekong tributaries and delta region. But real progress means envisioning and openly promoting the interests of those who work there without coercion.

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William Holland

William Holland is North American recruiter for Wikistrat global consultancy monitoring Pakistan's nuclear program.