Since October 1991, when the Paris agreement on the settlement of the Cambodian conflict was signed, Indo-Chinese countries entered a new phase of economic development. In 1986, Vietnam and Laos introduced market economy policies known as Doi Moi (Renovation) and Chin Tanakan Mai (New Thinking), respectively. Both the countries needed assistance in their nascent stage of economic development, since then, Japan has played a very crucial role in providing aid to these countries. Hence, to understand the geopolitics of the Indo-Chinese region, it is very important to understand how Japan exerts its influence over Vietnam and Laos and how significant it is in the 21st Century.
Post-second world war till the end of the Cold war, due to the “Japanese Economic Miracle”, Japan had become an influential economic power broker in the Indo-China region. But after the second world war, Japan lacked political-military power, thus, it often opted to employ foreign aid as a strategic tool for gaining influence. If we look through the demography of the Indo-China region then it’s evident to say how important Laos and Vietnam are. Consequently, after the Cold war, when the region became politically stable, Japan played a vital role in developing the nascent market economies in Laos and Vietnam. It has provided bilateral assistance of roughly US$ 70- 90 million per year to Laos, which makes Japan the most generous donor since 1991. In the case of Vietnam, Japan has been the largest donor country. Japan’s ODA has reached 1,416.7 billion yen from 1991 to 2007. Japan’s assistance to Vietnam majorly consists of three pillars, firstly promotion of growth, secondly, improvement in lifestyle and social aspects, and third, institutional building: towards the progress of a market economy. Recently, Japan has pledged to contribute $3 million towards the COVID relief fund to Laos, and it has also provided US$ 18.8 Million non-refundable aid to Vietnam’s hospitals as a Covid prevention fund.
In the 21st century, the geopolitics of the Indo-China region went under major developments. Due to the economic reforms of 1979, China emerged as a hegemon and the second-largest economy in the region. Its occupation of more than its legal share of the South China Sea and the East China Sea poses a challenge to the region’s stability. If we were to talk about other countries in the Indo-China region then, the civil unrest in Myanmar and Cambodia’s heavy dependency on China over its economy has led Japan to rethink its policies concerning Laos and Vietnam because they act as swing states in the region. Both the countries have strategic importance for Japan. Hence, Japan upgraded its relationship from merely being an official development aid donor to becoming a strategic and defence partner of Vietnam and Laos in 2006 and 2010 respectively. Japan is very well aware of the fact that Vietnam serves as a deterrence to China in the Mekong region because of its differences in the South China Sea dispute. Therefore, Japan is not only providing aid or heavily investing in Vietnam’s economy but is also helping it to build a defence against China. Japan’s economic interests are well served in Vietnam for the reason being that Japan, since the end of the cold war has been formulating Vietnam’s economic development programme. Japan believes in the cooperation of Vietnam together with the Philippines and Indonesia as potential actors in driving ASEAN regionalism and stability of the region so that they can balance China’s expansionist policies.
Laos on the other hand is the least developed landlocked country and symbolically seen as a prawn in the Indo-china region. If we look through the map of Laos then it has immense strategic and economic importance because it is bordered by China on the north, by Vietnam on the east, by Cambodia on the south, and by Thailand and Myanmar on the west. Hanoi and Beijing have locked their horns to counter each other’s influence. Although Vietnam and Laos share a historic alliance, in recent years Beijing has challenged the Vietnamese influence on Laos, through leveraging Laos via Belt and Road Initiative. Increasing Chinese influence not only impact Vietnam but also a major strategic threat to Japan’s Interest because the Mekong river which is crucial for maritime trade and activities related to hydropower generation and the agriculture sector flow through China and it controls the flow of the Upper Mekong river which worries Japan, because, agriculture is a prominent sector in Laos’s economy and Japan International Cooperation Agency has heavily invested in partnership with Laos on development of Agriculture sector and building of Hydropower development project. Thus Japan and Vietnam try to dilute China’s increasing influence on the country by strengthening cooperation with Laos on political and security area, economy, and regional security.
Japan does have certain restrictions which hamper its strategic and defence ability to be more integrated towards the Indo-pacific region Because the “Peace Constitution” limits Tokyo to maintain direct military deterrence to China. Plus because of the Burden of History Japan and South Korea couldn’t work together as effectively to counter China. Japan always aspires to see a multipolar region, where countries respect the status quo, But Chinese influence and its expansionist nature intends to hinder the very idea of regional integration. Despite China’s rise of influence, Japan’s contribution in terms of Aid to various countries in Indo-pacific before and after the pandemic and Japan’s Free and Open Indo-Pacific Policy which works towards the promotion of Infrastructure development, and various projects related to trade and investment, by creating a healthy business environment and human development, through connecting ASEAN countries with other countries across the world have has helped Tokyo to gain trust which counterbalances China’s influence in the region.