Whither Sub-Regional Cooperation? The CLMV Perspective

Recent debates advocate that closer sub-regional cooperation may be an excellent start to stronger regional cooperation. The study investigates this proposition for the case of CLMV countries that remain less integrated into the ASEAN region, based on their trade links with China. In this respect, the China-CLMV trade flows are examined, prior to detailing the role of China as a core trading partner to CLMV, within the context of intra-ASEAN regionaland intra-GMS sub-regional synergies. The study points out that overall, the CLMV trade relations with China remain unbalanced in terms of volume and structure of trade. Nevertheless, sub-regional membership of CLMV in the GMS is found to be relevant for deepening China-CLMV trade ties for two reasons. First, China plays a greater catalytic role, along the dimension of an export destination, in enhancing intra-GMS trade relative to intra-ASEAN trade. Second, common border effects are found to be significant only for sub-regional trade, consistent with border trade as the modality of cooperation within the GMS.