Set to open this year, the link will be watched closely after several Chinese-funded rail projects abroad were viewed as mixed blessings. The Laos route is an important piece in the greater prize of infrastructure access to Southeast Asia.
In Southwestern China’s Yunnan province, there is great fanfare around the construction of a mega-railway link to neighbouring Laos, Southeast Asia’s only landlocked country and one of its least developed.
“To build the Sino-Laos Railway as a symbolic project of the Belt & Road Initiative and of the friendship between China and Laos,” read huge bright-red banners proclaiming the project’s significance at a construction site near Yuxi, China’s tobacco capital in central Yunnan.
The US$6 billion railway, expected to open in December, has been hailed by China’s state media and state-owned companies as a “strategic docking project” between China’s Belt & Road infrastructure programme and Laos’ potential to transform from “a landlocked country into a land-linked country”.
Comprising 522km (324 miles) in Yunnan and 414km in Laos, the line will carry freight and passenger trains from Kunming in Yunnan, one of China’s fastest growing regions, to Vientiane, the once sleepy Laotian capital.
Already the largest infrastructure project in Laos, the railway is the latest evidence of China expanding its influence in Southeast Asia by transforming transport and trade links across a region that has become the new theatre of the China-US power rivalry.
“It will be touted by China as evidence that it and its railways and connectivity projects support the development of its neighbours and the region, and that there is much [to be gained] for other Southeast Asian countries in engaging China too,” said Dragan Pavlicevic, an associate professor of China studies with Xian Jiaotong-Liverpool University who is also an expert on China’s railway diplomacy.
Completing the railway could offer “some badly needed good news for China” after several Chinese-backed international rail projects were overshadowed by delays, accusations of trapping host nations in debt, and a lack of job creation, Pavlicevic said.
“It is likely to prompt other Southeast Asian countries to reassess and possibly seek to expedite plans for developing railway infrastructure, which will provide opportunities for Chinese companies … and for relationship-building between China and host countries,” he said.
According to the Vientiane Times, the Laos-China Railway Company – a joint venture that will run the railway – plans to hire 600 to 700 Laotian staff.
With its mountainous terrain, particularly in its north, Laos is not ideal for massive railway construction, but it is a useful entry point for China to advance its planned Kunming-Singapore high-speed railway, according to Xu Liping, an expert in Southeast Asian studies at China’s National Institute of International Strategy.
Original proposals included an eastern route through Vietnam and a western line through Myanmar to Bangkok and eventually Singapore, but a long-standing territorial dispute with Vietnam over the South China Sea and an ongoing political crisis in Myanmar have left those in jeopardy.
“From an economic perspective, the route through Laos is of least significance among the three, but it is the safest choice because the country is the most stable politically,” Xu said.
Construction has involved topographical challenges. Chinese engineers have drilled 168 tunnels – including 72 in the hard-to-reach mountainous north of Laos – and built hundreds of bridges, according to Chinese media.
When the coronavirus outbreak was unfolding in China last spring, the Laos rail link, after a brief pause, was among the first projects to resume. A group of 40 Chinese engineers, along with equipment and materials, were sent to Laos last March.
“This project can demonstrate China’s largesse and engineering prowess,” Simon Rowedder, a research fellow with National University of Singapore, said.
“It is a demonstration of power by setting a new standard for infrastructure in a region that did not have any significant rail infrastructure to begin with. It has potential to be sold as a poster child of Chinese progress.”
Resource-rich Laos is being prioritised in the Belt & Road Investment push. Since railway construction began in 2016, China has outlined investment plans including a motorway between Vientiane and Boten, on the Chinese border, and the cross-border Mohan-Boten economic zone, which Laotian officials hope could emulate some of the success of the southern Chinese technology hub of Shenzhen, neighbouring Hong Kong.
“In return for much-needed domestic development, Laos grants China further geopolitical clout that might allow further concessions for resource extraction, as well as infrastructure access to Southeast Asia,” Rowedder said.
For Laos, which has identified logistical connectivity as being vital to its development, a rail link with China could aid economic integration, especially in tourism, trade and investment.
However, the railway has raised questions. Environmentalists have warned against the possible impact and in 2018 there were protests in central Laos’ Vang Vieng after water in the Nam Song River turned murky, blamed on chemicals leaked from a tunnel construction site.
Laos’ heavy reliance on its deep-pocketed neighbour has also fuelled concerns that it is accepting what critics of China’s infrastructure financing elsewhere have described as “debt-trap” diplomacy.
It has been estimated that China holds nearly half of Laos’ total public debt, while debts to foreign lenders could soon exceed 85 percent of Laos’ GDP. However, Rowedder said it was too early to draw conclusions given Laos’ long history of development financed by external loans from, among others, the World Bank and Asian Development Bank.
Pavlicevic said China needed to prove the railway could bring benefits, and not only to itself. “What might be crucial for China’s railway diplomacy is whether this railway performs financially, whether it is followed by deeper economic engagement, to Laos’ benefit,” he said.
So far, the touted benefits have been mostly short-term: improved connectivity with Thailand is prominent in the Chinese narrative, while in Laos there is talk of revenue from transit fees (for freight trains en route to Thailand or Singapore) and from tourism.
“Frequent mention of transit fees is linked to the fundamental question of what being a ‘land-linked’ nation would actually mean,” Rowedder said. “Can it constitute more than merely a thoroughfare that benefits mainly larger economic powers such as China and Thailand?”