China’s pan-Asia rail project is on a slow track, and that’s OK

Will Doig says the project’s arduous progress even in a pliable country like Laos reflects the scale of the challenge of this marquee belt and road project. When it comes to international development, China is still moving up the learning curve

Will Doig

Published: 2:00pm, 5 Aug 2018

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Following years of false starts and delays, China’s efforts to build a pan-Asia railway running the length of the Southeast Asian peninsula are finally beginning to gather steam. Tracks are being laid, bridges are rising, and boring machines are tunnelling through the soft limestone of the Himalayan foothills where China and Southeast Asia meet.

For China, this surely comes as a relief. The pan-Asia railway is as an early test case for the country’s marquee foreign direct investment effort, the Belt and Road Initiative. Its success or failure will speak to whether China can replicate its rail-building prowess abroad. But where the project is finally materialising – and where it is not – should concern Beijing.

Of the four countries on the railway’s route – Laos, Thailand, Malaysia and Singapore – Laos is the only one in which the project has moved well beyond the planning phase. In early 2017, I travelled to the Laos-China border region to take stock of the progress. Earthmovers were clearing tracts of land along the railway’s route, scores of Chinese labourers were living in newly-built roadside dormitories, and workers were surveying the rice paddies of Lao subsistence farmers for future clearing and construction.

Since then, the pace of work in Laos has only accelerated. Project managers claim that tunnelling is 20 per cent complete, and over four-fifths of the railway’s land is reportedly under Chinese control.

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But this positive progress report obscures the pan-Asia railway’s longer-term troubles. China isn’t moving aggressively forward in Laos because it’s the first country on the railway’s route. It’s because, of all four countries on the route, Laos is by far the easiest to penetrate. It’s one of the region’s poorest nations, landlocked and desperate for transport infrastructure. Bribery and corruption grease the wheels of large-scale development deals, and there’s consensus among the project’s observers that under-the-table yuan has done just that for the project in Laos.

It also benefits China that Laos’ leaders abide no public dissent. The state-controlled media blindly lavish praise on the project, and accountability is virtually non-existent. Public protests are rare. Many of the Lao villagers living the railway’s path aren’t fully aware of what’s coming their way. Several I spoke to had never seen a train in their lives.

In other words, China could hardly ask for a more acquiescent environment. And yet, just getting the Lao segment of the pan-Asia railway to 20 per cent complete has been arduous. Negotiations between China and Laos began well over a decade ago. The two countries signed a memorandum of understanding formally agreeing to the project back in 2010. But disagreements over financing, corruption in China’s now-disbanded Ministry of Railways, and the 2011 high-speed train collision in the Chinese city of Wenzhou stalled the project for years.

Emergency personnel carry out rescue operations after two carriages of a high-speed train derailed and fell off a bridge in Wenzhou, Zherjiang province, in July 2011. The accident was a setback for China’s ambitious plan to build a pan-Asia railway. Photo: Reuters

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The fact that it’s now moving forward — it’s scheduled for completion in December 2021 — isn’t cause for optimism. Instead, the slow pace of progress in such a pliable country bodes poorly for China’s plan to keep pushing the railway further into Southeast Asia, where it will have to work with countries with more money and more power to push back.

With time, China will find ways to circumvent some of the obstacles it has faced in Southeast Asia

Take Thailand. The Thai military government, installed in a coup in 2014, is friendly with Beijing. Since the changeover, the two countries have deepened their security ties. They’ve conducted joint air force exercises and are collaborating to build a Thailand-based military production facility that would link their defence industries. China and Thailand are also economically enmeshed. Thailand sells more fruit to China than any other country in the world; China, in turn, flies millions of tourists to Thailand’s resorts and red-light districts every year.

It’s a cosy relationship, but it’s also reciprocal rather than dependent, which means that Thailand has far more leverage in dealing with China than Laos does. Since 2011, Thailand has been classified by the World Bank as an upper-middle income country.

And despite the current government cracking down on freedoms of speech and press, public dissent is still possible in Thailand. Its media remains fairly independent, and its citizens are well aware of the risks of too much Chinese influence seeping into their country.

Thailand’s then prime minister Yingluck Shinawatra and visiting Chinese Premier Li Keqiang attend an exhibition of the high-speed rail project in Bangkok in October 2013. In negotiations to let China bisect its sovereign territory with a railway, Thailand has demanded fair terms, environmental impact mitigation and sustainable rates of return. Photo: AFP

In negotiations to let China bisect its sovereign territory with a railway, Thailand has demanded fair terms, environmental impact mitigation and sustainable rates of return. This is the main reason that, despite China’s aggressive courting of Thailand, it has made relatively little headway there. Construction crew broke ground on a tiny 3.5km “pilot” stretch of track in December, even as questions lingered about whether the line would carry passengers or freight. There’s no way to get from China to Singapore without going through Thailand, and whether the line will actually ever materialise there is far from certain.

Malaysia is similarly difficult for China to manipulate. The national election in May proved that Malaysians are willing to use their votes to stymie Chinese development there. The new prime minister, Mahathir Mohamad, talked frequently during his campaign about the dangers of too much Chinese influence and investment in Malaysia. Soon after his victory, he announced the suspension of a planned high-speed railway from Kuala Lumpur to Singapore — another link in the pan-Asia railway that China was bidding for the contract to build.

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When it comes to international development, China is still moving up the learning curve. With time, it will find ways to circumvent some of the obstacles it has faced in Southeast Asia. In fact, a pan-Asia railway doesn’t necessarily need to be one contiguous line stretching all the way from Kunming to Singapore to achieve many of China’s goals. Even a partially built network of rail could connect China with markets, seaports, industrial zones and other strategic interests on the peninsula. But pushing southwards will require increasing amounts of diplomatic deft on China’s part. A country like Laos may be easy to railroad — more powerful neighbours, not so much.

Will Doig is a journalist covering urban development and infrastructure in Asia and beyond, and the author of the book, High-Speed Empire: Chinese Expansion and the Future of Southeast Asia

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