‘Game changer’: Laos opens Chinese-built railway line against backdrop of debt concerns
- Route will connect Chinese city of Kunming to the Laotian capital Vientiane
- It’s a huge test for the mostly agricultural subsistence-based economy, which does not have a big merchant class, says academic
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Analysts have acknowledged the potential economic boost, but have queried how infrastructure-poor Laos will pay its US$1.06 billion debt – and whether it is ready to exploit the state-of-the-art transport system.
But Chinese foreign ministry spokesman Wang Wenbin said on Wednesday the “flagship project” would give a “boost to Laos’ strategy to convert itself from a landlocked country to a land-linked hub”.
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China-Laos railway set to open in latest advance for Beijing’s Belt and Road Initiative
Laotian President Thongloun Sisoulith is expected to hold virtual talks with Chinese President Xi Jinping on Friday, with both expected to deliver speeches at the official opening ceremony.
The route will connect the Chinese city of Kunming to the Laotian capital Vientiane, with grand plans for high-speed rail to ultimately snake down through Thailand and Malaysia to Singapore.
Laos, which has a population of 7.2 million, previously had only 4km of railway line.
But now sleek red, blue and white bullet trains will speed along the new line at up to 160km/h (100mph), passing through 75 tunnels and across 167 bridges, stopping at 10 passenger stations.
Passenger services are expected to begin on Saturday, state media reported, although only for those fully vaccinated against Covid-19.
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A Buddhist ceremony was held on Thursday to bless the new railway, with Prime Minister Phankham Viphavanh banging a gong nine times to bring good luck, the Laotian Times reported.
Laos took a battering in the pandemic with economic growth declining to 0.4 per cent in 2020, the lowest level in three decades, according to the World Bank.
Hopes for a 2021 rebound were dashed when the country locked down as it registered more than 76,000 infections in the past eight months.
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Laos takes delivery of train as new China-funded Belt and Road railway nears completion
The railway could boost Laos’ economy, but the government needed to undertake substantial reforms – including improving its border management systems – a World Bank report noted.
But the project could be an economic “game changer”, according to Bangkok Bank chief economist Burin Adulwattana.
“I don’t look at it as China trying to bankrupt Laos … it’s not a Trojan horse strategy. I think it’s going to be a win-win situation,” he said.
But there was little transparency around how Laos would fund its debt, said Greg Raymond, an Australian National University lecturer in Asia-Pacific affairs.
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A World Bank report noted “funding of the existing public infrastructure programme looks increasingly unsustainable”.
Raymond noted the railway was a huge test for the country’s mostly agricultural subsistence-based economy, which did not have a big merchant class.
“The issue for Laos is whether their economy … their private sector is positioned to take advantage of this transport system,” Raymond said.
