If Laos fell into a Chinese debt trap, would it make a noise?

China’s largesse in funding regional infrastructure has prompted claims Beijing is seeking leverage over poorer, heavily indebted nations

Yet Laos’ increasing reliance on its large-pocketed neighbour has faced relatively little scrutiny, in part because it is obscured by Vientiane’s ties with Hanoi

Reading Time:6 minutes

A Laos trainee learns signalling skills from a Chinese mentor Wei Songtao as part of work on the China-Laos railway. Photo: Xinhua

Published: 12:00pm, 20 Feb 2021Updated: 11:02am, 22 Feb 2021

Cambodia’s close ties with China have often led to criticism that the Southeast Asian country is too dependent on, and even a client state of, the world’s second largest economy. However, its next-door neighbour Laos – despite enjoying billions of dollars of Chinese funding – has seldom been viewed in the same light. Why not?

Analysts says this is due to the more adroit way in which Laos has handled relations with China and its other neighbours, most notably Vietnam.

Since overtaking Japan as Cambodia’s biggest aid donor in 2010, China’s influence in the country has grown steadily through an influx of investment, workers and tourists. It now supplies about 40 per cent of Cambodia’s foreign direct investment

Yet, Laos, which in recent years has also increasingly fallen under China’s orbit, has not faced the same amount of scrutiny as Cambodia. Nor has it been accused of “cozying” up to China.

The landlocked country has become more reliant on China in recent years, especially for financing the development of its infrastructure. Experts warn this could leave it beholden to Beijing, which has been accused of using its infrastructure financing elsewhere in the world as a form of “debt-trap” diplomacy.

CHINA, VIETNAM: A BALANCE

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