How China is building railways in a bid to fast-track diplomacy
South China Morning Post
8 min read
On the desolate northern outskirts of the Laotian capital Vientiane, a grand new railway station with a traditional curved roof seems to be sending a message: this country is going places.
From here, a Chinese-built railway line costing nearly US$6 billion connects Laos - one of the region's poorest nations - with China, the world's second largest economy. The Laotian leadership hopes it will bring new jobs and foreign investment, but also transformation for the only landlocked country in Southeast Asia.
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The railway line stretches some 1,035km (about 640 miles) from Vientiane to Kunming, capital of fast-growing Yunnan province in China's southwest. It is the first leg of a trans-Asian link that policymakers in Beijing have long envisioned will extend China's vast railway network to Southeast Asia, a region now crucial to its diplomatic and economic agenda.
From Southeast Asia to Central Europe and Africa, railway diplomacy is a key part of China's global infrastructure investment plan, the Belt and Road Initiative. Beijing touts it as an alternative model for economic development, especially in developing countries struggling with a low standard of living and lacking in infrastructure.
China does have an edge when it comes to building railways - it had some 155,000km of them as of the end of last year. That includes 42,000km of high-speed railway line - the most in the world.
As such, building railways has been high on Beijing's agenda since it announced the multibillion-dollar belt and road plan in 2013, according to Yu Hong, a senior research fellow at the National University of Singapore's East Asian Institute.
"The core of the belt and road is connectivity, and China has some of the world's best railway infrastructure," Yu said.
The China-Laos Railway was announced in 2010 and construction began at the end of 2015, with the line up and running six years later. It is seen as a flagship belt and road project.
The railway line cuts a swathe through the jungle-covered mountains of northern Laos, and Chinese workers and engineers had to excavate 167 tunnels and build 301 bridges to make it happen.
China provided nearly everything - most of the loans, the technology, the trains, ticketing systems, wireless network antennas and even training for the Laotian attendants.
And while many belt and road projects around the world came to a halt at the start of the Covid-19 pandemic in 2020, the China-Laos Railway was the first to fully resume construction so that it was ready to open in December 2021.
Yu said that launch was important for Beijing, whose overseas lending strategy has faced intense scrutiny. Critics say these projects have worsened the economic woes of many developing countries as they grapple with rising interest rates and high inflation in the post-pandemic era.
"The China-Laos Railway demonstrates that the BRI remains on track," Yu said. "There has been a lot of speculation that the BRI will slow down because of the Covid-19 pandemic and the changing global geopolitical environment, but it's not the case."
Meanwhile, after years of delays and cost overruns, Indonesia has just opened its first high-speed rail link - another belt and road project, with a US$7.3 billion price tag. The 142km railway line connects the capital Jakarta with Bandung in West Java province. It is the first high-speed railway in Southeast Asia - it has a maximum speed of 350km/h - and started operating earlier this month.
Yu said Beijing saw both projects as good news stories that it could use to sell its railways and the belt and road plan to the rest of Southeast Asia and beyond.
There has been discussion in Indonesia about extending the railway line to Surabaya, a port city in East Java province. Thailand has also begun talks with Laos about the potential development of a China-Laos-Thailand railway, while Vietnam is looking at the possibility of a high-speed rail link to China.
Beijing is also in talks with Nepal about a cross-border railway project that would connect Shigatse in Tibet with the Nepalese capital Kathmandu - a link Nepali leaders hope would open up the landlocked country's export routes to China.
While infrastructure projects can create jobs and boost foreign direct investment, productivity and tax revenues, many governments are put off by their high cost and slow economic returns, as well as liquidity risks and potential environmental damage.
The China-Laos Railway was heavily criticised from the start, particularly for its reliance on a workforce largely brought in from China, and there were protests over exploitation and the lack of job opportunities for locals.
In Central Asia, construction of a railway line first proposed in the 1990s to link China with Kyrgyzstan and Uzbekistan was due to begin this autumn. But it was reportedly called off because of a disagreement over financing, according to Uzbek news site Kun.uz.
Meanwhile in Hungary, funding from China to build the Budapest-Belgrade railway project was halted last month because Chinese contractors were unable to deliver EU-standard railway systems, Hungarian media reported.
Sithixay Xayavong, director of the Chinese Studies Centre at the National University of Laos, said policymakers in Laos were looking to the new railway line to boost the economy but it would not be an easy task. The country of 7.5 million has been hit by some of the world's highest inflation as well as severe currency depreciation.
He said returns on the railway would be slow and a lack of skilled workers had made it difficult to attract foreign investment to the country.
"In the first five years, profits may be relatively small and connectivity with neighbouring countries remains weak," Xayavong said.
He said the authorities needed to improve the efficiency of the civil service and the country's laws and regulations.
Yu, from Singapore, said Beijing would continue to push its railway diplomacy. But he said there should be more financial transparency on the projects and more efforts to create local jobs and protect the environment.
More than 20 million trips have already been taken on the China-Laos Railway, according to Chinese data. Photo: Laura Zhou alt=More than 20 million trips have already been taken on the China-Laos Railway, according to Chinese data. Photo: Laura Zhou>
For many in Laos, a shiny new railway line is something to celebrate - even if its top speed is 160km/h. Previously, the only railway in the country was a 7km line in the south, built by French colonialists in the 1890s to transport gold and timber through Cambodia to France. It closed in the 1940s.
Locals have been able to take slower train services since April last year - they travel at 120km/h, but there are more stops.
The railway line had notched up more than 20.9 million passenger trips as of early September, with over 25.36 million tonnes of cargo transported, according to official Chinese data.
"It is faster, and safer," said Mayvong Sayatham, who works for an NGO and often takes the train from Vientiane to Luang Prabang - a 338km journey that takes under two hours. It takes six hours on the bus.
She said the train was "always full". "Laos never had a train before and this has proven that it helps a lot logistically," Sayatham said, noting that it was cost-effective and saved time.
In Vientiane, there are signs of economic recovery, as foreign tourists slowly return to the city's cafes and night markets.
There are also plenty of signs of Chinese investment. Not far from the Vientiane Centre, a shopping mall backed by Chinese money, billboards and restaurant signs advertise in Chinese characters. The city's central bus terminal stands half-finished after the project ran out of cash, and many buildings nearby are up for lease - the ads are mostly in Chinese.
For Chinese investors like 47-year-old Liu Yongde, Laos offers business opportunities and a change of pace.
Liu, who is from Sichuan province in China's southwest, has invested 500,000 yuan (US$68,400) in a durian plantation about 85km away from Vientiane. Liu and his business partners have invested in bridges and roads to access the fields.
His plan is to sell the fruit back in China. "The labour costs are very low here - it's only 2,500 yuan for each labourer [per month]. But in China, you can barely hire one worker with 7,000 yuan [a month]," he said.
"I'm planning to bring my two sons to Laos after they graduate from college," he added. "It's so difficult for young people in China to get a proper job, but here it's less stressful and there are many opportunities to make money."
