The line is unlikely to bring Chinese tourists into Laos for the foreseeable future, given China’s zero-covid policy
On December 3rd, at long last, a portion of those aspirations was realised. A high-speed rail line connecting Kunming to Vientiane, the capital of Laos, was opened after five years of construction. The route is part of China’s Belt and Road Initiative, and the completed section comes with a hefty price tag of $5.9bn—equivalent to nearly a third of Laos’s annualFor China, the rationale for closer links with South-East Asia is clear.
The strategy has historical precedent. Until the 1970s Japanese firms’ main interest in South-East Asia was buying raw materials. Then they began moving production to the region. The shift took off after the Plaza Accord of 1985, at which Japan agreed to let the yen appreciate, which widened the gap between domestic wages and those in low-cost countries. Firms were able to preserve their competitive advantage by moving, while also fostering technological expertise elsewhere.
What does the new train line mean for Laos? The landlocked country suffers most from South-East Asia’s limited connectivity. The World Bank has been cautiously optimistic about the new route: Vientiane, it reckons, could become a logistical hub into China from Thai ports, but only if the Lao customs system were made more efficient and connecting roads improved.
Other assessments, however, are less optimistic. A paper published by the Asian Development Bank Institute last year suggested that the investment was unlikely to be profitable given its expense. Opinions of the Belt and Road Initiative have soured since 2016, and fears have risen that the infrastructure acts as a debt trap which gives China influence over borrowers.
A wider network across the region would yield greater economic benefits for everyone, but that is outside any one country’s control. Thailand approved the first step of a Chinese-built high-speed line in March; it is intended to reach the Lao border at a later stage. Even the first half is not expected to be completed for five years, however, and such schemes often miss their deadline, if they materialise at all.
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