Laos is set to open its new $5.9 billion railway that links China's southwest regions with the country. The Chinese-built railway passes through Laos' lush tropical mountains from the Laotian capital city of Vientiane to China's Kunming city.
The new 642-mile railway is set to officially open this week. The railway will only be open to cargo as passengers are still not allowed to travel given the COVID-19 pandemic.
The Kunming-Vientiane railway is part of a larger network that is aimed at eventually connecting China to Thailand, Vietnam, Myanmar, Malaysia, and Singapore. Southern China would get additional access to ports and export markets as a result of the project.
The railway is just one of the hundreds of projects under China's ambitious Belt and Road Initiative, which aims to expand trade by building roads, ports, and railways across Asia, Africa, and the Pacific.
Laos, which has a population of about 7 million, is wedged between China, Thailand, and Vietnam. While the project is expected to bring in more business to the country, critics argued that such projects could put Laos at risk of having too much debt, which it might not be able to pay.
Projects under the Belt and Road Initiative are typically financed by loans from Chinese state-owned banks. While most nations might be able to repay that debt, poorer nations are at risk of having too much debt.
A 260-mile segment of the railway will be operated by a joint venture company between China Railway group and two other Chinese government-owned companies called Laos-China Railway Co. The joint venture will own a 70% stake in the railway, while a Laotian state-owned company will own the rest of the 30%. About 60% of the investment used to build the railway came from borrowed Chinese money.
Laotian officials believe that the railway would enliven their economically isolated country by connecting it to China and markets as far as Europe. However, Western analysts believe the benefits to Laos beyond serving as a conduit for Chinese commerce are unclear, and the cost looks to be prohibitively expensive.
Scott Morris of the Center for Global Development in Washington said that the railway would clearly generate "very positive economic returns" for China, but how exactly it would benefit Laos is not that plain to see. Morris said that Laos only has 21 stations, and the railway looks like it has been designed to serve the needs of China so that it can get access to foreign ports.
"This is essentially a Chinese public infrastructure project that happens to exist in another country," Morris said.
