How China is building a railway in an attempt to speed up diplomacy

China has an edge when it comes to building railways – about 155,000 km at the end of last year. It also includes 42,000 km of high-speed rail – the most in the world.

According to Yu Hong, a senior research fellow at the National University of Singapore’s East Asia Institute, building railways has been high on Beijing’s agenda since it announced the multibillion-dollar Belt and Road Initiative in 2013.

„The key aspect of the Belt and Road is connectivity, and China has the best railway infrastructure in the world,” Yu said.

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The China-Laos Railway was announced in 2010 and construction began at the end of 2015, with the line operational six years later. It is seen as a major Belt and Road project.

The railway cuts a section through the forest-covered mountains of northern Laos, and Chinese workers and engineers had to dig 167 tunnels and build 301 bridges.

China provided almost everything – most of the loans, technology, trains, ticketing systems, wireless network antennas and even training for Laos helpers.

While many Belt and Road projects around the world were halted at the start of the Covid-19 pandemic in 2020, the China-Laos railway was the first to fully resume construction, making it ready to open in December 2021.

Yu said the launch was important for Beijing, whose foreign debt strategy has come under intense scrutiny. Critics say the programs have exacerbated the economic woes of many developing countries, with interest rates and high inflation in the post-pandemic era.

„The China-Laos railway proves that the BRI remains on track,” Yu said. „There has been a lot of speculation that the BRI will slow down due to the Covid-19 pandemic and the changing global geopolitical environment, but that is not the case.”

Meanwhile, after years of delays and expense, Indonesia has opened up First high-speed rail link – Another Belt and Road initiative, with a US$7.3 billion price tag. The 142 km railway line connects the capital Jakarta with Bandung in West Java province. It is Southeast Asia’s first high-speed railway – which has a maximum speed of 350 km/h – which began operations earlier this month.

Yu said Beijing saw both projects as good news that it could use to sell its railway and Belt and Road plan to Southeast Asia and beyond.

Discussions are underway in Indonesia to extend the railway line to the port city of Surabaya in East Java province. Thailand has started talks with Laos on the possible development of a China-Laos-Thailand rail line, while Vietnam is looking at the possibility of a high-speed rail link with China.

Beijing is in talks with Nepal on a cross-border rail project linking Shikatse in Tibet with the Nepalese capital Kathmandu – which Nepalese leaders hope will open up the landlocked country’s export routes to China.

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While infrastructure projects can create jobs and increase foreign direct investment, productivity and tax revenue, many governments are put off by their high cost and slow economic returns, as well as liquidity risks and potential environmental impact.

The China-Laos Railway has been heavily criticized since its inception, particularly because of its reliance on labor brought in heavily from China, with protests over exploitation and a lack of employment opportunities for local people.

In Central Asia, construction of a railway first proposed in the 1990s to connect China to Kyrgyzstan and Uzbekistan was set to begin this fall. But according to Uzbek news site Kun.uz, ​​it was reportedly called off due to disagreements over funding.

Meanwhile, in Hungary, Chinese funding for the construction of the Budapest-Belgrade rail project was suspended last month because Chinese contractors could not deliver EU-standard railway systems.

Sithixay Xayavong, director of the China Studies Center at the National University of Laos, said policymakers in Laos are looking to the new railway line to boost the economy, but it will not be an easy task. The country of 7.5 million people suffers from the world’s highest inflation and severe currency depreciation.

He said earnings in railways are slow and lack of skilled workers makes it difficult to attract foreign investment to the country.

„In the first five years, the profit may be relatively small and the connection with neighboring countries will be weak,” Xayavong said.

He said the authorities should improve the efficiency of the civil service and the country’s laws and regulations.

Yu, who is from Singapore, said Beijing would continue its railway diplomacy. But he said there should be more financial transparency in the plans and more efforts to create local jobs and protect the environment.

According to Chinese data, more than 20 million trips have already been made on the China-Laos railway. Photo: Laura Cho

For many in Laos, the shiny new railway line is something to celebrate – even if its top speed is 160km/h. Previously, the country’s only railway was a 7km stretch in the south built by French colonialists in the 1890s to transport gold and timber to France via Cambodia. It closed in the 1940s.

Locals have been able to take the slow train services since April last year – they travel at a speed of 120 kmph but have more stops.

According to official Chinese data, the railway carried more than 20.9 million passenger trips in early September, carrying 25.36 million tons of cargo.

„It’s fast and safe,” said Mewong Sayatham, an NGO worker who often takes the train from Vientiane to Luang Prabang – a 338km journey in less than two hours. It takes six hours by bus.

The train is „always full,” she said. „Laos has never had a train before and this has proven to help a lot logistically,” said Saitam, adding that it is cost-effective and time-saving.

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In Vientiane, there are signs of economic recovery as foreign tourists slowly return to the city’s cafes and night markets.

Signs of Chinese investment abound. Not far from the center of Vientiane is a shopping mall supported by Chinese money, with billboards and restaurant signs advertising in Chinese characters. The city’s central bus terminal stands half-way through the project with no money, and many nearby buildings are leased out — with advertisements mostly in Chinese.

For Chinese investors like 47-year-old Liu Yongde, Laos offers business opportunities and a change of pace.

Liu, from China’s southwest Sichuan province, has invested 500,000 yuan (US$68,400) in a durian plantation 85 km 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 to China. „Labor costs are very low here – only 2,500 yuan for each worker [per month]. But in China, you can’t hire a worker with 7,000 yuan [a month],” he said.

„I plan to bring my two sons to Laos after they graduate from college,” he added. „It is very difficult for young people to find a proper job in China, but here it is less stressful and there are many opportunities to earn money.”

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