CHIANG MAI – The Beijing-backed and financed China-Lao high-speed railway’s official inauguration was planned for December 2021, symbolically opening coincident with the 46th anniversary of the founding of communist rule in Laos.
But the Covid-19 crisis has caused delays in the 414-kilometer railway’s construction, with progress on the link from the northern Lao border town of Boten down to the capital Vientiane now frozen amid the viral panic.
The mega-project is not only an expression of the friendship that China has established in recent years with its impoverished southern neighbor. It also aims to serve as a connective gateway linking southern China with Thailand and the rest of mainland Southeast Asia with plans to extend as far south as Singapore.
In that context, the railroad is of utmost strategic importance. China is not likely to give up its grand plans and visions because of the Covid-19 crisis.
Rather, Beijing will likely seek to leverage the crisis to double down on its Southeast Asian ventures, including in Laos, which are vital to expanding exports and securing access to needed agricultural and mineral resources.
On the Chinese side of the border, the 600-kilometer stretch of the railroad, which runs from Yunnan’s provincial capital of Kunming to the Lao northern border, has been completed, an indication of the special emphasis Beijing has put on the project.
The importance China places on its relations with Laos as a beachhead into the wider Southeast Asian region has been apparent in its response to the Covid-19 crisis.
In the latest example of Beijing’s so-called “face mask diplomacy”, Chinese authorities last month delivered more than 2,000 coronavirus test kits, while a small group of a dozen Chinese medical experts arrived in the country in early April to help fight the virus.
The privately-run Jack Ma Foundation, named after the Chinese tycoon who founded the e-commerce giant Alibaba, recently donated 5,000 sets of protective clothing along with testing sets and several hundred thousand face masks.
While Jack Ma’s assistance is a private initiative, the Chinese government’s is not. But both goodwill gestures may help to enhance China’s image as a benevolent neighbor — precisely the portrayal that Beijing needs to fulfill its vision of becoming the region’s post-pandemic dominant power.
China has resorted to more than sending medical supplies and teams to turn the Covid-19 crisis into strategic opportunity, despite the fact that the lethal disease originated in China before spreading worldwide.
On March 22, with the virus crisis reaching new global heights, the ruling Chinese Communist Party (CPP) sent a congratulatory message to Lao People’s Revolutionary Party (LPRP), the country’s only legally permitted political party, on the 65th anniversary of its formation.
According to the message, the LPRP “has united and led its people in successfully realizing national liberation and unification and scoring splendid achievements in the country’s socialist construction and reform cause.”
The message went on to say that “the [CCP] attaches great importance to China-Laos ties” and pointed out that Chinese President Xi Jinping in April 2019 signed an action plan with LPRP secretary general Bounnhang Vorachit for “charting the course for the development of the relations between the two countries in the new era.”
More telling, the message stated that “following the outbreak of Covid-19 [in China], the Lao party, government and all sectors of the Lao society lost no time in expressing sympathy and solicitude to China providing financial and material assistance, well embodying the spirit of the China-Laos community with a shared future.”
At the outset of 2020, the Laos-China Friendship Association raised US$400,000 in cash and $100,000 worth of medical supply donations to send to China when the crisis first erupted in the city of Wuhan, the disease’s first epicenter.
At a ceremony in Vientiane on February 21, Chinese Foreign Minister Wang Yi and Lao Prime Minister Thongloun Sisoulith stood side-by-side, raised their arms and together chanted “Stay strong Wuhan!” and “Stay strong China!”
Laos, of course, needs its giant northern neighbor’s support more than vice versa. With a population of 7.3 million, more than half of which lives in small villages without proper road access and often without regular power, Laos’ nominal gross domestic product (GDP) per capita is a paltry US$ 2,670, among the lowest in Asia.
But the small nation is strategically positioned as a vital link in Xi’s $1 trillion infrastructure-oriented Belt and Road Initiative (BRI), one that could grow in importance as Beijing inevitably restrategizes the scheme in a post-pandemic order.
That is why the potential spread of coronavirus in Laos, with its limited health facilities and mostly hard-to-reach mountainous terrain, has suddenly emerged as a major headache for China’s security planners.
With only 16 confirmed Covid-19 infections and no reported deaths so far, landlocked Laos has been largely spared from the lethal outbreaks that have hit other regional countries. As elsewhere, Laos’ borders are now closed and non-essential workers have been ordered to remain home.
As for the thousands of Chinese laborers and technicians working on the railway project, sources in Vientiane say that only a handful have returned to Laos after returning to their hometowns in China at the end of January to celebrate Chinese New Year.
Whether the project kicks back into high gear any time soon is unclear. Construction of the railway, which entails blasting 72 tunnels through mountains and building 170 bridges and 33 stations, has caused environmental damage and displaced local communities.
According to a June 2019 Radio Free Asia report, only 230 out of 4,211 families negatively affected by the project have been compensated for their confiscated land, forcing many of the displaced to move to Thailand to find jobs.
The massive influx of Chinese capital — and workers who may or may not return home after the project has been completed — will inevitably alter the entire socio-economic structure of the comparatively small, poor and vulnerable country, sources in Vientiane fear.
There are also questions about the project’s funding.
According to initial estimates, which may change because of delays and other complications caused by the virus crisis, 40% of the railway’s total $6-7 billion cost will be shouldered by the two sides’ goverments, with Vientiane paying 30% and Beijing 70%. Private and state enterprises in both countries will finance the remaining 60%.
In the event the Lao government can not pay its share, amounting provisionally to $840 million, China has agreed to provide a $500 million low interest loan. As typical in communist-ruled Laos, the exact terms of the deal are not entirely transparent.
What was clear in the past, when Laos was unable to repay Chinese loans for various development projects, it gave long-term land concessions and access to natural resources to Chinese state and private companies in compensation.
For example, when the Lao government could not pay back a $80 million loan provided by China to build a modern sports stadium for the 2009 Southeast Asian Games, the government paid the contracted Chinese company with a 300-hectare land concession.
The question being asked now in Vientiane is whether Laos can afford such a massive and costly undertaking without losing significant sovereignty to China?
In 2018, the Washington-based Center for Global Development think tank ranked Laos as one of the eight most vulnerable to a potential debt trap of the 70 or so countries participating in the BRI. It’s not clear how much that math may have changed in the wake of the economically debilitating Covid-19 crisis.
To be sure, China is not the only country providing Laos with help to weather the coronavirus storm. In February, the US donated surgical gowns, face shields, biohazard disposal bags, aprons, sanitizers, gloves, face masks and other medical supplies to Laos.
More American aid was delivered on March 13, when US ambassador to Vientiane, Peter Haymond, announced that the United States Agency for International Development (USAID) will provide Laos with additional funding of nearly $2 million to fight the virus.
Those shows of US support have no doubt been welcome in Laos, but no foreign power can match the role China now plays in the country. By all accounts, the Covid-19 crisis has so far only strengthened, not weakened, Vientiane’s ties to Beijing.
The high-speed railroad project may be temporarily stalled because of the pandemic, but, as the CPP stated in its message to the LPRP, China remains committed to “strengthening strategic communication” in a “shared future.”
But when trains from Kunming one day start to arrive in Vientiane in a post-pandemic era, it’s not clear how much control Laos’ indebted government will actually retain over its nation’s destiny.