China’s southern railway expansion is not all good news for Laos

Posted on : 2021-12-19 10:05 KST Modified on : 2021-12-19 10:05 KST
China’s Belt and Road Initiative has built massive infrastructure in Southeast Asia, but at a cost for many of those living there
Chinese leader Xi Jinping and Lao President Thongloun Sisoulith congratulate one another on the opening of the China-Laos railway during a virtual event on Dec. 3. (Xinhua/Yonhap News)
Chinese leader Xi Jinping and Lao President Thongloun Sisoulith congratulate one another on the opening of the China-Laos railway during a virtual event on Dec. 3. (Xinhua/Yonhap News)

On Dec. 3, a railroad running for a total length of 1,035 kilometers (642 miles) began operations between Kunming, capital of China’s Yunnan Province, and Vientiane, capital of Laos. It’s a distance comparable to that between the South Korean port city of Busan and the Russian port city of Vladivostok. The railway’s construction and operation are being handled by the Laos-China Railway Co., a joint venture in which the China Railway group controls a 70% share and a Lao state company has a 30% share.

Laos is famous for its rugged jungles and mountains. The jungles, which cover a wide range of uplands in Southeast Asia and are known collectively as Zomia, have long been home to a range of tribal minorities who live free from the meddling of the state governments of the plains.

In his 2009 book “The Art of Not Being Governed: An Anarchist History of Upland Southeast Asia,” anthropologist James Scott argues that the people who have lived for thousand years in these highlands outside of the order of nation states have been misrepresented as “uncivilized barbarians.” Scott explains that Zomia is inhabited by people who have not yet been incorporated into nation states. Those people, he argues, are the descendants of slaves and those who fled from the tyranny of the state-building projects of the plains over the past two millennia, projects that have brought slavery, conscription, taxation, corvée, disease and war in their wake.

Travelers wait to board a train running along the China-Laos railway at a station in Kunming, Yunnan, on Dec. 3. (Xinhua News Agency)
Travelers wait to board a train running along the China-Laos railway at a station in Kunming, Yunnan, on Dec. 3. (Xinhua News Agency)
Is the railroad from China good for Laos, too?

China’s dream is to build a railroad through Zomia to help it expand south. Opening this central line is the first step in its plan to create a rail link to Singapore that runs through Thailand and Malaysia. Once complete, a planned eastern line through Vietnam and Cambodia and a planned western line through the heart of Myanmar would represent a major pillar of the Belt and Road Initiative, which expresses the Chinese desire to achieve the great rejuvenation of the Chinese people through global infrastructure projects.

The Chinese-led development of logistics infrastructure in Southeast Asia is ongoing today. An expressway is being built in Cambodia, and railways are being laid in Indonesia, the Philippines and Malaysia as well. The World Bank projected that opening this railroad would enable Laos to save 40%-50% of its current logistics costs and would increase the volume of shipping from 1.2 million tons in 2016 to 3.7 million tons by 2030.

The Lao government expects that the new railroad will increase the value of exports by 60% and bring in a million tourists from China each year. In a small country like Laos — both landlocked and resource-poor — this kind of rail link is regarded as an opportunity for economic growth.

Needless to say, the railroad construction project is not without its downsides. Its scale is immense, accounting for one-third of Laos’ gross domestic project (GDP). The Lao government has had to take on massive debt to cover its share of the cost, which amounts to 30% of the total.

According to a report published in August by Singapore’s ISEAS–Yusof Ishak Institute, the Lao government was loaned US$1.5 billion by China for the railroad project. That’s a considerable amount for a country with a nominal GDP of US$20 billion and foreign exchange reserves of US$1.1 billion.

Recently, China has been accepting transfers of Lao land in exchange for writing off part of the debt or postponing repayment.

Laos’ dependence upon China is increasing every year. China became its biggest investor in 2013; as of June 2020, the Chinese have invested a cumulative total of around US$10 billion in the country and account for around 60% of all foreign direct investment. In 2022, 55% of the debt the Lao government must repay is owed to China.

While Laos’ fiscal deficit is not at a worrisome level relative to its GDP, the country doesn’t have much momentum for growth yet, which has prompted widespread concerns that the country could fall into a debt trap. The Lao government has opened 12 special economic zones that provide massive tax breaks and other benefits to foreign corporations investing there. Four of those zones, which occupy 500,000 hectares of space, are operated by Chinese companies.

The special economic zones could integrate Laos more quickly into the global production network. But a vision of growth without democracy or labor rights is liable to leave ordinary people in a bind.

In March 2015, more than 70 workers at a fertilizer plant owned by a Chinese company in Vientiane went on strike to protest unpaid wages. Such events occur almost every year. Another strike over late wages was organized by 300 workers at a clothing factory run by a Chinese company in April 2020, toward the beginning of the COVID-19 pandemic.

When the biggest private-sector company in Laos laid off a large number of workers about a month later because of the spread of COVID-19, workers organized mass protests. In late October this year, over 500 people working at a Chinese-owned banana plantation walked off the job because of unpaid wages and exposure to harmful materials.

But such forms of resistance are greatly limited by tough regulations in Lao law. In Laos, workers who join groups that organize demonstrations or other actions that can create social unrest can be sent to prison. In fact, Laos doesn’t guarantee the freedom of association or the right to strike, and dissidents face severe oppression and human rights violations.

Quickly becoming more dependent on the Chinese economy

Developing special economic zones and the Mekong River basin has required the forceful appropriation of land, inflicting pain on the people who used to live on that land. In 2011, 25 locals were arrested for organizing demonstrations resisting the appropriation of land in Salavan Province in southern Laos. In April 2019, a member of that group was arrested again without a clear basis and later died of electric shock in prison. The deceased had reportedly been suffering from health issues, including malnutrition, while in custody.

More than a hundred households living in Hadxayfong District, in Vientiane, were forcibly relocated so that their land could be used to build the railroad. Two years later, they still haven’t received any compensation. Another cause of grumbling is that the promised compensation — US$11 per square meter — is lower than the going rate.

Despite these circumstances, the trains will keep running, and Laos will fall under the sway of the Chinese economy. But the people of Laos themselves don’t seem overjoyed about these developments.

When Shanghai Wanfeng Real Estate Co., a Chinese company operating in the That Luang Lake Specific Economic Zone, announced it would build a golden Buddha statue measuring 100 meters in size, many citizens of Laos voiced their anger on social media.

Such a huge statue of the Buddha, built with little regard for harmony with the local environment, isn’t a good fit for Laos’ Buddhist culture. Perhaps the Belt and Road Initiative itself, representing a Chinese-led plan to create links between the world’s transportation networks, doesn’t pay enough consideration to the lives of locals.

That’s why I can’t help but doubt that the new railroad will do much to improve the lives of ordinary people living in Laos.

By Hong Myung-kyo, staff reporter

Please direct questions or comments to [english@hani.co.kr]

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