Laos opens railway to China as debt to Beijing rises

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After a blessing by Buddhist monks, Lao Prime Minister Phankham Viphavanh on Friday rode the first run of a $5.9 billion Chinese-built railway that links isolated, mountainous Laos with southern China in an effort to increase trade.

Both governments tout the 1,035-kilometer (642-mile) line from the Lao capital, Vientiane to Kunming in China’s poor southwest as a boost to economic growth. But it leaves a debt that foreign experts warn Laos, a country of 7 million people wedged between China, Vietnam and Thailand might struggle to repay.

The railway is one of hundreds of projects under Beijing’s Belt and Road Initiative to build ports, railways and other facilities across Asia, Africa and the Pacific. Poor countries welcome the initiative, but some complain they are left owing too much to Chinese banks.

The first train pulled out of Vientiane following an inauguration ceremony conducted by Chinese President Xi Jinping and his Lao counterpart, Thongloun Sisoulith, over a video link from their capitals, the Lao news agency reported.

On Thursday, saffron-robed Lao monks conducted a ceremony for the railway, according to the Lao news agency.

The railway is to carry only cargo across the border for now due to curbs on passenger travel imposed to contain the coronavirus.

The Kunming-Vientiane railway is a link in a possible future network connecting China with Thailand, Vietnam, Myanmar, Malaysia and Singapore. That would give southern China more access to ports and export markets.

Chinese contractors are building a high-speed rail line from the Thai capital, Bangkok, to the Lao border. That won’t be completed until 2028 and will leave a gap between the border and the line to China.

Borrowed money makes up 60% of the railway’s investment. Foreign experts say that is unusually high for an infrastructure project and increases the risk that the railway might fail to generate enough revenue to repay its debt.

Laos has been one of the world’s fastest-growing economies over the past decade but still is among the poorest. Its average economic output per person more than doubled since 2010 but stands at $2,600.