The China-Laos railway linking China’s Yunnan province to Vientiane, the capital of Laos, was officially opened in December 2021. This mega project under China’s Belt and Road Initiative is expected to improve connectivity and stimulate the economy but Laos has incurred hefty external debt to achieve this, says EAI academic Yu Hong. The railway alone is also just the hardware; the Laotians will have to do more to make the best of its investment.
ISEAS academic Nick Freeman says that Laos’ first major railway, inaugurated on 3 December 2021, will create a new link with the Chinese market and has the potential to be a game changer for the Lao economy. This comes at a good time, as Laos seeks post-pandemic recovery in 2022. But the opening of the railway alone does not guarantee such a prospect. While the railway might boost industries such as tourism and exports, leading to a shift away from traditional sectors such as power generation and mineral mining, Laos needs to develop economic "muscle tissue" to ensure that the potential of the railway is translated into tangible results through investing in both hard and soft infrastructure.
The pandemic has affected BRI projects, but China has swiftly taken measures to keep BRI projects going by ensuring financial flow and supply of materials, so that key BRI projects in Cambodia and Laos are not much affected. Through the BRI, China’s economic presence and influence in Southeast Asia will continue to rise, while Cambodia and Laos will continue to rely more on China for their economic development.
The Covid-19 pandemic provides a window of opportunity for China to exert its international leadership and influence. It has managed to turn the crisis into a diplomatic and strategic opportunity in mainland Southeast Asia and elsewhere. Public health diplomacy has become one of the key sources of China’s soft power projection, enhancing China’s image and influence. Cambodia and Laos have been most receptive to China’s public health diplomacy, including its vaccine diplomacy, while Thailand and Myanmar also have welcomed Chinese assistance. But Vietnam has been reluctant to endorse China’s Covid-19 assistance, including receiving Chinese vaccines.
Despite low global commodity prices, the mining sector in Lao PDR still constitutes a key source of state revenue and an important destination for foreign direct investment, especially from China, Vietnam and Thailand. However, economic development through industrial mining has not translated into employment opportunities for local communities. Rather, the Lao mining sector is marked by a parallel structure of medium- to large-scale mining operations and informal artisanal and small-scale mining (ASM), which often operate in a legal grey zone. ASM communities thus suffer from the sector’s high social and environmental costs and conflicts with foreign investors over allocated land.
Hanoi is applying its South China Sea playbook to the Mekong. It is putting effort into enmeshing all stakeholders while carefully balancing relationships with major powers interested in the Mekong. What does this mean for Southeast Asia and the region's relationship with China and the US? RSIS graduate research assistant Phan Xuan Dung examines how Vietnam can make a difference.
A new study suggests that official Chinese lending has dropped in recent years. This stems from lessons learnt after a decade of mistakes in overseas lending. How would this affect Belt and Road Initiative projects in Southeast Asia?
ISEAS academics Malcolm Cook and Ian Storey note that Southeast Asia would welcome a Biden administration policy towards Asia that is less confrontational and unilateralist, and firmer and more action-oriented. The region's governments prefer the new US administration to adopt a less confrontational stance towards China and lower US-China tensions. But while they welcome increased US economic and security engagement with the region, they are less enthusiastic about Biden’s emphasis on human rights and democracy.
Beijing has pledged financing, materials, technology and manpower to build railroads, hydropower stations and other infrastructure projects in Southeast Asian countries under the BRI. But China continues to face enormous challenges getting projects off the ground in countries that need the investment most. US academic Murray Hiebert examines why.