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China builds railway station in Vientiane
China Railway Construction Corporation (CRCC) has begun construction of a large railway station in Vientiane, capital of Laos. The 14.500 square meter station consists of seven railway lines and four platforms, with a maximum capacity of 2500 passengers plus freight.
Vientiane Station is the terminus of the China-Laos Railway, which is part of the central route of the Pan-Asia Railway Network, formerly known as the Kunming-Singapore Railway. Much of the work on this BRI mega-project has been suspended due to Covid-19 but the China-Laos section has so far escaped major delays.
Talks between China and Laos about the railway started in 2001, long before BRI was even born. Construction finally began in 2016 and progress has been swift, with Chinese state media claiming in early July that “civil engineering is 90 percent completed”. Operations are scheduled to start in 2022. The line will carry passengers and freight with a maximum speed of 160 kilometers per hour.
The 414-kilometer China-Laos railway goes through difficult terrain, with more than half of the distance covered by tunnels (198 km) and bridges (62 km). Main tunnel builder is another BRI-veteran; the China Railway No 5 Engineering Group (CREC-5) . China says the line turns landlocked Laos into a “landlinked” country. About 50.000 Chinese citizens have migrated to Laos in recent years. The railway line will likely accelerate this development.
The railway runs from the Laotian-Chinese border town of Boten southwards to the capital Vientiane. From Boten northwards, the line runs to the Chinese border town of Mogan and then onwards to Kunming, capital of Yunnan Province. From Vientiane southwards, the trains may one day cross the border with Thailand to Bangkok and then all the way to Singapore. However, work in Thailand is progressing at a very slow pace and work on the link through Malaysia has been suspended.
The total cost of the China-Laos railway is an estimated US$6 billion. About 60% is financed directly by loans from BRI-banker Exim Bank of China. The remaining 40% is financed by a joint venture called Laos-China Railway, of which Laos owns 30% and China 70%. To help finance its stake in the railway, Laos borrowed $1.5 billion from Exim Bank.
Laos’ entire GDP in 2019 was only $18.17 billion, with foreign exchange reserves of about $1.1 billion and external debts of about 10.72 billion. It is estimated that some 45% of that debt is owned to China, for the railway project and for various earlier schemes, raising worries about a ‘debt trap’. Some of the loans are believed to be guaranteed by mining concessions and by land-for-agriculture concessions.
Laos rewards China on the international front by watering down ASEAN-resolutions on the South China Sea and by supporting China’s new national security law in Hong Kong.
Tycho de Feijter
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