The Importance of the China Laos Railway Development

I am currently in Vientiane, the capital of Laos. It’s three years since I was last in Laos and one of the first things that I noticed is the large number of Chinese tourists, ahead of the Chinese New Year. A trekking guide in Luang Prabang, the UNESCO heritage approved town, who was born on the Chinese border, boasted of many Chinese clients and told me that the Chinese like to travel in large groups and frequently by road across the border. Soon the Chinese will swarm across South East Asia in increasing numbers but by rail. Chinese consumers can be demanding posing major challenges but they are big spenders.

China is financing the important rail link with Laos. For a summary of the related news open this link.

I have travelled extensively in Eastern and South-Eastern Asia, including to Southern China and Tibet. Putting political considerations aside, the soft loans from China for infrastructure projects are massively important for developing the economy. I have witnessed first-hand the benefits of Chinese infrastructure investment in Tibet. By comparison, I have seen Asian economies that have developed without infrastructure investment and there are deep scars.

In international terms of GDP per head, Laos is a poor country but it has a rich cultural heritage and is incredibly beautiful, with 75% of the country covered by forests and jungle in rugged mountains. Rapid economic growth will change Laos. Let’s hope that the best of Laos can be preserved for both the Lao people and visitors alike.

Eventually, Southern China will be linked by rail to Thailand and Singapore. In terms of geopolitics, one is reminded that China is increasing her reach. Sadly, visitors to South East Asia quickly see the scars of the colonial years and of the American post-colonial years.

This leaves me with two interesting open questions:

  1. Why can’t the global financial system provide infrastructure investment for developing countries?
  2. Why don’t Western countries match China will soft loans to developing countries for infrastructure investment?