China-Laos railway on track
Project set to be completed in 2021, despite challenges
Construction of the China-Laos railway is underway and the line will go into operation by the end of December 2021, a leader of the project told the Global Times on Sunday.
The 414-kilometer railway will link Kunming, capital of Southwest China’s Yunnan Province, and Vientiane, capital of Laos. It is also part of the TransAsian Railway, a project designed as an integrated freight railway network across Europe and Asia.
Since a groundbreaking ceremony for the railway was held in December 2015, concrete progress has been made in Laos in the past two years, Huang Hong, head of the China-Laos railway commanding department under China Railway Group Ltd, told the Global Times.
China Railway Group, along with its subsidiaries and other affiliates such as China Railway No.5 Group and China Railway International Group, are working on different parts of the railway.
“The total length of our construction tender is 244.5 kilometers, including 45 tunnels and 99 bridges. As of midOctober, we’ve completed 14,925 meters in the channel excavation work,” Huang said.
Under a franchise agreement signed between China and Laos, the Laotian government provides policy support for the project while Chinese companies are responsible for 90 percent of the total construction work, Huang noted. “And the remaining 10 percent will be carried out by Laotian workers, in order to create more local jobs,” he said.
The investment in the project is about 40 billion yuan ($5.8 billion), 70 percent of which comes from Chinese investment and the rest from Laos, the Xinhua News Agency reported in August.
Laos has been stepping up efforts to improve its infrastructure, as it is the only inland country in Southeast Asia and it still has limited transport options, noted a Chinese business representative in Laos.
“The China-Laos railway will fix this problem and help lower logistics costs,” said Chen Cuiying, general manager of a Laos-based subsidiary of Yunnan State Farms Group Co.
For example, it costs about 900 yuan to transport 1,000 tons of rubber from Vientiane to Yunnan during the peak season for rubber production, which runs from July to December, Chen noted.
“Though it remains unclear how the operator of the China-Laos railway will price cargo, it will cost 50 to 60 percent less to transport cargo by rail than by road,” she told the Global Times on Monday.
Joint efforts
The Belt and Road Forum for International Cooperation held in Beijing in May provided new impetus for the China-Laos rail project, as a slew of concrete construction plans were advanced, Xu Liping, an expert with the National Institute of International Strategy at the Chinese Academy of Social Sciences, told the Global Times on Monday.
“However, it remains a project between two nations, and has not been considered as an intercontinental project extended to Thailand,” he said.
Huang, the chief commander, also noted that there is no timeline for the overall Trans-Asian Railway project.
The integration of the China-Laos railway into the Trans-Asian Railway will certainly play a role in generating profits for countries along the route, but the countries involved have not yet started any talks on the matter, he said.
Difficulties remain
Despite the progress, the China-Laos rail project still faces some difficulties. For example, funds are not always allocated on time, and Laos lacks some of the needed construction materials like cement, Huang noted.
“The poor transport conditions in the country also increase risks for the on-site work,” he said.
Given these challenges, the Laotian government should adopt some temporary policies to facilitate imports of related products, Xu noted.
In addition, as Chinese workers are usually more efficient, it’s necessary to provide some training programs for their Laotian co-workers to make sure both sides complete the project at the same time, he said.
“The project will play an exemplary role in the Belt and Road initiative and will showcase the enhanced connectivity among Southeast Asian countries, as well as bringing business benefits for local commu- nities,” he remarked.
“The project will play an exemplary role in the Belt and Road initiative and will showcase the enhanced connectivity among Southeast Asian countries, as well as bringing business benefits for local communities.” Xu Liping An expert with the National Institute of International Strategy at the Chinese Academy of Social Sciences
During his ongoing trip to Laos, Chinese President Xi Jinping called on both sides to build “a community of shared future with strategic significance” in a signed article published in the Laos media on Monday. Laos is also eager to enhance its economic links with China and cater for increasing consumer demand in the world’s secondlargest economy. Rice is a major part of the story, with China being one of the main destinations for Laos’ rice exports.
Laos posted a small trade surplus with China in 2016. This favorable balance of trade with China has been a hardwon result and is also an issue of great importance for the country. If Laos can accumulate more foreign exchange reserves, it could become a major engine for driving economic growth, if used properly. Besides the country’s traditional exports such as wood products, rice has become a new growth point in Laos’ exports to China.
China agreed to allow imports of rice from Laos for the first time in 2015, a move that gave Laotian farmers access to the world’s biggest rice market. In recent years, Thai fragrant rice has become one of the most popular consumer choices in the Chinese market, and there is a lot of public interest in rice imported from Laos, a country that shares a border with Thailand and has a similar natural environment. Rice imported from Laos to China is expected to rise from 7,200 tons in 2016 to roughly 10,000 tons in 2017.
However, this export potential is still far from being fully realized. Rice has long been the most important food crop cultivated in Laos. While the country boasts a long history of rice planting, a considerable portion of its rice is of relatively low quality. One reason for this is weak infrastructure. The Xinhua News Agency reported earlier this year that approximately 226,000 hectares of rice fields in the country are totally dependent on rainfall because they do not have irrigation systems. However, China requires imported rice be of high quality and free from any diseases. The demand in Chinese markets is increasing, so it is regrettable that Laos is unable at the moment to produce enough rice that can meet Chinese import standards.
In a bid to expand cooperation with Laos over rice, China could draw on its experience in agricultural cooperation with other Southeast Asian countries such as Cambodia. Following a series of measures to boost cooperation in rice planting, inspection and quarantine, as well as food security, Cambodia exported 94,720 tons of milled rice to the Chinese market in the first half of 2017, up 101 percent over the same period last year. China could make full use of its advantages in capital and technology to invest in Laos in a bid to improve the quality of rice in the country and push up productivity in related industries. In this regard, the two countries share large potential for cooperation in
rice processing, warehousing and logistics.
Given Chinese consumers’ enthusiasm for rice imported from Laos, its supply sometimes falls short of demand in the Chinese market. Although the China’s Xuanye (Lao) Co Ltd was reportedly approved by the Chinese authorities as the sole exporter of rice to China from Laos, people can easily find different brands of “Laos’ rice” at China’s leading online retailer Taobao. It is high time for China to crack down on the smuggling of illicit rice and counterfeit goods in order to prevent defective products from damaging the reputation of Laos’ rice.
Laos is not the only country that China is looking to in the hope of importing more highquality rice. Many Southeast Asian countries, including Thailand, Vietnam and Cambodia, have established rice trade contacts with China. In a bid to deepen cooperation, coordinated mechanisms and arrangements are needed now. In this regard, an industrial park in South China’s Guangxi Zhuang Autonomous Region to focus on trade, warehousing and processing of agricultural products exported to or imported from Southeast Asian countries would be helpful for boosting the rice trade between China and Southeast Asian countries. Although there are still a lot of problems that need fixing, rice trading has the potential to promote economic integration for China and Southeast Asian countries.