China’s Silk Road ambitions face obstacles
KUNMING: For the southwestern city of Kunming, China’s plan to extend a high-speed rail link 3,000 kilometres (1,875 miles) south to Singapore is already a boon: pristine expressways, a gleaming station and something of a real estate boom, as young buyers crowd property showrooms.
In Laos, work has yet to start on what should be the first overseas leg of a rail line stretching throughout Southeast Asia.
The country, one of the region’s poorest, could struggle to finance even part of the US$ 7 billion cost and has yet to agree financial terms with China.
From Laos, the railway would enter Thailand. But Beijing’s negotiations have soured there as well, in part over financing, adding to a growing headache for China and highlighting the sort of problems Beijing may face as it develops its economic highways beyond Southeast Asia and across Asia under its “One Belt, One Road” project.
The ambitious plan to build land, sea and air routes reaching across the continent and beyond was announced by President Xi Jinping in 2013 with the aim of boosting trade by US$ 2.5 trillion in the next decade. As China’s economic growth slows, Beijing is encouraging its companies to win new markets overseas.
But across the Southeast Asia border, China is facing the most complex and possibly
There were very high-ranking dignitaries from both sides at the signing.
most significant obstacles to its ambitions, as its neighbours protest what they say are excessive Chinese demands and unfavourable financing conditions.
They have resisted Chinese demands for the rights to develop the land either side of the railway. Beijing says turning a profit on land development would make the rest of the project more commercially viable and allow it to make a greater upfront financial commitment. Myanmar, in addition, had environmental concerns and cancelled its part of the project in 2014.
For China, Southeast Asia’s concerns are “going to be the first significant hurdle as they implement One Belt, One Road,” said Peter Cai, a research fellow at Lowy Institute for International Policy in Sydney.
China’s foreign ministry and the Export-Import Bank of China did not respond to requests for comment.
In 2013, all signs pointed to fast completion of the Laos leg. Leaders from both countries agreed to speed up construction - China offered to loan most of the project funds. In November, construction on the line’s terminus in Kunming began.
The 2.1 billion yuan ( US$ 325 million) high- speed rail station in Kunming is now months from opening. Yet, there is no action in Vientiane despite an elaborate groundbreaking ceremony in December.
Without significant help from China, Laos lacks the financial muscle for the project, diplomats said.
It is unclear why China, which has been vying with Vietnam for influence in Laos, could not offer terms acceptable to Vientiane.
Both countries are invested politically in the scheme. China aims to increase its reach and influence in Southeast Asia and Laos says it wants to turn its country into one that is landlinked, rather than landlocked.
“There were very high-ranking dignitaries from both sides at the signing,” said a Western diplomat in Vientiane. “Most people believe it will cost more than US$ 7 billion, and Laos is struggling to even finance US$ 2 billion of that.”
The Laos government did not respond to a request for comment for this story. Diplomats though say the inaction ref lected an internal Communist Party rift
Diplomat
over how the negotiations with China were handled.
They said a shock decision in January by the politburo to exclude Deputy Prime Minister Somsavat Lengsavad from the top decision- making body in part indicated concern at senior levels that the deal’s terms were too favourable for China.
Somsavat had led negotiations on China-related projects and had faced internal criticism for being too pro- Chinese.
“The terms were good for Laos,” Somsavat told Reuters. Construction was delayed because Laos was still “researching some details” and because of local opposition of land issues. — Reuters