As China-Laos railway nears completion, infrastructure poised to transform Lao economy

Lao Minister of Foreign Affairs Saleumxay Kommasith. Photo:, CC BY 3.0, via Wikimedia Commons

The China-Laos railway, slated for completion by December, may bring the most dramatic shifts of any current infrastructure project in Southeast Asia as it transforms communities along its route and changes the dynamics of Laos’ economy. Offering an alternative to Laos’ reliance on hydropower dams for economic development, it could also become increasingly significant for China.


Laos appears to be on schedule to open the country’s first national railway by the end of 2021, as the controversial China-Laos railway, linking Vientiane to Kunming in China’s Yunnan province, nears completion.

In early February, Chinese Foreign Minister Wang Yi met with Lao Minister of Foreign Affairs Saleumxay Kommasith to discuss the US$6 billion project, a part of China’s Belt and Road Initiative (BRI) and its plan to eventually develop rail lines stretching all the way to Singapore. 

Chinese state-run media say construction teams and engineers in Laos will likely finish laying track in May, leaving only signaling systems and other infrastructure outstanding. The chairman of China Railway International, one of many contractors on the project, said in January that the line’s bridges and tunnels are 95% complete.

The railway is poised to cause a major shift in Laos’ economy as it will be the fastest mode of transportation in the country by far. Freight and passenger trains will reportedly travel at 160 kilometers per hour, linking cities and communities that are now connected only by winding, often poorly-maintained roads. The railway is, however, technically not the first in Laos; in the late 19th century, the French built a 7-kilometer route in the south near the Cambodian border.

On the national level, the high-speed railway’s biggest impact is that it offers an alternative to Laos’ plans to rely on hydropower dams for its economic development, to become the “battery of Asia” by exporting electricity to its neighbors, chiefly Thailand. 

The railway from Vientiane to Kunming may also become even more important to China, as Myanmar’s coup has jeopardized the rail project under the BRI’s China-Myanmar Economic Corridor. A planned railway would run from Kunming to Mandalay, with branches to both a Chinese deep sea port at Kyaukphyu and down to Yangon. 

Following the Myanmar military’s coup, the futures of investment projects in the country are uncertain. Though China has not condemned the coup, Aung San Suu Kyi had built strong ties to China over BRI projects.

Railway brings potential and controversy

Proposed connections for the Kunming-Singapore railway. Credit: Classical geographer, CC BY-SA 3.0, via Wikimedia Commons

The portion of the route inside Laos stretches 422 kilometers from Vientiane north to the Boten border gate. The route passes over gorges and through mountains; developers have bored 75 tunnels totalling around 200 kilometers and laid over 150 bridges spanning at least 60 kilometers.

For communities along the route, the China-Laos railway brings one of the most drastic shifts of any current infrastructure project in Southeast Asia. Laos is among the least industrialized states in the region and the country’s north, where the rail line runs, has historically been relatively removed from centers of commerce. The railway is a key piece in the Lao government’s vision to see the country “graduate” from the UN’s least-developed country list by 2024.

While proponents have touted the railway’s economic benefits, the project has drawn major international criticisms over its environmental and social impacts. Laos is a one-party state known for its strict repression and intolerance of dissent. The opinions of local communities along the route were simply not part of the conversation as governments and developers drew up plans for the railway.

There are reports that the project has pushed people off of their land without compensation, contaminated water sources and damaged farmland. The Lao government has requisitioned nearly 4,000 acres of land for the project and construction is estimated to displace over 4,400 families. Some people who moved to make way for the railway have said the government hasn’t compensated them fairly for their land and property. 

The Vientiane Times reported in November that completion of the line may be delayed due to mediation and land acquisition issues. The railway has also brought a spree of economic zones and other large developments along its route, many of which have faced criticisms and questions despite the risks of speaking out.

GMS Nam Theun 2 Hydroelectric Project in Lao PDR. Photo: Asian Development Bank shared under a Creative Commons (BY-NC) license

High-speed rail offers an alternative to hydropower

To date, much of the Lao government’s economic plans have hinged on building an ever-increasing number of hydropower dams in the Mekong river basin. This plan has seen far more attention than the railway from international advocates looking to support Lao communities in the face of negative impacts. 

Large dams on the mainstream of the Mekong and its tributaries pose major threats to the food supplies and livelihoods of the 60-70 million people who rely on the river. Two dams on the Mekong mainstream, the Thai-backed Xayaburi dam and the Malaysian-backed Don Sahong dam, are already operational.

Hydropower plans for the Mekong have also come under fire as the river becomes a site of geopolitical tensions, after a study published in 2020 showed that China’s numerous dams on the upper portion of the Mekong held back water as Thailand, Laos, Cambodia and Vietnam saw record-breaking drought. Mekong water governance and data sharing have become a focus of US engagement in the region. This attention has further amplified the demands that local communities and activists along the Mekong have made for decades for transparency, public participation and prioritizing inclusive development.

The high-speed railway presents Laos with another option to drive economic growth. Regardless of its significant negative impacts, the railway has already been built and introduces new possibilities for exports, industry and tourism. The transformations to come around the railway may not be any less fraught than hydropower, as residents are more or less at the whim of the Lao and Chinese governments and companies. But it does offer a convincing argument that Laos could rely less on hydropower and explore other routes to economic growth.

The future of the Lao national railway will also play a role in shaping economic ties to neighboring Vietnam and Thailand, both key partners in the country’s economic development. Construction on a 500-kilometer rail line from Vientiane to Vung Ang, Vietnam is slated to begin later in 2021 and would give Laos much quicker access to a port as well as connecting it to Vietnam’s rail system. 

In Thailand, Laos will likely be linked to Bangkok via another Chinese-backed high-speed rail line, though talks are still ongoing for a large portion of the route. The line would link Laos to the new central railway station in Bangkok, now nearly complete, which has been billed as the new hub for rail in Southeast Asia.

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