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ASEAN risks becoming overwhelmed by Chinese railway diplomacy

22 Aug ASEAN risks becoming overwhelmed by Chinese railway diplomacy

It may not be full speed ahead for the “Chinese high-speed railway diplomacy” aimed at improving China’s links with Southeast Asia. Dubbed as Beijing’s thinly-veiled plans to assert its power and influence over the region, Chinese involvement also promises to help ASEAN achieve its connectivity goals by 2015.

While improved railway connectivity is likely to boost cross-border trade and reduce transportation costs for the region, ASEAN countries fear that the costs of building the railway may well outweigh the benefits. Recent news of the likely cancellation of the Kyaukpyu-Kunming rail link –a critical connection that links China with the rest of ASEAN – due to public opposition in Myanmar is an example of nationalistic pushback that could hamper progress on the ASEAN-wide railway project.

Wariness of growing Chinese influence

In the case of Myanmar, the Chinese had planned to invest US$20 billion (S$24.9 billion) to link up the energy-rich region of Kyaukpyu with Kunming, and attain rights to manage and operate the rail link for 50 years. But, negotiations have since stalled due to strong opposition among public and civil society organisations in Myanmar over concerns on whether the project will benefit the local population.

Many Laotians also fear the growing Chinese influence in their country, and of Beijing gaining the upper hand in the railway deal. Chinese corporates are rapidly expanding their business networks across Laos, from agriculture to construction sectors. Locals are worried by the influx of Chinese workers, if the government reopens talks for Chinese assistance on the railway construction.

Rail constructions are also costly. Asian Development Bank (ADB) cautioned that these rail projects could sink a country into debt. The construction of the Vientiane-Thakhek link, connecting Laotian capital city with northwestern Thailand, comes up to roughly 90 percent of Laos’ annual GDP. A loan from the Chinese was planned to finance the project, but it was later suspended due to delays from the Thai on their sections of the rail link. If the deal were to proceed, Laos would have to put up their untapped minerals as collateral to the Chinese, putting the country at risk of being one of the world’s most-indebted countries.

Heavy Chinese financing is also anticipated in Thailand, as China’s national railway operator will help build the Thai routes next year.

A need for an inclusive process

Economic benefits of infrastructure projects can often be overstated, with its costs not fully appraised. In a group like ASEAN, income levels vary significantly across members. Poorer nations need to borrow money in order to build their sections of the railway. A long drawn project may put a young economy into jeopardy, and could deepen and widen the catch up process.

ASEAN, as a community, needs to recognise that the integration of more-developed nations and less-developed nations will have to take place gradually. Some are still grappling with its own domestic needs of improving connectivity within the borders of its own nation. Greater ASEAN connectivity is a goal that the region should work collectively towards, but without the risk of destabilising anyone.


Thailand’s ruling junta approves China rail links worth $23bn
 [The Guardian, 1 Aug 2014]

China’s 120mph railway arriving in Laos [Telegraph, 14 Jan 2014]

Crossing the line [South China Morning Post, 29 Sept 2013]